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Online resale sites and department stores have had an on-again, off-again relationship. Now, the flame is being rekindled.
On 8 August, luxury vintage reseller Rebag and US department store chain Bloomingdale’s announced a partnership: 2,500 of Rebag’s pieces — including designer handbags, watches and fine jewellery from brands like Goyard, Van Cleef & Arpels and Hermès — will be available at Bloomingdales.com, with a smaller selection on offer in five of its locations across the US. In stores, consumers can sell their used bags as well.
Earlier this month, London’s Sign of the Times announced plans to further its partnership with UK department store John Lewis. The reseller is opening a permanent space at John Lewis’s Peter Jones in Chelsea following a successful pop-up, and will now be available on the multi-brand’s website. In autumn, the partnership will launch at John Lewis’s Oxford Street flagship.
Fashionphile has been planting similar seeds. In March, the reseller acquired Two Authenticators Inc, a Montreal-based wholesale distributor of pre-owned luxury vintage. It’s a bid to seek additional sales channels, including department stores, Fashionphile co-founder and CEO Ben Hemminger told Vogue Business at the time. “It’s market penetration; getting more of the pie beyond e-commerce.”
In 2019, Neiman Marcus invested in Fashionphile, later opening five Fashionphile studios across its store locations where customers could consign bags. Around this time was also when Rebag and Bloomingdale’s began talks, with initial explorations dulled as Covid hit and as shoppers were forced indoors.
Now that consumers are back out and about, both resellers and department stores are looking to rekindle sales as consumer spend continues to drag. Department stores are struggling to capture shoppers’ tighter dollars, operating on a wholesale model that’s showing its cracks. Resale, meanwhile, is fast growing, but has its own set of problems: profitability remains elusive given the high operational costs — including the limitations of online growth and logistical hassles of breaking into bricks and mortar. In this more fraught context, perhaps a link-up makes more sense than before.
“It’s always been the vision that there’d be a meeting of the roads between firsthand and secondhand,” says Rebag founder and CEO Charles Gorra. “It’s very logical — it already happens in lots of other verticals.” (He points to cars, electronics and watches.) Gorra would have loved to do it earlier, but it took time to scale to the level needed to operate in a department store, he says.
Now, the timing is right. “We resumed the discussions in a post-Covid world,” Gorra says. “Now that companies and department stores are seeing customer requests, the market is ready.”
For department stores looking for ways to fuel growth, it’s a way to increase foot traffic and revenue streams. As a fast-growing part of the market, it’s attractive to retailers, says Neil Saunders, managing director and retail analyst at Globaldata. And for the resellers, it’s a way to reach more consumers and break (further) into physical retail, with Rebag more than doubling its footprint. (It has four existing stores; the five Bloomingdale’s concessions make nine.)
“It creates that growth engine we can deploy,” Gorra says. “This is just the beginning — a stepping stone to future openings in the next months or years.” For its part, Bloomingdale’s says it’s only committed to the announced locations at this time.
What consumers want
Young consumers’ interest in resale is well documented. The global secondhand market is expected to surge threefold the rate of the overall global apparel market up to 2027, driven by Gen Z consumers, per secondhand online platform Thredup.
“It exacerbates the pressure for a move to happen, because eventually those generations are going to become the core customer,” says Gorra.
Jennifer Jones, SVP and general merchandise manager of women’s accessories at Bloomingdale’s, recognises this — hence the partnership. “When we started to hear and understand that our customers were interested in and looking for resale products, it became an opportunity we wanted to pursue,” she says. Danielle Gagola, innovation lead at John Lewis, agrees, noting the clear interest in pre-loved items following the store’s 2022 foray into fashion rental.
Plus, it’s a smart play to grab consumers who are increasingly preoccupied with environmental concerns.
Slowing down to speed up
This is in step with the wider luxury fashion slowdown we’re seeing across the board. As evidenced in this quarter’s earnings, consumers are pulling back their luxury spend as prices continue to rise. Luxury resale may give consumers with financial constraints an option to purchase otherwise out of reach brands.
It’s why, particularly at this moment, a Bloomingdale’s or a John Lewis — rather than higher-end stores like Bergdorf Goodman or Harrods — makes all the more sense. Brands and sellers want to go where more consumers are. “Luxury department stores have a relatively niche audience. Luxury resale has a much wider audience, that includes a lot of middle-market shoppers. As such, it makes sense to partner with mid-market stores to widen the reach,” Saunders says. “Some high-end luxury brand resellers will also figure that being in a mid-market store will help introduce their brand and proposition to new audiences.”
Rebag’s Gorra expects this to be a turning point, in that the downward shifts in the luxury market will accelerate the move towards resale integration. “When things go very well, companies don’t have an incentive to change,” he says. This has been a major challenge when pitching resale in recent years: execs didn’t want to rock the boat. Now, Gorra says, there’s drive to innovate. “We’ve been getting a lot more calls in the last six to nine months.”
Careful offerings
To make the business model work, though, both sellers and their retail partners need to tread carefully, experts say. The main risk for department stores is to ensure that these ventures drive incremental revenue, according to Saunders. “What stores don’t want is for the resale offer to cannibalise sales from the mainstream range.”
For resellers, Saunders says, the challenge is making the business work in terms of inventory across multiple stores. “Online it’s easy to showcase everything. When it comes to stores, issues like stock allocation and distribution become more of a consideration — which can be hard in resale where there are a lot of SKUs with little volume behind them.”
It’s not just about balancing what’s on offer in-store — but also how many players get in on the action.
Saunders expects that we may well see more of these link-ups given the growing interest in resale from mainstream retailers. This is where interested parties need to be cautious, he says: “The issue is that the more mainstream retailers that play in this market, the less a point of differentiation it becomes.”
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Correction: Fashionphile does not yet offer repairs at Neiman Marcus locations, as was previously reported.
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