Indian consumers are wary of buying second-hand luxury items; Generation Z more open to ideas
The luxury industry has been infamous for its wastefulness and extravagance since ancient times. It is encouraging to see that there is a rapid change in the global luxury landscape which has stipulated that luxury brands are turning to more sustainable models. Clearly, this industry is no longer immune to the growing chatter around green consumption and under the close scrutiny of “sustainability experts”. Fortunately, new consumer models that are inherently sustainable are gaining momentum and being embraced by younger generations. One of these forms is second-hand luxury.
Charm of “second-hand” luxury
The fascination with occasion, also called second hand Where pre-loved luxury, is reflected in a booming market pegged at $37.2 billion by Bain and Company, 2021. This is a jump of 65% from 2017. This relentless growth is shared by luxury brands. luxury, consumers and investors. Luxury conglomerates like Moët Hennessy Louis Vuitton (LVMH) and Kering are reconsidering their stance towards this previously shunned channel by signaling their interest and formulating broader retail strategies. A few independent luxury houses like Prada are also in the running by establishing resale as a business model. Therefore, luxury resale establishes a culture of circularity and offers brands the opportunity to signal a promise of sustainability.
Along with brands, luxury consumers are also demonstrating a paradigmatic shift in attitude by embracing second-hand luxury. A 2019 Boston Consulting Group survey found that more than half of “true luxury” consumers tend to buy from resellers, and 45% are willing to sell on these platforms. More importantly, the younger generation is becoming more participatory and mainstream as they want to express their identity with “people like me”.
Indulging in second-hand luxury is certainly also lucrative for investors, and their numbers are on the rise. They are optimistic about the demand drivers for the resale of luxury goods. They’re also optimistic about luxury conglomerates and brands walking around embracing this channel.
Gen Z eccentricity
Experience-seeking, digital-native and eco-conscious – these three traits aptly define the most influential generation of luxury consumers – Generation Z (Gen Z) or iGeneration. This set of consumers are on the cusp of adulthood, have distinct characteristics, and seek distinctive experiences compared to any of their older counterparts such as Millennials and Gen Xers. it’s no secret that these consumers are now at the heart of every luxury brand’s strategy, and they spare no effort to communicate the values that these consumers seek.
Generation Z shares many traits with Generation Y; however, confusing the two generations in terms of luxury consumption habits might not be rewarding for brands. Gen Z isn’t just a younger version of Millennials, rather it demands hyper-personalization, curated offerings, and unparalleled experiences. And these experiences are no longer limited to physical stores, but have shifted to brands’ online presence. These consumers hardly distinguish between online and offline, rather they are looking for seamless “omnichannel” encounters. Thus, they have certainly transformed the luxury industry by asking questions about ethical transparency, production traceability and environmental sustainability.
India stands out from its western cousins
Second-hand luxury is a well-established phenomenon in Europe and the United States. Consumers are embracing buying from second-hand retailers, both online and offline, which has given this sector a dramatic boost. A Vogue Business report highlights that 69% of luxury consumers in the United States have turned to second-hand luxury during the pandemic. Interestingly, 45% of them make a purchase at least once a month.
Eastern consumers, however, have yet to experience this market and have indulged in second-hand luxury as a lifestyle. Indian consumers, in particular, are reluctant to adopt this scheme mainly because the notion of second-hand is stigmatized, and they care a little too much about their status in the social strata. Even the few active second-hand luxury buyers like to keep their purchases low-key. But would this behavior change as Gen Z overtakes the luxury market? The answer is yes, and here’s why:
Younger generation more receptive
The younger generation of consumers is much more receptive to this idea, and with their purchasing power on the rise, they are ready to discover luxury through alternative modes of consumption. A psychological shift towards destigmatizing the second hand and its perceived readiness is visible, allowing them to signal their identity and social status.
Rise of the “aspirational” middle class
The democratization of luxury paved the way for ambitious middle-class consumers to dream and yearn for the finer things in life. In emerging economies, these consumers engage in luxury to signal their status in their broader reference communities. Pre-owned models offer these consumers better and affordable access to luxury and offer them an opportunity to dissociate themselves from the middle class.
Variety is the spice of life
Gen Z consumers are looking for experiences and want to get their hands on as many unique products as possible to keep their wardrobe fresh. In addition to saving money and contributing to a noble and socially accepted model by being eco-responsible, second-hand luxury meets their need for novelty without compromising the future of our planet. In fact, a recent McKinsey study points out that Gen Z is environmentally conscious as long as they don’t have to pay extra for sustainability. Second-hand luxury bridges that gap between attitude and behavior.
So these ambitious, value-conscious young shoppers not only make a smart choice to buy from resellers, but also send a meaningful message about sustainability while reducing the burden on their wallets.
(Chakraborti, the author is Dean of the School of Engineering and Technology and Dean of Research at BML Munjal University. and Rathi, PhD Scholar, BMU.)
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Posted: Saturday, February 26, 2022, 12:16 PM IST