Consumers, investors, and other key stakeholders of fashion retail are at a juncture where they seem to be conducting a rather brutal intervention of the entire industry. Sustainability, purpose, ethics, and overall operations are being questioned as the detrimental practices of the industry, which has been promoting increased consumption, has been coming to the fore. In the wake of this movement towards conscious consumerism, many alternative business models are taking shape and succeeding, one of which is the pre-loved fashion market.
Now estimated to be a multi-billion-dollar arm of the fashion industry, the secondhand luxury market witnessed a huge surge of 18 per cent from $36.1 billion in 2020 to $37.3 billion last year, according to Statista. It’s expected to increase twofold by 2026 to an estimated global value of $77 billion. With dedicated sites for pre-loved goods rising, it’s a big market continuing to champion sustainable ways of shopping.
Founded in Dubai in 2012 by Kunal Kapoor, The Luxury Closet is an online store that sells pre-owned fashion items. Born into an entrepreneurial family, Kunal worked for French luxury brand Louis Vuitton before starting the The Luxury Closet. “All disruptive ideas come from sparkling trends. The core idea was to solve the sustainability issue and the democratising of luxury,” said CEO and Founder of The Luxury Closet, Kunal Kapoor.
An Industry overview
The Middle East closet has a very high value with the highest per capita spend on luxury in the world. The buyers here are collectors and they’re finding the best of items from the world over. Put that into numbers and the Middle East residents of the UAE, Saudi Arabia and Kuwait buy $1 billion dollars of items from Western Europe. “When we showcase these amazing closets, they’re wanted all over the world and this makes us one of the few Middle East businesses that was global from day one. A Chanel bag is a Chanel bag anywhere you go,” added Kunal.
However, resale of luxury items isn’t yet mainstream in the Middle East. It is a more common trend in the US, Japan and Western Europe. Kunal elaborated, “There is an adoption curve of green energy, you will see some countries leading it and some countries lagging behind. Japan has been leading for the last 20 years, followed by the US. I would say it will take another 5-7 years for the Middle East to catch up.”
The sustainability movement
Consumer patterns are shifting towards a more conscious and sustainable approach to fashion. Pre-owned items drive the fashion movement while offering buyers access to real luxury, which has previously been unreachable for certain customers due to price or availability in their regions. “Re-sale is the future of shopping. We expect one in six transactions to be pre-owned by the end of the decade. This marks a paradigm shift in consumer choice and the value chain of the fashion and retail industry. What we are excited about most is leading the industry to a more sustainable and environmentally friendly future,” he said.
“I really think it is the right thing to do for the consumers to not buy new products continuously but buy pre-owned ones. People can exchange things, they can re-sell them, but not discard them. The next organic step is that the share of the pre-owned market will go up, but it will all become circular and the brands will become part of this. Look at the car industry – they manufacture a car knowing it will have multiple owners. The brands design the car around that, knowing that the warranty will need to be transferred and people will buy it and resell it. In fashion, the brands will become the major contributors and enable the pre-owned and circular economy,” he added.
The Circular Economy Action Plan
As announced in the Circular Economy Action Plan, the EU Commission recently proposed new rules to make almost all physical goods on the EU market more friendly to the environment, circular, and energy efficient throughout its whole lifecycle from the design phase through to daily use, repurposing and end-of-life. The Commission also presented a new strategy to make textiles more durable, repairable, reusable and recyclable, to tackle the demons of fast fashion, textile waste and the destruction of unsold textiles, and ensure the production takes place with full respect given to social rights. “It just so happened that we stumbled upon something that has really become something of a trend now. With early signs of regulation coming in, industry players are going to be forced to become a lot more sustainable.”
The EU Strategy for Sustainable and Circular Textiles and the revision of the Construction Products Regulation will mainly address two priority product groups with significant impacts – sustainable and circular textiles. “This sets out the vision and concrete actions to ensure that by 2030 textile products placed on the EU market are long-lived and recyclable, made of recycled fibres, free of hazardous substances and produced in respect of social rights and the environment.”
The European Commission also considered the Digital Product Passport (DPP) as a tool to provide digital information and data about a product, accessible through a physical identifier. The Policy Hub – Circularity for Apparel & Footwear is a strong supporter of digitisation and the use of digital technologies to communicate product information. Digital communication vehicles (for instance QR codes, Data Matrix) would provide better ways to share easily accessible, up-to-date, comparable, trustworthy, and easy-to-correct information.
