Consumers, spooked by accelerating job cuts, looming recession fears and continuing high prices for goods and services in 2023, are trading down when they’re shopping, and that includes in secondhand stores.
Demand for secondhand goods remains red hot, with the resale market expected to reach $82 billion in sales by 2026, nearly doubling from $43 billion in 2022, according to industry data.
But, just as they are doing with their weekly groceries and purchases of new items such as clothes and shoes, consumers are looking for better value in the resale market.
“We started noticing it in late summer, early fall of last year,” said Sasha Skoda, director of merchandising with online luxury reseller The RealReal.
(REAL). “Demand for higher-priced luxury brands at resale is down, which is pushing prices for brands like Chanel, Gucci and Louis Vuitton down.”
At the same time, she said, demand for previously owned lower-priced luxury brands — such as Miu Miu and Bottega Veneta — is up.
“Consumers are worried about the economy and they are not spending as much. They are no longer willing to pay the same price at resale that they were willing to pay last year for brands like Hermes, Gucci and Louis Vuitton,” Skoda added.
According to The RealReal’s Annual Luxury Consignment Report 2023, which was released Thursday, handbag resale prices fell 20% for Louis Vuitton, 17% for Gucci, 10% for Hermès and 9% for Chanel over the past 90 days.
On average, the resale value of higher-end luxury bags from these brands is beginning to level out, with prices down 5% in the last six months, said Skoda.
“A potential recession, the climate crisis, and global unrest are all reasons that, going into 2023, consumers are making shopping decisions based on value,” Rati Sahi Levesque, co-CEO and president of The RealReal, said in the report.
As they embrace lower prices, resale shoppers have become less picky about the condition of the items they buy.
Demand has nearly doubled for “fair condition” items, such as those showing signs of heavy wear through worn corners and significant scratches, the report said. Fair condition merchandise sold by The RealReal is on average 33% cheaper than products being resold in good or excellent condition.
Skoda noted that Millennial and Gen Z shoppers, who are the core shoppers of secondhand merchandise, are gravitating to more affordable contemporary brands like Miu Miu, Bottega Veneta and Telfar instead of investment pieces from top-tier luxury brands.
But what’s old — or perhaps more properly, “vintage” — continues to strike the fancy of younger shoppers, said Skoda.
Data from searches on The RealReal’s website show that pearl jewelry, ultra-feminine dresses, low-heeled mules, tailored suits, loafers, and brooches are emerging as 2023’s most bankable fashion trends. Also hot: Y2K fashion.
“Pearls are a value play. They’re less expensive than diamonds and timeless,” said Skoda. Oversized clothing, in suits or dresses, is popular because casual comfort remains popular with consumers.
Demand for clothing and anything from the 1990s and early 2000s is strong, in large measure because fashions aimed at Gen Z buyers are so commercialized that “they are like walking advertisements for brands,” Skoda said.
“They see buying vintage clothing at resale as a way to be different, creative and sustainable.”