In a cavernous underground store near Shanghai Hongqiao Airport, shoppers browse aisles stacked with some of the world’s biggest luxury brands, including Louis Vuitton, Dior and Gucci.
But in contrast to the glitzy malls downtown, the products here aren’t brand new. “This is a gift item. . . Most of the original packaging remains intact,” one sign reads. “Be yourself and think later,” says another.
The ZZER Store is the brick-and-mortar embodiment of the thriving online second-hand market for luxury goods, at a time when the entire industry is under increasing pressure in what was once a booming market.
Luxury groups including Cartier owner Richemont, Gucci parent Kering and LVMH reported third-quarter sales declines in the Asia-Pacific region outside Japan, which is dominated by China. Richemont CEO Nicolas Bos said the Chinese consumer slump was “probably a medium- to long-term phenomenon”, while Kering warned that its profits could be halved this year.
In China, amid growing concerns about the economy, there are growing concerns about demand for new luxury goods, but there are also signs of strong demand for second-hand goods. In September, luxury goods resale platform Hongbulin was acquired by Zhuanzhuan Group, an online marketplace for second-hand goods.
The market size rose from just RMB 300 billion in 2015 to more than RMB 1 trillion ($138 billion) in 2020, according to a report by consulting firm Frost & Sullivan and Tsinghua University.
Although recent data on the used luxury goods market is lacking, there is a growing number of users of online platforms such as ZZER and Xianyu, which offer users a place to resell luxury goods for a fee.
The ZZER store in Shanghai alone, which opened in 2022, reportedly receives 5,000 new items every day, highlighting the sheer volume of handbags and luxury clothing circulating in the country.
For Xianyu, users commented on aggressive negotiation, suggesting that consumers are becoming more price sensitive.
Jacob Cook, CEO of Beijing-based marketing group WPIC, said that given the economic pressures and travel restrictions that have prevented people from purchasing goods during the COVID-19 pandemic, the There is growing interest in second-hand luxury goods as a highly effective alternative.” abroad.
“Post-pandemic economic pressures remain,” he added.
“People like us, who are close to the middle class and earn more than 10,000 yuan a month, may be reluctant to invest in luxury goods,” said Li, a 28-year-old ZZER shopper. I was visiting Shanghai from Xi’an. “(We may) prefer to save money.”
Mark Tanner, managing director of Shanghai-based marketing agency China Skinny, said that while some price-sensitive buyers like Mr. Li are looking for deals, others are Buyers are looking for high-end products that “will hold their value or appreciate even more,” he said. Mr. Tanner pointed out that Chinese second-hand luxury goods buyers tend to prefer “market luxury goods.”
At ZZER, a bag with the Louis Vuitton label is sold for RMB 4,762 against the original price of RMB 14,300.
A few miles away in Shanghai’s French Concession, there are many shops specializing in used bags. In one of them, a Chanel bag from around 2014 is on sale for RMB 35,800, down from its original price of RMB 41,000.
As well as a distinctly gray luxury market dependent on new products brought in from abroad, some question the authenticity of the products being sold. ZER, which started as an online app, allows sellers to list their products at the price of their choice and has a unique verification process. The company declined to comment.
It was Li’s first time visiting a second-hand goods store, which she discovered on the Chinese social media app Xiaohongshu. “It’s not that you can’t buy luxury goods, but I think the value for money here is very good,” she said. “If a store like that opened in Xi’an, I’d probably go there on my way home from work.”
Lee added: “We didn’t have this kind of business model before the pandemic.”
The second-hand market could “take away demand” for new products and “undermine brand value,” Cook suggested.
But Federica Levato, a partner at Bain who heads the consulting firm’s global luxury and fashion practice, said it’s at least attracting customers who might not have shopped for luxury goods before. “(This) shows that a large portion of the population is willing to buy these products,” she said.
Located in the heart of the Shanghai store, next to Hermès and Chanel brand handbags, one woman said she learned about the store after a friend sold her products there.
One store employee said, gesturing to the T-shirts, that some of the items had “never been worn.” The company declined to comment.
ZZER’s Shanghai store also attracts overseas customers looking for bargains. “There’s nothing like it where we are… nothing on this scale,” said Conor McLarnin, 27, who was visiting Shanghai from Australia.
