Where is China’s secondhand luxury market headed in 2024?

The global market for pre-owned watches and handbags could be in for a reshuffling as some consumers pour cash into the space while others — even previously active buyers — hold back. The central question this year is whether demand in the secondhand luxury niche will bounce back as consumers seek lasting value in economically challenging times or further diminish as potential buyers are simply priced out. Last November, the "Handbags Online: The Paris Edit" auction at Christie's served as a barometer for the broader secondhand handbag market. Consumer interest in pre-owned Gucci, in particular, showed a softening, with two Bamboo bags failing to meet their low pre-sale estimates and a third barely reaching its minimum. In the end, the most expensive Gucci handbag was a black leather Bamboo with a yellow gold handle and a diamond-studded clasp that ultimately sold for €138,600 ($150,423), failing to reach its minimum pre-sale estimate of €150,000. At that same auction, buyer demand for normally highly sought-after Hermès Birkins, too, was relatively muted, with a rare 2015 matte white Niloticus crocodile Himalaya Birkin 30 featuring palladium hardware selling for €126,000, falling in the center of its pre-sale estimate of €100,000–150,000. A rare matte white crocodile Retourné Kelly 28 sold for €119,700, just above its pre-sale low estimate of €100,000. Whether this auction ultimately proves to be an isolated case or a bellwether of a more impactful market shift remains to be seen. Yet, there are signs that a cooling of interest in secondhand luxury goods at the top level could gain pace in 2024, owing to a recalibration in the secondhand luxury watch market after a red-hot streak over the past three years. Prices have retreated to a near two-year low, eroding the gains of the pandemic era, which saw brands like Rolex, Patek Philippe, and Audemars Piguet achieve unprecedented highs. From March 2022 to August 2023, the average price for a pre-owned luxury watch decreased by 31 percent, suggesting a market realignment after a period of intense demand. Despite these trends, the 2023 auction scene for luxury watches has shown resilience in certain brands and models, indicating a market that is more nuanced than a simple downturn. Concurrently, the concept of the "investment handbag" has evolved from high-quality, timeless pieces to handbags as investment assets. Since the publication of an influential 2016 Baghunter study that found the returns on Hermès Birkin bags outpace traditional investments like the S&P 500 and gold, Jefferies analysts have noted significant returns on certain Hermès handbags in the secondary market. However, the relatively cool reaction to Hermès handbags at the recent Christie's auction — which still sold above low estimates, if not high estimates — indicates there is potential for consumer perceptions to gradually shift, leaving secondhand luxury sellers and investors vulnerable. This is particularly important in the crucial China market, which has seen a steady rise in interest in pre-owned luxury goods over the past decade. While analysts suggest China's secondhand luxury market could already be worth more than 3 trillion RMB ($420 billion), driven by middle-class and younger consumers, the luxury watch and handbag segment could plateau in 2024 as these consumers hold back amid increasing economic concerns. The mystery for 2024 is whether the trajectory of China's secondhand luxury market follows or diverges from that of broader global trends. Recent data from The RealReal indicates a shift in consumer behavior, with demand for higher-priced luxury brands at resale decreasing, leading to a reduction in prices for brands like Chanel, Gucci, and Louis Vuitton. This trend is accompanied by an increased interest in previously owned, lower-priced luxury brands such as Miu Miu and Bottega Veneta. Millennials and Gen Z, core shoppers of secondhand merchandise, are gravitating towards more affordable contemporary brands, reflecting a broader trend of seeking value and sustainability. Millennials and Gen Z, core shoppers of secondhand merchandise, are gravitating towards more affordable contemporary brands, reflecting a broader trend of seeking value and sustainability. Greater demand for value could be the hinge that means success or failure in China's secondhand watch and handbag market going forward. However, concerns about China's real estate market, rising unemployment, and general economic malaise among younger consumers are mounting. In all likelihood, one of two things will likely shape up in the next six to 12 months in the China market: younger, urban consumers will either pile into the secondhand watch and handbag market to park their disposable income into blue-chip items that they hope hold their value better than a bank account, or they'll simply drop out of the luxury market and wait for macroeconomic conditions to improve.

Where is China’s secondhand luxury market headed in 2024?

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Published January 09, 2024

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Where is China’s secondhand luxury market headed in 2024?