Luxury Brands React to the Used Market Upturn

Cub-reporter You Ha-young

gkdud8877@naver.com

As resale platforms have gained a lot of popularity and interest from the public, several luxury brands have had conflicting opinions. When department stores and duty-free shops led offline distribution, they had the right to set prices for products. However, as the resale and used markets begin to attract more attention, control of the existing market power infrastructure is collapsing. According to global consulting firm Bain & Company, the used market is expected to grow 15% annually over the next five years and reach double growth rate of new product sales during the same period. Actually, the resale platform 'Cream' sells used Hermes 'Buckin Bags' which are difficult to acquire even with money and are traded at more than twice the initial retail price.

Many consumers tend to buy new luxury goods when they go shopping in department stores, but recently department stores have increased the number of stores selling used goods. This is because as the MZ generation has emerged as a 'core axis of consumption,' they boldly choose used luxury goods transactions with high scarcity and cost-effectiveness. Accordingly, the department store industry also has great interest in used transactions and showing related offline stores or investing in platforms that follow the changing trend in consumerism. However, some luxury brands have a negative stance.

Luxury brands such as Hermes, Louis Vuitton, and Chanel have a negative opinion about resale. In March, Hermes Korea included a 'no participation in resale' rule that guarantees that it will not be involved in the act of reselling for profit. In addition, in July last year, Chanel started supporting the 'ban on resale' and requires ID cards when purchasing products or receiving after-sales services.

Despite these efforts by luxury stores, the resale market is attracting more attention. Experts showed a skeptical reaction about whether this can be properly regulated. The reason is that there is no legal basis to prevent individuals trading on the used market. For MZ generation customers, the value consumption trend has spread and demand for secondhand products is increasing. As a result, the opinion of luxury brands will continue to be divided, but the outlook for the resale market is expected to rise.