Recommercing Luxury Goods: A Market in Booming That Needs New Sustainability-Oriented Collaborative Strategies

Recommercing Luxury Goods: A Market in Booming That Needs New Sustainability-Oriented Collaborative Strategies

Floriana Iannone (Università degli Studi di Napoli “L'Orientale”, Italy)
Copyright: © 2020 |Pages: 25
DOI: 10.4018/978-1-7998-2728-3.ch011
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The aim of the work is to show that, in the luxury segment, retail operators are called to greater challenges imposed by the expansion of new competitive pressures especially driven by the dynamics of the demand trends increasingly oriented towards sustainability. The work provides a picture of the omnichannel strategies and of the practices adopted by the most important re-commerce players worldwide currently influencing the luxury brand choices in reassessing the opportunity offered by the re-commerce of the so-called ‘gently-used' personal goods. The ultimate goal is to underline the need for new collaborative strategies for luxury brands in order to better organize the retailing activities in an omnichannel perspective, especially considering the opportunities opened by the theme of sustainability.
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Sustainability goals cannot be achieved by the work of a single company: in order to become a prerogative of consumers too, it requires common rules and regulations for sustainable consumption. This perspective implies a new point of view and suggests collaboration and innovation practices for many companies involved in the engagement of consumers in order to redefine their own value proposition. In other words, competitors in the fashion business should have the common futuristic goal of changing the consumption patterns of buyers, only possible by maintaining the innovative mindset within the organizations: that’s why the concept of shopping for second-hand goods has been redefined.

Exploring and proposing solutions and best practices to sustainable development goals (SDGs) in the fashion industry means also rethinking on the design, on the production and, on the distribution moving towards shared business and social objectives.

For example, looking at the distribution strategies the wholesale (the largest channel for personal luxury) grew only 1%, in 2018 hampered by department store performance and a slowdown among specialty stores facing tough competition from the online channel (Bain & Co., 2019). In addiction, if the retail channel continued growing during 2017 (gaining 8%) in 2018, it grew by only 3%, as the strong performance of specialty stores was partially offset by the disappointing performance of department stores globally.

The relentless march toward e-commerce continued, with online sales jumping by 24% in 2017, reaching an overall market share of 9%. The retail channel grew 4% in 2018, with three-quarters of that increase coming from same-store sales growth. A stable growth is expected in 2019 even if the future of luxury is taking shape with several key characteristics, including new kind of consumers (f.e.: Chinese Generation Z), access, ownership, sustainability and social responsibility, the impact of digital across the entire value chain, preference for luxury experiences over products, and consumer networks as a new measure of value.

Luxury resale is a contentious business (expected to grow under the pressure of an accelerated second-hand market favored by digital players with global scale) and the relationship between luxury brands, department stores and companies involved in re-commerce is not exempt from legal problems and disputes. This relationship is still largely unsettled. In fact, if on one hand, the fear among fashion’s well-established houses seems to be that luxury resellers are cannibalizing their business, or some of the significant arrays of second-hand good being peddled are fake, allegedly piggybacking on the reputation and appeal of luxury brand; on the other hand, that resale can represent a point of entry-level access for young customers who can’t yet shop full-price luxury.

In today's retail marketplace, a mix of thrift stores, high-end stores, and online retailers are recognizing the value of second-hand hosting flea markets or launching their own vintage product collections. Amazon itself, the most customer-obsessed company in the world, acknowledging that consumer behavior is evolving across the world (and that millennials, in particular, are interested in the second-hand product) acquired Shopbop enabling it to expand its services and to enhance the customer experience.

Furthermore, if the major luxury companies, such as Richemont and Farfetch, have entered the market by acquiring resale platforms of their own (Watchfinder and Stadium Goods, respectively), the popularity of online businesses such as TheRealReal, Vestiaire Collective and Rebag has paved the way for more retailers and brands to enter the resale market.

Based on these premises, the paper deals with the managerial approaches that characterize the luxury fashion goods reselling strategies, and analyzes the contributions of the scientific and sectorial debate regarding the themes of the second-hand goods and the luxury goods, together with the second-hand fashion consumption motivations.

The aim is to explain that, unlike the rest of the resale apparel market which has thrived off the uncertainty of the “treasure hunt”, luxury retailers have to deal with bigger challenges, imposed by the sustainability issue, too.

Key Terms in this Chapter

Second-Hand Good: Pre-used or pre-owned good that is being purchased by or otherwise transferred to a second or later end user.

Re-Commerce: Process of selling previously owned, new or used products through physical or online distribution channels to companies or consumers willing to repair, if necessary, and reuse, recycle or resell them afterwards.

Sustainability: Originated with the Brundtland Report in 1987, this concept describes sustainable development as one that satisfies the needs of the present without adversely affecting the conditions for future generations.

Luxury Goods: Products which are not necessary, but which tend to make life more pleasant for the consumer. In contrast with necessity goods, luxury goods are typically more costly and are often bought by individuals that have a higher disposable income or greater accumulated wealth than the average.

Omichannel Retail Strategies: Approach to sales and marketing that provides customers with a fully-integrated shopping experience by uniting user experiences from brick-and-mortar to mobile-browsing and everything in between.

Fashion Product: Product for which demand changes frequently because of changes in consumer tastes or product attributes. Where consumer tastes are fickle and consumers seek to be fashionable, suppliers can take advantage of this by frequent restyling of products.

Fashion Industry: Fashion industry consists of enterprises from textile, clothing and accessories, and tanning sectors.

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