As luxury sales dip, brands should find a way to monetise resale channels without impacting brand value, according to a study. A new cross-party congressional group in the US hopes to boost the sector, too. 

The luxury market appears to be in flux. In a sector that showed resilience even through the pandemic, and which tends to grow at above inflation rates, recent declines reported at the big brands shows that it is not immune to macroeconomics. LVMH Group, which owns brands including Christian Dior and Fendi, reported a 9% fall in first-half revenues in its fashion and leathergoods division to €19 billion. Similarly, Kering reported a 16% dip in first-half revenues to €7.6 billion. Its biggest brand, Gucci, contributed €3 billion to the total, but this figure represents a decline of 26% year on year. Leathergoods-focused Bottega Veneta provided most solace to Kering, with revenues declining ‘only’ 1% to €846 million.

Before these results, in April, consultancy Bain & Company, in partnership with the Italian luxury goods industry association Altagamma, published a report suggesting the global luxury sector was facing its “most far-reaching disruptions” for at least 15 years and that the €1.5 trillion revenue industry faces its first slowdown since the global financial crisis of 2008-09 (excluding the temporary effect of the Covid-19 pandemic). Luxury confidence has been eroded by economic upheavals, geopolitical and trade tensions, currency fluctuations and financial market volatility. As well as these factors, Bain claims there is growing disillusionment among younger generations, notably Generation Z, who are seeking creativity, excitement and emotional re-engagement. Millennials, too, are being more cautious due to financial pressures.

Capitalising on resale

One of the ways luxury brands could offset declining revenues would be to take more control of resale channels, it has been suggested. A survey by Mastercard found that in 2024, about 27% of online spending on luxury clothing was at fashion resellers. However, most of these sales take place on third-party platforms. Luxury brands are keen to not damage their reputation in a sector so image-driven, so taking control of these platforms can be tricky – why would consumers then pay full price? – but it is a balance they should seek to strike, says Bain.

UK-based online retailer Karen Millen has launched a preloved luxury channel, where second-hand bags are selling for not much less than they would full price. A quilted leather Chanel bag that costs £5,664 new is selling for £4,634 – only an 18% discount. Similarly, a Hermes bag is on sale for £5,759 when it was only 11% more – £6,500 – new. These prices suggest handbags – particularly leather ones with their innate durability – can hold their value time and again, also meaning there could be repeated profits to be made from single items, with the bonus that a reseller does not have to pay for the original manufacture, logistics, retail and marketing.

In the US, a congressional caucus (members that meet to pursue common legislative objectives) has been launched to boost the second-hand market. Democrat Sydney Kamlager-Dove and Republican Nicole Malliotakis have jointly set up the Recommerce Caucus to champion small businesses and expand digital access. "Recommerce is more than a trend, it’s a growing economic engine that provides consumers with affordable, high-quality goods and gives entrepreneurs, small businesses and resellers access to trusted, thriving marketplaces,” says Kamlager-Dove. She aims to reduce sales tax on second-hand items and provide tax credits for companies adopting circular business models. Not surprisingly, the caucus has been endorsed by eBay, Etsy, Mercari, OfferUp, Pinterest and Poshmark.

The group will also advocate for policies that help individuals and small businesses earn income through resale, repair and refurbishment on digital platforms, and support initiatives that extend product lifecycles, cut down on landfill waste and encourage environmentally responsible commerce. Rachel Kibbe, CEO of American Circular Textiles, comments, “For too long, resale, repair and reuse have  been sidelined in policy conversations, despite their critical role in reducing waste, creating jobs and giving everyday Americans the chance to participate in the circular economy. This caucus reflects a long-overdue recognition of the entrepreneurial power and environmental impact of recommerce.”

Decarbonisation bonus

Boosting resale channels could also help to ‘decarbonise’ the fashion industry, something artificial intelligence (AI) and similar tools could help to navigate. Luxury’s high gross margins mean that brands tend to overlook overproduction. However, unsold inventory not only erodes margins but also carry environmental costs that are increasingly under regulatory scrutiny, particularly in Europe. Therefore, cutting overproduction and scaling resale will be important to focus on, suggests Bain. Its latest report says AI-powered sales forecasting is already in use or being tested by 60% of fashion brands, enabling more accurate predictions of consumer demand across styles, sizes and geographies. In parallel, around half of brands are using AI to allocate stock more precisely. Technology is also enabling new production models, where brands are piloting made-to-order and made-to-measure approaches that reduce waste by producing only what is needed. “Second-hand is fundamental to reaching the Science-Based Targets Initiative’s near-term targets, and digital product passport (DPP) is a critical element to remove friction and cost to the overall channel,” says Matteo Capellini, a partner at Bain. “Done right, resale can shift from margin drain to margin growth, and become a credible and scalable decarbonisation tool.”

Despite short-term volatility for the luxury industry at present, its long-term prospects remain strong, Bain concludes. Over the next five years, more than 300 million new consumers – over half of these in Generation Z or Generation Alpha – are expected to enter the market. Rising global incomes, generational wealth transfers and a projected 20% increase in the number of high-net-worth individuals will increase the pool of potential buyers.

Despite the falling first half revenues reported, there was ample local demand for LVMH’s fashion and leathergoods, and the sector maintained its very high operating margin. “Beyond the prevailing uncertainties, we remain focused, thanks to the long-term vision that has always guided our family group,” says group CEO Bernard Arnault. “We head into the second half of the year with great vigilance, and I am confident in LVMH’s tremendous long-term potential and the commitment of our teams. Our main shared priority is about offering our customers the most exceptional products.”

The big luxury brands need to refocus on the fundamentals of the luxury business, having clear and differentiated brand identities and high product quality, concludes Bain. Increased technology – especially the use of AI – supply chain modernisation and more sophisticated pricing analytics will be essential. “As the industry faces an increasingly complex global landscape, luxury brands are entering a pivotal new chapter – one that demands sharper focus, greater cultural relevance and growth rooted in purpose,” says Federica Levato, Bain’s head of fashion and luxury in Europe. “At the heart of this transformation is a redefinition of value and meaning that resonates across all generations – with those shaping luxury today, and those who will define it tomorrow.”

This summer, US-based reseller Rebag collaborated with Luxury Stores at Amazon to offer 30,000 pre-loved luxury items, including brands such as Hermès, Louis Vuitton and Rolex. 
Credit: Rebag

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