Today’s high-end consumers seem to be going through a phase: consumption drivers are being upended, and the very notion of luxury is progressively morphing. Rather than revolving around exclusivity, their focus is now the unique. To be an object of desire, a hefty price tag that only a few can afford is not enough – instead that object must truly be one of a kind. And this is possible thanks to personalization tailored to specific customer preferences, which in turn is fueling the growing phenomenon of product customization in the luxury world.
A product can be truly unique when it has an unusual story to tell, a “life experience” that distinguishes it from any possible replica. This then is the fertile ground where vintage products can flourish, further enabled by the development of digital platforms. These items, also called second-hand or pre-loved, will account for 10% to 20% of the total luxury market by 2030, according to a recent report by BCG-Altagamma. And many brands in this market are starting to sit up pay attention to this trend. Case in point: Richemont’s acquisition of Watchfinder, an online platform to search and buy second-hand watches. Another example: Kering’s 5% acquisition in the second-hand platform Vestiaire Collective (valued at over one billion dollars). Kering’s Chief Client and Digital Officer is Grégory Boutté, and he has this to say: “Our innovation strategy aims to invest in brands and technologies for the next generation of consumers, focusing on breakthrough business models that will better serve our customers and improve our performances. Our investment in Vestiaire Collective makes perfect sense in both respects.”
And in fact, as far as the younger generations of luxury clients, first among them Millennials and Gen Zs, we expect them to drive both the vintage and the rental markets. This would actually consolidate the shift in consumption orientation from owning to using goods, so consumers can re-channel resources from buying exclusive objects to enjoying unique experiences.
In a context where consumers are getting more and more used to the philosophy of pay-per-use, the world of luxury too is discovering new approaches to consumption and seeing new business models emerge. To earn or convey a certain status, people no longer need to possess an object; they simply need to be able to get it when they want it. In the wake of this new demand, luxury rental platforms are proliferating, and digital products will probably reinforce this trend in the sphere of social networks.
So the “everything as a service” business model has even infiltrated the luxury market. And access-based consumption has various interesting facets. First, it allows a broader audience to get acquainted with luxury brands, to try them out, albeit for a limited time only. The effect is that customers are gradually being educated on luxury goods; this could play a major role in building loyalty in the long run. Second, the pay-per-use option in luxury goes hand in hand with another essential development path in the industry: sustainability. Opting to rent a luxury item appears to be the preferred choice especially of younger targets, not only because renting allows them to spend their money on other experiences, but also because it helps reduce the carbon footprint of one of the industries that by now is notorious for its dramatic contribution to global pollution. This awareness makes temporary consumption an even more attractive option in the eyes of people who are keenly aware of environmental issues. The broader impact is an amplification of this behavior, as young people share their choices in their online communities rather than trying to hide the fact that their fashion is coming second hand.
In the world of luxury, rentals do not tarnish the perceived status of consumers, in particular if they already own similarly-positioned products. Instead, rentals simply represent an intelligent choice to responsibly spice up your wardrobe. A trend that will likely also be driven by digital, as many brands are starting to do, as they make virtual versions of their real products available to their customers.
