Vintage boom buoys RealReal and jolts luxury labels

Sales of second-hand, or vintage, luxury goods - from Chanel handbags and Gucci dresses to Rolex watches - are thriving on dedicated web platforms that are drawing a younger clientele seeking bargains and championing recycling.

The RealReal could be ready to list on the stock market within two years, when it expects the value of goods sold on the site to have roughly doubled to US$1 billion annually, its founder and CEO said.

The seven-year-old US company is also in talks with high-end brands like Louis Vuitton parent LVMH and Gucci owner Kering over potential partnerships, Julie Wainwright said.

Luxury labels have hitherto shunned the second-hand trade, fearing diluting their exclusivity and cannibalising their sales. But they are now finding it hard to ignore a second-hand luxury business that is worth US$25 billion in annual revenue and is expected to grow by up to 10 percent annually in coming years, according to Berenberg analysts.

That is more than twice the projected pace of growth of the much larger primary market.

While there are few indications so far that they are planning in-house ventures, brands including LVMH and Kering are now talking to vintage sites as they try to figure out how they might extract some value from the burgeoning sector, The RealReal and executives from other resellers said.

Second-hand platforms make their money by taking a cut of the resale price of an item, anything from 10 per cent to 50 per cent depending on the product and how much the seller has sold via the site.

The RealReal is facing growing competition from rival resellers looking to cash in on the booming market, including thredUP, which branched into luxury last year, and established players like Vestiaire Collective.

The RealReal has a 100-strong team of anti-counterfeiters to weed out fakes, and processes between 200,000 to 300,000 products a month. Vestiaire, which also works with authenticators, adds 6,000 new products a day to its site, after 30 percent of all items submitted for resale are rejected.

Prices and discounts vary considerably, with determining factors including the condition of the item and how in demand a brand if at that moment.

For example, shoppers on The RealReal can buy a 2015 black lace top from Givenchy for 1210 euros (S$1,917), around a third of the original price, while polka-dotted Balenciaga high heels from last year were down to 374 euros from around 876 euros.

Yet some things hold their value or even fetch premiums second-hand. A maroon Hermes Birkin bag made of ostrich leather from 2009 is on the RealReal at 21,130 euros when its 2017 retail price as a new product was around 15,000 euros.