Introducing the Glossy+ Luxury Briefing, our newest member product uncovering the strategies driving the success of global luxury brands. For this week only you can save 50% on a three-month Glossy+ membership. Become a member here. To kick it off, we’re rolling out the State & Future of Luxury Report in five parts over five weeks. Each will focus on a luxury category across fashion and beauty, and will feature insights from a focus group of luxury marketers, founders, investors and analysts. In addition, we’ve worked with Saks to compile exclusive insights from its panel of luxury consumers. Week 1 focuses on Leather Goods & Accessories as informed by experts including designer Brandon Blackwood and Bergdorf Goodman chief merchandising officer Yumi Shin. I hope you enjoy! –Jill Manoff, editor-in-chief, Glossy
Telfar is among fashion brands marketing resale value
With resale value increasingly driving purchases of leather goods, luxury brands have begun marketing resale rates to prove their products as smart investments.
As the luxury market grows, fashion further embraces resale and young, comparatively affordable brands carve out new definitions of luxury, the conversation around handbags as investment pieces has never been louder or more widespread. Even fashion brands and retailers in the primary market are messaging resale value, as they settle into a new landscape where highly educated consumers are treating handbag purchases like buying real estate or a car.
Charles Gorra, founder and CEO of 9-year-old luxury resale company Rebag, pointed out that Telfar features a link to Rebag’s 2022 Clair Report on the brand’s online product pages. The report leverages data from Rebag’s Clair AI tool, which can be used by consumers to assess the value of used bags by top brands. Gorra has previously described the tool as the Kelley Blue Book of luxury accessories. Telfar, the innovative, CFDA award-winning bag brand by designer Telfar Clemens, was the star brand of the report. Rebag called out that its “average value retention on the secondary market” exceeded that of all legacy brands including Hermès. For example, the Telfar x Ugg Shopping Tote retained 211% of its retail value, and its signature Shopping Tote retained 193%. Telfar’s large Shopping Tote retails for under $260. Gorra said the Telfar.net links were a surprise and not part of an official partnership.
On the same note, but different product category, luxury watch blog-turned-e-tailer Hodinkee offers a “Sell Your Watch” tool through its Crown & Caliber brand. According to CEO Jeffery Fowler, the feature “spits back an instant quote” based on information provided through a set of prompts. The tool is used 10,000 times per month, on average, both before a customer buys a watch and before they list one as a seller. Hodinkee sells new and used watches by brands including Rolex, Omega and Tag Heuer.
The resale opportunity is top of mind for consumers. Charles Gross, a luxury content creator with 1.3 million TikTok followers, said, “A huge buzz phrase that’s come up a lot for my audience is ‘investment value’ in their purchases. People are focusing on: ‘If I buy a bag, in 10 years, am I going to be able to sell it?’”
He added, “They see headlines like, ‘A used Birkin sold at auction for $150,000.’ And some of them keep their bags in their closets as investment pieces.”
But some retail executives remain hesitant to position a fashion item as an investment. Emily Essner, CMO of Saks, acknowledged the “mindset shift from spending on luxury to investing in luxury.” However, she questioned, “Is ‘investment’ appealing, or does that become intimidating [to the consumer]? I honestly don’t know; it’s something I’m scratching my head about. In some ways, it feels safer. But in some ways, it feels bigger.”
The “shift” also poses new challenges for brands. “The resale market has definitely put pressure on brands,” said Brandon Blackwood, founder and designer of his namesake brand that sells bags for under $500. “In the age of social media and everything being fast-paced, things get recycled pretty quickly. So now, not only do you have to have a really cool item, but you also have to have an item that keeps its purchase value. “
Blackwood said he recently saw a pair of Brandon Blackwood handbags at a The RealReal store and they were priced above their retail price. He owed that to the brand’s tight control of its price points and discounting, for example, which its direct-to-consumer model enables.
Meghana Dhar, advisor to retail tech companies including ShopShops, called the rise of resale the biggest story in luxury in the last year. She owed its trajectory, in part, to big-name partnerships in the category, including Gucci’s with Vestiaire Collective, announced in March. Active participation on a resale site can offer a brand more control of its image plus access to useful data, she said. For example, a hot-selling bag could signal an opportunity for a trending reissue.
“There’s certainly been a change [for the better] in tone, in terms of how brands interact with resale and discuss their overall goals,” Gorra said. He hinted that Rebag will be announcing its first official brand partnerships soon.
The result of the resale boom has been greater access to luxury across price points, which has been good news for Gen Z. But that has big implications for the future of the market, which the highest of the high-end brands are clearly rejecting. Chanel, for one, has been raising its prices to an extreme. Most of Chanel’s handbags now retail for more than $10,000.
“I don’t know if any of us expected prices to go so high,” said Sarah Willersdorf, global head of luxury at Boston Consulting Group, speaking about prices across luxury. “They are well in excess of inflation, obviously.“
Likewise, Gross noted that Chanel is following Hermès’s lead of driving intentional inaccessibility. In addition to limiting how many bags in a single style that someone can buy per year, the brand is decreasing the number of bags it sells in its stores and carving out exclusive VIP experiences for its top-spending customers.
As Telfar proved earlier in its business, limiting quantities can work to a brand’s advantage. On top of Hermès, other brands that have found success with this model include Maximilian Büsser and Friends, or MB&F. The company makes 300 watches per year and has a 20-year waitlist, Fowler said.
On the flip side, there’s Louis Vuitton, the luxury goods and overall luxury brand leader. Its parent company, LVMH, has been a notorious resale holdout.
