Consumer European Luxury: Everything you need to know about the resale market

UBS Evidence Lab surveys show second-hand is taking off in China: what does it mean for the luxury sector? Read inside for our deep-dive into the resale market.

10 Jan 2020

UBS Evidence Lab data show second-hand luxury market is taking off in China

The latest wave of the UBS Evidence Lab luxury consumer survey points to the growing importance of the second-hand luxury market in China: 72% of respondents there have increased their purchases in the online resale market (versus 31% in H2 2018). This is an important development, given the size of the Chinese cluster (33% of the global luxury market) and relative under-penetration of the resale market in China. We believe it is time to take a closer look at the second-hand market, its impact on the luxury goods companies and the lessons investors can learn from it. 

We analyse the benefits it brings to the luxury sector

According to Bain and Altagamma, the size of the global luxury resale market is estimated at €22bn, and we forecast it to grow at a CAGR of 12-15% by 2023E (3x faster than the overall luxury market), driven by consumers’ growing acceptance of the second-hand market. However, the benefits it brings to the luxury industry are still underestimated, in our view. UBS Evidence Lab and other industry sources suggest that the resale market:

  1. keeps consumers in the cycle, and thus fuels purchases in the primary market;
  2. validates the price paid for luxury goods, thus making consumers more likely to buy such items; and
  3. helps to fight the counterfeit market.

What is the impact on the individual luxury goods companies?

Despite its overall positive impact on the sector, the implications of the resale market can vary by brand as well as by product category, and may require some companies to adjust their strategies. We see soft luxury players (clothes, shoes and bags)  as the biggest beneficiaries of consumer spending "recycled" from the resale market. We think watchmakers and aspirational luxury names (premium brands) could be at greatest threat from the rise of the second-hand market and its cannibalisation of sales in the primary market.

UBS Evidence Lab: Differentiated data informs our forecasts and views

Our analysis of the market and its long-term implications for the luxury sector are supported by:

(1) our top-down view of consumers’ attitudes towards the second-hand market, powered by the latest wave of UBS Evidence Lab luxury consumer surveys;

(2) our bespoke analysis of the resale values of individual luxury brands;

(3) UBS Evidence Lab US Premium Handbag Merchandise Planning data, and

(4) latest industry data points (Swiss watch exports, KOF data, Planet tax-free shopping data).

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