Pre-Owned Luxury Goods Market Is booming in Upcoming years, $55 Billion in 2025
- by KD Market Insights
- March, 2021
Global pre-owned luxury goods market accounted for USD 26 billion in 2019 and is estimated to reach USD 55 billion in 2025, registering a compound annual growth rate (CAGR) of 14% between 2020 and 2025.
Increase in numbers of high-net worth individuals, rising demand of second-hand luxury goods and growing online revolution are the major factors which are anticipated to positively impact the growth of pre-owned luxury goods market in the upcoming years. With respect to product type, the market is segmented into clothing, footwear, bags, jewelry, watches and accessories, out of which, watches segment shared approximately 66.9% of the global pre-owned luxury goods market in 2018, in terms of value.
Europe pre-owned luxury goods market was held at USD 14 billion in 2019 and is anticipated to reach USD 28 billion by the end of 2025, registering a CAGR of 13% between 2020 and 2025.
What are the factors driving market?
Increasing Sales of Clothing & Footwear Segment
The pre-owned luxury fashion is likely to continue with its exponential growth in the upcoming years. The pre-owned luxury trend is being accepted into almost every region, such as the United States, Asia Pacific, Middle East, and other regions. Further, there is a rise in sales of luxury clothing & footwear segment, which is providing immense growth opportunity for the pre-owned luxury goods market over the forecasted period. Apart from this, the adoption of pre-owned luxury goods is favoring the consumers to make an effort to save money instead of spending tons of money on luxury stuff.
Growing Numbers of Start-ups
The increasing number of start-ups in the field of pre-owned luxury goods is opening a gateway opportunity for the market to grow in the upcoming years. In addition to this, the U.S., United Kingdom, Germany, France, Italy, and other countries are the most attractive countries in the field of pre-owned luxury goods, which is indulging many start-up companies in entering the market. Further, this factor is likely to impact the growth of the pre-owned luxury goods market over the forecasted period.
Affordable High End Fashion
Pre-owned luxury goods are the ideal choice for high-end fashion as they offer luxury goods at a lesser price. Further, the high costs of rents and education are adding uncertainty to the job market; these are the significant reasons, which make consumers save money and reduce their frequency of purchases. In addition to this, also the U.S. is one of the most attractive countries in the North America region for the luxury brands, which makes it a strategic center for companies to enter into the regional market.
When an item is made, there are a lot of ways the environment gets abused. For manufacturing a luxury good, multiple processes are involved which impact the environment in many ways. Further, growing environmental concerns among the population are anticipated to impact the market in a positive way. Moreover, the method of reuse and recycling can provide a growth opportunity for the pre-owned luxury goods market in the upcoming years.
Growing Online Sales Channel
The penetration of smartphones has led to the increase in the usage of online sales all over the world. The millennial populations are preferring online sales channels over the offline sales channel, which is opening a gateway opportunity for the online sales channel to grow in the near future. In addition to this, advancements in the online marketing and continuously rising use of digital media for product marketing & promotions of the pre-owned products are the major key factors that are anticipated to drive the growth of the pre-owned luxury goods market over the forecasted period.
Other Major Advantages
The top countries, such as the U.S., Germany, U.K., and France, are exceptionally dynamic markets that are offering high growth potential in the pre-owned luxury goods market. The visitors to countries such as Dubai and Abu Dhabi are attracted by luxury boutiques, iconic shopping malls & high-end hotels. In addition to this, the iconic luxury brands are retaining their leading position in the UAE to attract residents and tourists. Further, these factors are expected to impact the growth of the pre-owned luxury goods market in the near future.
What are major restraints which are likely to inhibit the growth of market?
Pre-Owned Authenticity Concern
Authenticity is especially crucial in the context of second-hand luxury goods market as the risk a consumer perceives in terms of authenticity is increasing. Further, the fear of inauthenticity is increasing in the customer to customer markets, which is believed to hamper the growth of the market.
Secondhand Luxury Market Isn’t Thriving in China
The secondhand luxury goods market is still in its infancy in China. Most of the consumers in China don’t prefer the secondhand luxury goods. This factor is hampering the growth of the secondhand luxury goods market. In addition to this, most domestic consumers still prefer to purchase new luxury goods and look down on the value of secondhand goods.
Counterfeit Luxury Goods
The major threats to the progression of the fashion and luxury industry are the prevalence of counterfeit luxury goods. The absence of transparency and authenticity within the second-hand luxury goods market makes it challenging for the industry to propel forward. The consumers are not willing to trust sellers, through their formal or informal channels due to the fear of being duped. Further, these factors have the potential to negatively impact the demand for pre-owned luxury goods market over the upcoming years.
Major Industry Trends
Increasing Sales of Second Hand Luxury Handbags
Since the sales of second-hand luxury handbags have grown remarkably over the years, further, the market for second-hand luxury fashion has been increasing due to changing consumption patterns and growing demand for new designs and brands. In addition to this, growing brand awareness and discounts on big brands online are considerably supporting the pre-owned luxury goods market.
