As inflation takes its toll on consumer spending, luxury consignment stores are grappling with the effects, witnessing a notable increase in the challenges associated with high-end fashion.
The RealReal is undergoing a comprehensive revamp, involving alterations to its commission system, a reevaluation of its supply dynamics, and the incorporation of third-party advertising. Meanwhile, Fashionphile, a San Diego-based luxury resale platform focusing on preowned ultra-luxury accessories, is entering the B2B wholesale realm following its acquisition of the Canadian preowned luxury omnichannel retailer LXRandCo. (LXR).
Read more: Consignment Shops Diversify to Boost Sales as Consumers Pull Back
Similarly, luxury consignment platform Rebag is expanding its consignment focus beyond the luxury sphere through its new partnership with thredUP.
In an interview with PYMNTS, Rebag founder and CEO Charles Gorra discusses the reasons behind the company’s shift beyond luxury — and provides insights into what can be anticipated in the resale category, particularly in challenging economic circumstances.
“The collaboration among players has already been in progress for a few years,” Gorra said. “Additionally, brand collaborations have been prevalent for quite some time. I just think we’re going to witness a significant increase in such collaborations.”
And collaborations are not a new thing for Rebag, Gorra emphasized, citing a previous partnership with ultra-luxury-focused platform Christie’s. In line with the company’s overarching strategy to cover the entire market spectrum, the recent collaboration with thredUP is a purposeful initiative to cater to the opposite end of the spectrum, specifically focusing on the more affordable side of the market.
As a result of this collaboration, Rebag has expanded its acceptance of more accessible brands, including names like Marc Jacobs and Michael Kors. Following the acceptance of items, customers now have the choice to receive Rebag credit, which can then be utilized to shop from a curated assortment facilitated by Rebag.
However, that is just one approach Rebag is employing to navigate through this challenging economic landscape.
Gorra highlights that at the core of Rebag’s identity is its role as a purchaser of products. This foundational function involves acquiring, servicing, authenticating and intentionally redistributing items. To ensure financial sustainability, Gorra underscores that Rebag has intentionally introduced a contribution phase between the stages of acquisition and distribution.
In its approach, the company adopts a conservative stance, prioritizing quality and concentrating on a carefully chosen set of brands defined by quality guidelines. The determination to acquire diverse items is dependent on factors such as market conditions, desirability, inventory status, and other relevant considerations.
Although Rebag typically adheres to this business model, Gorra is attentive to the uncertainties prevalent in the current environment, looking at customer behaviors and macroeconomic conditions.
In light of this, Rebag has introduced tools like its artificial intelligence (AI) engine Clair, designed to offer instantaneous insights into supply and demand trends. Through this tool, Rebag can assess the real-time dynamics of seller and buyer preferences. Recognizing the inherent volatility in markets, Rebag proactively adjusts to changes, incorporating them into its evolving value proposition.
When the company announced Clair, Gorra told PYMNTS: “Rebag’s overarching goal is to bring transparency and standardization to the luxury resale market, so that the consumer’s buying and selling experiences can be as easy and simple as possible.”
Read also: Rebag’s AI Solution Brings Transparency, Confidence To Luxury Resale Market
But while Rebag has taken measures to ensure its stock is what consumers want, PYMNTS asked “are consumers buying?” Because wanting and buying in this environment are completely different.
“There’s some tension on the ultra-high-end pieces,” said Gorra.
Pointing to the watch market, which epitomized opulence in the previous year, Gorra said there has been a discernible shift since early 2022. Many high-end watches have undergone depreciation, with some experiencing losses ranging from 20% to 30%. He said such fluctuations are not unusual.
“It’s fair to say that things have stabilized significantly now; the time has passed when you could purchase a Daytona and, within seconds, sell it for another few thousand dollars. So, you need to be more mindful as arbitrage has become more challenging and perhaps, in any case, more sustainable,” said Gorra.
Beyond timepieces, Gorra notes that over the past decade, top brands have experienced substantial value increases. An example is the Chanel classic flap, initially retail priced at $3,000 to $4,000, which has now surged to nearly $10,000. This prompts debates on whether one would prefer a Chanel Maxi or a Birkin at the $10,000 price point.
With that, many have looked to the vintage version because they find that the quality is better but the same cannot be said for the price.
“When considering vintage items, what is typically observed is that their prices tend to adjust to the changes; hence, there’s no free lunch,” said Gorra.
In the ongoing evolution of the resale industry, Gorra envisions the emergence of the next phase, which he refers to as “Resale 2.0” or even “3.0.” The concept revolves around the idea of becoming a comprehensive solution that caters to the entire resale market.
With that in mind, rather than being a singular platform, Rebag plans to offer an all-encompassing service. This entails a collective effort within the industry to provide more holistic services across various segments and cater to diverse customer needs.
“You will witness an enlightenment of the minds, leading to the eventual provision of a more comprehensive service across various segments and tailored to diverse customer needs,” said Gorra.
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