Are secondhand sales the right branding move for Neiman Marcus?
Neiman Marcus last week announced it had acquired a minority stake in Fashionphile, becoming the first luxury retailer to invest in the fast-growing reseller market.
Founded in 1999, with sales projected to reach $200 million this year, Fashionphile resells luxury handbags, jewelry and other accessories with an online inventory of 15,000 items. It operates showrooms in Beverly Hills, San Francisco, Carlsbad and New York City. Competitors include The RealReal, Vestiaire Collective and Rebag.
For sellers using Fashionphile, the retailer stands out for its direct buyout model. Most resellers are either consignment or peer-to-peer platforms, whereby sellers wait until their item is purchased by a consumer before receiving payment.
As part of the partnership, Neiman will designate five to seven Neiman locations as drop-off spots this fall. Sellers will receive an immediate quote for their items from Fashionphile as well as immediate payment they can use to make purchases at Neiman Marcus.
An annual report from ThredUP in March showed the resale market has grown 21 times faster than the retail apparel market over the past three years. Annual revenues are projected to reach $51 billion by 2023, up from $24 billion currently, driven by Millennials and Gen Z who prioritize sustainability and clean fashion.
Neiman Marcus noted that over half of its customers already engage in pre-owned luxury and “limited overlap” between Neiman’s core customer and those who buy secondhand.
“There is a customer who enters the luxury market through re-commerce who one day will graduate into buying products of the season,” Neiman Marcus’ CEO Geoffroy van Raemdonck told Fortune. “We see a recruitment vehicle of the younger customers.”
The investment follows H&M’s announcement the prior week of an e-commerce trial of secondhand sales at its & Other Stories banner.
One concern is that reselling may dilute the aspirational branding of a luxury label. Last November, Chanel sued RealReal for selling counterfeit handbags. RealReal responded by calling Chanel’s claims “anti-consumer” and “anti-competitive” while charging Chanel only wanted to “undermine consumer confidence in the secondary market.”
- Neiman Marcus Group Becomes First Luxury Retailer To Invest In Pre-Owned Market Company Announces Exclusive Partnership With Fashionphile As A Significant Step In Its Transformation Plan – Neiman Marcus
- What Neiman Marcus’ Latest Investment Means for the Resale Market – Business Of Fashion
- Neiman Marcus Dips Toes into Secondhand Luxury Market – Fortune
- & Other Stories Explores Pre-Loved Project With Sellpy H&M – H&M
- The RealReal calls Chanel lawsuit “anti-consumer” – Fashion United
- Secondhand Market Will Reach $51B In 5 Years – ThredUP
DISCUSSION QUESTIONS: Does it make sense for Neiman Marcus to get into secondhand selling? Do the potential benefits of its partnership with Fashionphile outweigh any risks to its traditional business?