Luxury and Second-hand: The Consequences of Pricing Power and Sanctions Diversion (Part 2)

For Victoria Uldry, founder of the luxury consignment store Closet in Geneva, there is no doubt: "No one in the current economic context wants to pay full price for a luxury bag, especially if the quality is not increasing accordingly," she says in an interview with Luxury Tribune. On her online platform, she doesn't hesitate to set the prices of Chanel bags at 50% of their original value, she reveals.

Bloomberg reports that Chanel has increased the price of its iconic medium-sized "2.55" model by 91% over five years, now priced at 11,100 euros. The brand, which reviews the prices of its handbags twice a year, had indicated that it also adjusts prices based on the inflation of raw material costs.

This significant increase, which some specialists even consider indecent, worked well with aspirational clients during the post-pandemic era, but that is no longer the case today. In the current economic context, they prefer to buy a second-hand product of better quality in very good condition, rather than spending money on an extremely expensive new bag that might lose value over time.

In a report, the financial firm KPMG mentions that during the first five months of 2022, the average price of luxury goods was 25% and 7% higher, respectively, than in 2019 and 2020. The attractiveness of prices thus makes the secondary market much more accessible and converts a new clientele, often distant from this universe.

However, according to a publication by the Boston Consulting Group, the primary luxury market could benefit from the situation: a new audience is interested in luxury and could potentially reinvest in a new product; the luxury industry is perceived more sustainably by environmentally conscious millennials, and finally, brands collaborate—sometimes invest—with the second-hand market.

Beyond the price increase, the rarity and desirability of certain luxury items and brands are also a growing success factor for the second-hand market. "The myths and idealization surrounding the creation of these models play a major role," explains Cécile Wickmann, senior director of the luxury sector for Vinted, in an interview with Luxury Tribune. "Due to their rarity, demand increasingly exceeds supply, and certain items—especially classic handbags—prove to be real successes when it comes to resale." On Vinted, the most sold brands are Louis Vuitton, Chanel, and Gucci. "Louis Vuitton clearly stands out for its fast sales. The Louis Vuitton Neverfull MM bag and the Moncler Maya jacket have become the most popular luxury items among Vinted members so far in 2024," details Cécile Wickmann. According to the latest report from the Lithuanian company, the Vinted community also shows a strong preference for Hermès, Dior, Saint Laurent, and Prada, with the popularity of Cartier increasing, while Balenciaga experienced a slight decline in interest compared to the previous year.