Luxury brands’ stiffest competition is the stuff they have already sold

Demand for used luxury is stronger than for new goods at the moment. The RealReal, the world’s biggest online luxury reseller, has grown sales by 10% on average over the past 18 months. Its New York-listed stock is up more than 200% in a year. Business at Fashionphile, a large privately owned reseller, is growing above 10% so far in 2025.

Meanwhile, demand for new luxury goods has been flat on average for six consecutive quarters among top European brands. More than a dozen labels have hired new designers in a push to get shoppers back into stores and spending again.

The world’s most valuable luxury company, LVMH, is making early progress. This past week, the company said that sales rose 1% in the third quarter compared with the same period of last year, sending the stock soaring on hopes of a recovery.

One headwind for these companies: The resale market seems to have switched from being mildly helpful to luxury brands to a more direct competitor. Previously, shoppers used resale websites to clear out unwanted goods, selling their old clothes and using the cash to make new purchases in the primary market. This boosted the sales of luxury brands.

But behavior has changed over the past two years, according to resellers and luxury-market analysts. More people are spending the cash they get from reselling on other secondhand goods, bypassing the primary market altogether. This behavior is more prevalent among young shoppers and puts luxury brands in competition with the billions of dollars of goods already sitting in people’s wardrobes.

Gen Z and millennial consumers are The RealReal’s fastest-growing customers. These two generations have been defecting from the primary market. Gen Z consumers spent 7% less on new luxury goods in 2024 than a year earlier, data from consulting firm Bain shows. Millennials’ spending slipped 2%.

Shoppers still love the major luxury labels, which is positive for the industry. Fashionphile’s list of most-purchased handbags is topped by Louis Vuitton, Chanel and Gucci.

But the high cost of new luxury goods following years of above-average price increases is driving people to resale websites for discounts. A shakier jobs market and economic outlook are also prompting luxury shoppers to spend more cautiously.

“Appetite for these brands and products remains high but willingness to pay current prices is low," says Claudia D’Arpizio, global head of fashion and luxury at Bain.

The market for used luxury goods was worth $56 billion last year, according to estimates from Bain. This is nearly three times as much as a decade ago and equivalent to all of the business that luxury brands did through department stores globally in 2024.

At this scale, resale is starting to influence how people shop. More consumers are consulting prices in the secondhand market before buying new, to see how much money they might be able to claw back from a luxury purchase after a few wears.

Pricing transparency in the secondhand market is double-edged for luxury brands. It should strengthen labels that hold their value, such as Louis Vuitton and Bottega Veneta, whose handbags fetch 89% of their original sticker price on average when resold in very good condition, data from The RealReal shows. Brands that don’t hold their value could become relatively less attractive as shoppers weigh the odds of reselling them.

Luxury brands aren’t likely to jump into the resale business directly any time soon, no matter how fast it is growing. The logistics are messy. Do people cashing in their old handbags line up alongside those buying new? Telling shoppers their goods are only worth a fraction of what they originally paid for them is also a no-no for brands.

But brands are starting to track the secondhand market for clues about which of their old products are catching on again. Resellers’ algorithms, which price goods based on sales velocity, customer search activity and other factors, provide a pure barometer of consumer demand and are quick to show when an item is coming back into fashion.

For instance, the price of used Chloé Paddington handbags jumped to $724 this year on The RealReal, from $217 in 2024. The Chloé brand, owned by Swiss luxury company Richemont, has subsequently reissued the bag in the primary market to cash in on the buzz.

Louis Vuitton and Balenciaga also relaunched old handbag designs this year, partly in reaction to the demand they were seeing in the secondhand market.

Information about what consumers are looking for in the resale market is gold dust for luxury brands trying to figure out what shoppers want to buy now. But they will also need to persuade them to pay full price, rather than going for the relative bargains on resellers’ websites.