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High prices for luxury handbags, jewelry and other fashion products are fueling the growth of secondhand markets for the same products. Used luxury product sales were higher by 65 percent in 2021 compared to 2017 while new luxury product sales rose only 12 percent. Industry analysts expect that secondhand luxury product sales will increase annually by 15 percent over the next five years, double the rate for new luxury product sales. The WSJ article explains that the popularity of used luxury goods "...is surging. Steep price hikes by prestigious brands like Chanel SA are driving some luxury buyers to look for less expensive used items."

The booming market for secondhand luxury items is creating a dilemma for makers of high-end handbags, fashion and jewelry: Joining the trend, or ignoring it. Gucci maker Kering, Burberry Group PLC and Stella McCartney have started participating in the secondhand market. In some cases, they have offered to buy back new items from customers and resell the goods themselves, or route them to other online secondhand fashion sites, which often give the brands a cut of any sales. For other luxury brands, the trend threatens to cannibalize sales of new products or weighs on their pricing power. Luxury-industry standard bearers such as Herms International, Louis Vuitton SE, and Chanel have said they are not interested in reselling their products.

DISCUSSION QUESTIONS:

1. Explain how the secondhand market for luxury goods actually works. [Hint: visit The RealReal and Vestiaire to gain insight into the secondhand luxury market and then critically evaluate the market from a consumer perspective, brand's perspective, and entrepreneurial resale perspective.] Why are some luxury brands choosing to participate in the secondhand market? Which luxury brands are pushing back against secondhand sales? How and why?

2. Discuss how consumer sentiment towards secondhand luxury products has changed in recent years and the reason(s) behind it.

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Question

M

How to answer this discussion question:

High prices for luxury handbags, jewelry and other fashion products are fueling the growth of secondhand markets for the same products. Used luxury product sales were higher by 65 percent in 2021 compared to 2017 while new luxury product sales rose only 12 percent. Industry analysts expect that secondhand luxury product sales will increase annually by 15 percent over the next five years, double the rate for new luxury product sales. The WSJ article explains that the popularity of used luxury goods "...is surging. Steep price hikes by prestigious brands like Chanel SA are driving some luxury buyers to look for less expensive used items."

The booming market for secondhand luxury items is creating a dilemma for makers of high-end handbags, fashion and jewelry: Joining the trend, or ignoring it. Gucci maker Kering, Burberry Group PLC and Stella McCartney have started participating in the secondhand market. In some cases, they have offered to buy back new items from customers and resell the goods themselves, or route them to other online secondhand fashion sites, which often give the brands a cut of any sales. For other luxury brands, the trend threatens to cannibalize sales of new products or weighs on their pricing power. Luxury-industry standard bearers such as Herms International, Louis Vuitton SE, and Chanel have said they are not interested in reselling their products.

DISCUSSION QUESTIONS:

1. Explain how the secondhand market for luxury goods actually works. [Hint: visit The RealReal and Vestiaire to gain insight into the secondhand luxury market and then critically evaluate the market from a consumer perspective, brand's perspective, and entrepreneurial resale perspective.] Why are some luxury brands choosing to participate in the secondhand market? Which luxury brands are pushing back against secondhand sales? How and why?

2. Discuss how consumer sentiment towards secondhand luxury products has changed in recent years and the reason(s) behind it.

texted answers only no photos