“There are so many verticals within the house for so many customers,” Gross said. “They have an area for streetwear customers, they have an area for beauty. If you want a bag for $900, you can find that. If you want something that’s $30,000 and one of six in the world, you can find that. … It’s [been said that] Louis Vuitton is the McDonald’s of luxury. It’s fast and predictable. And I think that appeals to people, especially in an international market.”
A takeaway for brands: The addition of resale products and pricing tools as menu items makes good sense.
By the numbers: Luxury shoppers are spending more, with resale in mind
Powered by Saks Consumer Insights
In April 2023, Glossy partnered with Saks to survey 3,944 luxury consumers on their current shopping habits. This week, we spotlight how their spending on luxury goods has changed in recent months and to what extent they now consider resale value when making a purchase.
About one-third (36%) of respondents said their spending on luxury goods has increased in 2023, compared to 2022, with 13% spending “much more” and 23% spending “slightly more.” Thirty-four percent of respondents haven’t changed their spending habits, while 30% of respondents said they’re spending less.
When breaking down the data by age group, gender and household income, there’s little differentiation across segments. However, it’s noteworthy that the segment with the most shoppers spending less is young shoppers ages 21-30 (39%). The segments with the most consumers claiming to spend more are men (39%), and people with household incomes of $300,00-$499,999 (38.5%) and at least $500,000 (38.6%).
Meanwhile, most of the consumer panelists (51%) said they don’t currently shop with resale value in mind and they never have. And 5% said they’ve decreased their consideration of resale value when shopping in the last 12 months, compared to the 12 months prior. But on the flip side, 25% said they’ve consistently considered resale value when shopping. And 19% said they’ve upped their focus on resale value in the last 12 months.
It was older shoppers that most reported having never considered resale value, specifically those ages 51-60 (51.9%), 61-70 (60.1%) and 70-plus (74.4%). Men also fall in that category, with 59.9% saying they don’t consider resale value.
The State & Future of Leather Goods & Accessories
What’s now and next, according to insiders
Consumer shopping behavior: Demand is moving toward individuality.
From streetwear to quiet luxury to … lesser-known, niche brands? According to Yumi Shin, chief merchandising officer at Bergdorf Goodman, a new trend is taking shape that sets the stage for more personal style. Along with versatility, “individuality is key,” she said, adding, “Our offering from brands such as Luar and Puppets and Puppets evokes a sense of freedom in fashion, which our customers love.” New styling options like carrying multiple bags at once are also set to come out of the woodwork. “Customers will continue to gravitate toward what works for them,” she said.
Ian Schatzberg, co-founder of branding agency General Idea, has also caught wind of this trend. “Could you see the emergence of a potential new generation of niche luxury brands that become the anecdote to big luxury houses?” he asked other focus group members contributing to this report, regarding what’s next. He noted that he’d seen this happening across product categories, via brands including Jacque Marie Mage, Gucci Westman and Truff.
“It used to be that you couldn’t get a luxury handbag for under $1,000,” said Carly Mark, founder and designer of Puppets and Puppets, the NYC-based fashion brand that’s become known for its $500 Chocolate Chip Cookie bag. “But today, a luxury item is about the community around it and what it represents … It’s special to the individual, rather than expensive.”
Business strategies: Physical retail is a priority.
“People are incredibly responsive to in-person shopping,” said Mark. She realized this in late April, upon hosting a sample sale at the company’s headquarters. “It started at 11 [a.m.], and by 11:05, the bags were gone,” she said. “People were excited to touch the bags and walk away with one of them.” According to Mark, the brand made more money during the sale than it makes from most of its retail partners during market week. She said she now plans to look into brick-and-mortar opportunities. She’s also revisiting the brand’s margins.
The same sentiment was shared by Blackwood: “We did a pop-up at ComplexCon, and there was a line throughout the weekend,” he said. “People want to see what the bags look like [up close] and see the quality,” he said. “There’s still a lot of value in brick-and-mortar.”
Gorra, who recently reduced Rebag’s store footprint from nine locations to six, pointed out that digital still only accounts for around 20% of retail sales. “If we want to get to the customer, we have to be in physical stores,” he said. He admitted that reaching customers has become difficult via digital channels. Among Rebag’s workarounds is a newer referral program, plus Gorra’s in talks to establish relationships with hotels, Equinox and other companies with IRL locations.
Size and fluctuation: Luxury handbags to remain a happy place.
“The investor community has actually gotten increasingly bullish on the luxury sector because it doesn’t have the pitfalls of a lot of the non-luxury consumer product businesses that have faced a number of issues over the last 12 months,” said Nick Brown, co-founder and managing partner at VC firm Imaginary Ventures. He noted that luxury’s strong margins and focus on brand (versus performance) marketing and longevity are working to its advantage in today’s retail climate.
Meanwhile, Gorra said Rebag has maintained consistent sales growth. And Schatzberg said, overall. fashion companies with an accessories focus are well positioned.
“Gucci saw huge growth under Alessandro [Michele] by really growing leather goods,” he said. “Luxury brands survive on the [leather goods] category. It’s very hard to scale in ready-to-wear.”
According to Blackwood, “We’re in a very healthy market; it’s the right place at the right time. Plus, accessories are always going to dominate.”
In April, leather goods leader LVMH reported 18% year-over-year revenue growth in its fashion and leather goods division for the first quarter of 2023. For all of 2022, the category had 25% year-over-year growth, led by Louis Vuitton, Christian Dior and Celine.