Is your wardrobe an untapped asset?

I have, by and large, always bought clothes for personal and pragmatic reasons: namely, to clothe myself in garments I feel at ease in, and that look more or less appropriate for the various demands of work and life. This, apparently, is an old-fashioned way of thinking.

“There has been a shift towards thinking of fashion pieces as assets,” says Stephanie Crespin. She is the founder and chief executive of Reflaunt, a back-end technology start-up that enables companies such as Net-a-Porter, Balenciaga and H&M-owned Cos to collect past purchases from customers and sell them through multiple second-hand marketplaces, which customers can exchange for cash or store credit. It was shortlisted for LVMH’s La Maison des Startups and counts Balenciaga chief executive Cédric Charbit among its investors.

Her business’s goals are threefold: to help customers easily monetise their no-longer-worn wares, which can be put towards new purchases — or what she describes as “bringing liquidity to assets”; to enable brands to deepen loyalty with their customers by expanding their range of services; and to keep pieces circulating through consumers’ closets and therefore out of landfills.

Hard luxury drives the retail market because watches and jewellery tend to retain, or even increase, their value. But historically clothing has been a poor investment, losing about 90 per cent of its value at the point of purchase. But a boom in online retail, changing attitudes towards pre-owned, and a lucrative trade in rare product “drops” have given rise to vast online marketplaces for second-hand goods. That includes San Francisco-based The RealReal, a luxury consignment site that went public in 2019 and has a market cap of $650mn; Detroit-headquartered sneaker and streetwear peer-to-peer marketplace StockX, which was valued at $3.8bn last year; and Paris-based Vestiaire Collective, a peer-to-peer marketplace for general luxury goods that in 2021 achieved a valuation of $1.7bn.

These businesses are facilitating fast growth in the secondary market. California-based consignment website ThredUp estimates that resale volumes will more than double from $36bn in 2021 to $77bn by 2025.

Luxury brands have historically had little to do with resale platforms, except to sue them. Ebay has been hit with a number of counterfeit lawsuits over the years, and Chanel sued The RealReal in 2018 for allegedly selling counterfeit bags (The RealReal denied the allegations). But as the second-hand market gains traction — particularly among Gen Z and Millennials — brands are beginning to dip their toes in. Kering took a 5 per cent stake in Vestiaire Collective last year, weeks after its brand Alexander McQueen partnered with the platform to encourage its best customers to list their old McQueen dresses and bags on the site; Burberry and Stella McCartney have both partnered with The RealReal on similar programmes.

Some brands are going further, launching their own peer-to-peer marketplaces or, in the case of Mulberry and LVMH Prize-winning label Marques’Almeida, selling pre-owned pieces bought back from customers on their websites right alongside their newest wares. It eases much of the friction traditionally associated with reselling — taking photographs, putting together a listing — but generally at a considerable cost to the brand.

“At the moment, [resale] costs us,” says Marques’Almeida co-founder Marta Marques. “Maybe in the future it won’t. It’s more something we feel we need to do. We have to take responsibility.”

Last week, Copenhagen-based label Ganni launched its own second-hand marketplace with Reflaunt, where visitors can buy pre-worn pieces from other customers’ closets in the UK and Scandinavia and arrange to list their own. While the product photography is far from glamorous, consisting mainly of cut-outs of pieces on hangers or stretched on the floor, there are bargains to be had: dresses are generally priced under £75, a fraction of the £200-£300 they would have cost new. Sellers can exchange their earnings for cash or a Ganni gift card worth 20 per cent more.

Ganni co-founder Nicolaj Reffstrup, who invested in Reflaunt last year, says the label was mainly motivated by sustainability concerns. “If you are serious about reducing your carbon footprint, you need to reduce the afterlife of [your products],” he says. “Seventy per cent of clothes end up in landfills, but if you take a garment and another person wears it for another nine months, then you see a [significant] carbon reduction compared to buying a new one. Also our younger customers are recommercing already.”

But can it be a profitable business? “Responsibility is a cost for us so far,” Reffstrup says. But he believes it can be viable, by persuading customers to cash in for store credit and ultimately spend more with the brand. The company has committed to generating 5 per cent of revenues from “circular” models such as resale and rental by 2026, he adds.

Which begs the question: is resale really that sustainable? Analysts note that second-hand sales do not reduce the purchasing of new products, as most buyers are motivated by bargains rather than carbon footprint concerns, and because sellers tend to redirect their earnings towards purchasing new items. Reflaunt’s Crespin notes that most resellers tend to opt for store credit rather than cash on its service.

Better, then, to think of the rise of second-hand marketplaces in Crespin’s terms — bringing liquidity to assets. Yes, it enables the purchasing of yet more stuff, but it is also poised to persuade consumers to stop thinking of fashion as disposable. And that is a very good thing.

Email Lauren at [email protected]

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