“From an environmental perspective, electronic labelling would avoid creating extra waste in the form of larger labels and hangtags to accommodate the required information and its translations in a given minimum font/format. The EU is already announcing digital passports for all the luxury items – so imagine the day that everything you buy comes with a passport and has the entire lifestyle tracked through an app or a QR code.” He said. “It’s time to end the model of ‘take, make, break, and throw away’, which is so harmful to our planet, our health and our economy. Consumers rightly expect more environment-friendly and longer-lasting products. More sustainability and resource efficiency also means more resilience when a crisis disrupts our industrial supply chains. So that’s where we are heading,” he stated.
The Luxury Closet isalready on a robust global growth trajectory, with the company set to magnify its presence in markets outside the UAE and execute on a clear strategy to be a leader within the international high-end luxury resale market. “We are a venture backed company and have raised about $30 million until date. For a Middle Eastern company, it is a very good amount. I see the company being able to unlock the most exclusive closets in the world. Now the vision is to take the company more global – the US, Western Europe and South Africa,” he said.
From Niche To Necessity
The more informed, aware, and educated customers of today have been doing the fashion math and calculating cost-per-wear, only to recognize what items in their wardrobe have earned their keep and what is really worth investing in. “Pre-loved is already mainstream and becoming part of every woman’s wardrobe. Around 40% of people are now buying second-hand luxury goods. Our ability, as a brand to sustain and engage positively with our customers is vital in communicating and reinforcing the aura of craftsmanship, durability and sustainability behind every single product we are curating,” said Sabrina Sadiq – founder of Luxury Promise.
First launched in 2016 by Sabrina Sadiq, Luxury Promise is a leading London-based resale platform where people can buy, sell and swap luxury goods. Having seen over 450 per cent growth in sales in the last two years alone, Luxury Promise recently raised approximately $10.9 million from an array of strategic investors and leading figures in the luxury industry including former Jimmy Choo CEO, Pierre Denis, former CEO of De Beers Jewelers and executive at LVMH, Pierre Denis and more. Taking the platform to the next level, Luxury Promise has become one of the first to introduce artificial intelligence into its app.
“As an organisation promoting sustainability, we make sure to address our customer challenges and concerns from the best of our abilities, while finding unique ways to add value to our shopping experiences. By buying second-hand, we allow customers to extend the lifecycle of the products, while giving them the opportunity to get their hands on rare and unique pieces, that were made over ten, twenty years ago, which are no longer produced,” she added.
This movement towards sustainability and conscious consumerism goes beyond fashion or food and has become a lifestyle choice for people. Also, part of what really attracts buyers is the opportunity to access rare and exclusive pieces they will not find easily anywhere. “This shift has been accelerated by the “generational headwind”, the younger Generation Z and Millennial buyers. They have embraced newer forms of investment such as crypto and NFTs and are now looking for limited editions, vintage and investment pieces. Moreover Luxury Promise is using technology to provide its customers with a more environmentally-friendly and convenient way to shop via entertaining, fun and educational live shows, in case they don’t get to visit any of our physical stores.
Customers embracing the new change
The sustainable luxury concept promoting environment and social responsibility, is now well-received and embraced by customers. Nowadays, most people are accustomed to concepts such as ethical, circular, slow and conscious fashion. In that regard, companies cannot ignore this anymore and should follow customer needs. “It is also is a powerful way for brands and e-commerce platforms, to show their commitment to sustainability, while being part of a new distribution channel that’s gaining shares within the larger luxury ecosystem. At Luxury Promise, sustainability is at the heart of everything we do, from partnering with Hydrate in order to provide clean water in underserved countries, to reducing carbon footprint through tree-planting in partnership we Ecologi, and making sure all our packaging are sustainable and recycled. We stand behind our values and we deliver on them. It is obvious, the pre-owned luxury market is no passing fad, it is here to stay and presents real and lasting opportunities. Any brands or companies not participating will be missing out,” concluded Sabrina.
Consumers, investors, and other key stakeholders of fashion retail are at aMay 11, 2022 | By Zubina Ahmed
The eight edition of the Retail Leaders Circle MENA, convened more thatMay 5, 2022 | By Zubina Ahmed
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