HomeLatest newsThe stars align for the circular economy ... of luxury

The stars align for the circular economy … of luxury

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The circular economy will take off in style. The propensity for frugality due to the pandemic and the desire to curb pollution will encourage buying high-end second-hand. It is an advantage for resellers of items that can last a generation or more. Even luxury homes could get involved.

Levi Strauss has launched a buyback platform; Ikea, your first repaired furniture store; and Amazon has been offering renewed electronics since 2015. The durability and charm of a Louis Vuitton Speedy bag, launched in the 1930s, allows it to retain much of its monetary value. Due to shortages, Hermès used leather goods typically cost 10% more than the retail price.

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Before the pandemic, second-hand luxury goods sales were already growing three times faster than the primary market, and were expected to double, to € 41 billion, between 2018 and 2023, according to UBS. But the potential reserves are much higher. About 60% of a woman’s wardrobe is idle in her closet, says distributor ThredUp. Based on the 1.1 trillion in high-end shoes, bags and clothing sold in the last 10 years, based on Bain & Co estimates, and applying a 30% discount to the original price, we estimate that there are about 500,000 million in objects waiting to re-enter circulation.

For online actors like The RealReal and Vestiaire Collective, who sell multiple brands, that’s a potential revenue stream of $ 98 billion, applying a typical 20% commission. Or higher, if the same item is sold repeatedly. Reselling could also tempt Gucci or Burberry, who have already carried out pilot projects. Margins would probably be lower than your new products – used garments should be examined and, if necessary, polished.

But is it worth it. Until the pandemic, fashion generated 10% of annual carbon emissions and was the second largest consumer of water. Investors and customers can develop a new affection for brands that choose to embrace the virtuous circle.


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