Online Sales Channel
Increasing sales platforms are boosting the value of second-hand luxury items. It’s a lucrative market where luxury brands such as Channel bags, Rolex watches, and other such products can be found at amazing prices. As a result, it is not surprising to see shopping habits for pre-owned luxury goods moving away from traditional channels to online channels and especially in the emerging countries where there is fluid infrastructure development and sharp consumer price sensitivity. In addition to this, the purchase of a second-hand luxury item from an online sales channel offers value for money. It makes fashion & accessories that are trending, accessible, and affordable.
Digital Media Platform
The digital media has become one of the significant backbones for the marketing and sales of pre-owned luxury goods. Pre-owned luxury goods companies need sales and profits to grow. So, the companies are using digital media platforms such as Facebook, Twitter, Pinterest, Instagram, and other digital media platforms to attract the attention of luxury shoppers on various social media channels.
Opportunity in Pre-owned Luxury Goods Market
- The global pre-owned luxury goods market was held at USD 26 billion in 2019 and is presenting a lucrative growth opportunities for industry players. The pre-owned luxury goods value is expected to reach USD 55 billion in 2025.
- Europe is one of the most attractive region in the global pre-owned luxury goods market, which makes it a strategic center for companies to enter into the regional market.
- North America market for pre-owned luxury goods is expected to increase from USD 7 billion in 2019 to USD 13 billion by 2025, between 2020 and 2025, it represents an incremental value opportunity of USD 6 billion.
Major Industrial Activities
- In October 2018, Fashionphile LLC announced the launch of first east coast store in New York City.
- In July 2018, The RealReal Inc. announced the expansion of its new treasure-filled boutique in Los Angeles
- In June 2018, REBELLE acquired the 2nd Edit. This strategic acquisition helped the company to establish itself as a leader in Danish pre-owned luxury goods market.
- In April 2018, Tradesy announced the acquisition of Fitz.
Product Average Pricing Analysis
Pricing used luxury goods is more complicated than the pricing a new product as the price of a pre-owned luxury good depends on a number of factors. Though purchasing pre-owned goods can be great money-saving tools, but the value of luxury items doesn’t usually fall less than 30 to 40 percent from its original price in the secondary market. However, there were sometimes where discounts went up to 80 percent.
The pricing of a pre-owned luxury good based on a number of factors such as the original cost of the product, brand value, owner's demand, authenticity, product condition, and other factors. A pre-owned luxury bag can cost from hundreds of dollars to thousands of dollars, depending on its core values. The profit margin set by the reseller may vary according to country and time owing to their sales strategy.
Which segments are most attractive in Pre-owned luxury goods market?
- According to KDMI, in the product type segment, watches segment is expected to be the most attractive market in global pre-owned luxury goods market over the forecast period. Further, this segment is projected to open new avenues for the market players and to be the most lucrative market over the forecast period. Footwear and clothing achieved steep sales growth in previous years across most of the regions. Consumers are willing to spend more on branded sneakers in future.
- In the demography segment, men segment is expected to be the most attractive market in global pre-owned luxury goods market over the forecast period. Further, this segment is projected to open new avenues for the market players and to be the most lucrative market over the forecast period. It has been observed that women are the key consumers of luxury goods and even are dominating the pre-owned luxury goods market in major parts of the world.
- In the distribution channel segment, offline stores segment is expected to be the most attractive market in global pre-owned luxury goods market over the forecast period. Further, this segment is projected to open new avenues for the market players and to be the most lucrative market over the forecast period. There has been an increase in number of online stores across the globe that are offering pre-owned luxury goods. The online stores has witnessed huge mass of buyers in recent years.
Middle East offering high growth prospects
Middle East & Africa pre-owned luxury goods market value is expected to reach USD 2.4 billion by the end of 2025 from USD 1.2 billion in 2019. Furthermore, strong consumption of luxury goods in countries such as UAE and Dubai is opening new avenues for pre-owned luxury goods market in this region. Middle East consumers have the highest per capita spending on luxury goods in the world and are open to spend on pre-owned luxury goods due high costs of rents and education, added to the uncertainty in the job market. Pre-owned luxury start-ups are doing great in this region and are expecting a strong market growth in region in upcoming years. Consumers in this region are fond of high-end products and are willing to spend on such luxury items. The availability of luxury goods at great discounted price and easy purchasing methods (online stores and buy in instalment plans) are key factors which are attracting consumers in MEA regions.
According to the GCC statistical center, Saudi Arabia captured around 57.7% of the disposable income in the GCC and is followed by the United Arab Emirates with a percentage of 28.5. Further, with this rising disposable income in the region, the population is shifting towards the pre-owned luxury goods. Also, the consumers across the regions are adopting second-hand luxury goods to improvise and maintain their lifestyle. Moreover, consumers are choosing second-hand goods to cut their expenses on the purchase of luxury items and expensive products. This factor is expected to positively impact the growth of the pre-owned luxury goods market in the upcoming years.