Second-Hand Luxury Losing Stigma In China

“It’s Exactly The Same As The Second-Hand Luxury Market In Japan 10 Years Ago”

Fickle gift recipients or regular shoppers have contributed to the rise of the luxury second-hand shop in China

What Jing Daily referred to as the “spreading wildfire of luxury second-hand shops in China” last year continues to rage in China’s first- and second-tier cities (as well as over the border in Hong Kong). Though China’s overall luxury market is showing slower overall growth this year compared to 2011, demand from the country’s less well-heeled, yet still chicly conscientious, for “almost new” handbags, apparel and accessories is helping chains like Hong Kong’s Milan Station and Japan’s Brand Off gain extreme popularity.

As Zhou Ting, director of the Research Center for Luxury Goods and Services at UIBE, said this January, “[China is] exactly the same as the second-hand luxury market in Japan 10 years ago. After all of these years, the second-hand luxury market in Japan has become relatively mature, with a complete supply chain that is able to procure plenty of top luxury brands.”

Brand Off has a handful of locations in Shanghai, and is looking to expand further

With more young middle-class consumers entering the market, and outbound travel changing consumer attitudes toward “gently used” luxury goods, the old stigma about buying somebody else’s cast-offs is starting to fade. As CNN notes this week:

There are now signs that the stigma is melting away. Since 2009, Milan Court has posted double-digit annual sales growth, and the shop has hundreds of bags for sale, many on consignment from individuals. Ms Liu has opened six shops in Shanghai and plans to expand to other provinces.

Nidia Yuan, a regular customer of Milan Court, likes the fact she can purchase unused bags at the shop for 20-30 per cent less than retail.

“I don’t mind people knowing that I carry second-hand bags,” Ms Yuan says. “I think it is worth it to buy at those prices”.

This growth isn’t limited only to handbag and jewelry-focused chains, and extends into more male-dominated areas like high-end watches, particularly as changing economic times push some businessmen into the pawnshop. As Jing Daily noted in 2010, luxury watches started to show up in pawnshops in Beijing in the mid-’90s, with pawning activity increasing dramatically since around 2000 and creating big business in the Chinese capital and some of the country’s wealthier cities. Cashing in unwanted luxury gifts is not restricted to pawnshops, though, as it too has fueled the rise of second-hand luxury shops.

Milan Station is expanding rapidly in mainland China despite dozens of copycats

However, second-hand stores and shopping weren’t always so popular, particularly in China’s more fashionable cities. As Shanghai Daily wrote this past spring, when leading Japanese second-hand luxury retailer Brand Off first entered the Chinese mainland last September, it found it highly difficult to make any inroads in a country that considered used products lower in quality and status. But — perhaps due to a slowing economy and gradually changing consumer attitudes, Brand Off Shanghai store manager Takayuki Shimata told Shanghai Daily that “the business is getting better as our name catches on among bargain-hunters.”

So, why all the popularity in recent years? As Shanghai Daily sees it, the explosive success of luxury used-goods may be a symptom of a changing — and mildly subversive — perspective among Chinese shoppers, which is creating a “a new breed of luxury shoppers in China — people with a fashion-conscious bent in a budget-conscious reality who want a showy lifestyle without losing face.” This growing breed mainly consists of young women looking for a cut-price handbag and wealthy customers looking for unused limited editions.

Another reason consumer attitudes are changing is the growing accessibility of overseas travel, which has allowed ever more of urban Chinese to visit places like Japan and South Korea — where luxury second-hand shops have been around (and popular) for the last two decades at least. As one Chinese second-hand luxury shopper, who observed that she saw these stores “everywhere” on a recent trip to Japan, told Hexun last year, “I visited one [store] that was a six-story building full of second-hand luxury goods, separated into sections…and each item included a certificate of authenticity.” Additionally, some cashed-up Chinese buyers have fueled the growth of the industry by side-stepping long waitlists for popular, hard-to-get handbags like the Hermès Birkin, dozens of which are readily available at stores lining streets frequented by Mainland tourists in Hong Kong.


Fashion, Hard Luxury, Market Analysis