“Old is the new new” – Meet Vestiaire Collective, the pioneers of second-hand luxury fashion

In 2021, Vestiaire Collective became the first French unicorn – a privately-held start-up valued at more than USD 1 billion – to have been founded by women. That same year, the firm also became the first fashion resale platform to earn B Corporation certification, recognition of Vestiaire’s commitment to reducing the environmental impact of the fashion industry. (Vestiaire has made waves in the sector by banning ‘fast fashion’ brands from its platform.)

The timing of these two firsts is no coincidence. Since its 2009 beginnings in the Paris apartments of founders Sophie Hersan and Fanny Moizant, Vestiaire has had an uncompromising commitment to sustainability. “It was completely about sustainability,” Sophie and Fanny say. “From day one, we realised that our generation was creating waste, because our generation was the first one to consume fast fashion.”

Today, Vestiaire operates in over 70 countries, employs nearly 650 people across 8 global locations, has a catalogue containing more than 5 million items, and is recognised as the leading resale platform for second-hand luxury clothing and accessories.

Where Vestiaire led, others have followed. With numerous fashion resale platforms emerging in recent years, and the sub-sector forecast to outperform the wider fashion industry, we explore how sustainability and longevity are bucking fashion’s tradition of constant, fast-paced change.

Buying less, buying better

In 1885, Irish writer Oscar Wilde gave this description of what he saw as the fashion industry’s “unhealthy appetite for change”:

“I am told, and I am afraid that I believe it, that if a person has recklessly invested in what is called ‘the latest Paris bonnet,’ and worn it to the rage and jealousy of the neighbourhood for a fortnight, her dearest friend is quite certain to call upon her, and to mention incidentally that that particular kind of bonnet has gone entirely out of fashion. Consequently a new bonnet has at once to be bought, that Fifth-avenue may be appeased, and more expense entered into.”

While ‘Paris bonnets’ may no longer be in vogue, the human impulse to stay on trend remains central to the industry’s business model. Today, though, the pace of change has reached near breakneck speed, from the ‘fast fashion’ that began in the 1990s – marked by brands’ desire to get clothes from the drawing board to shop shelves within two weeks – to what has been dubbed ‘ultra-fast fashion’, with blink-and-you’ll-miss-it ‘micro-trends’ fuelled by social media.

Between 2000 and 2014 global clothing production doubled to 100 billion items, with each person buying 60% more on average than at the turn of the millennium

As the pace has increased so, too, has the scale. According to analysis by the Ellen MacArthur Foundation and consultants McKinsey, between 2000 and 2014 global clothing production doubled to 100 billion items¹, with each person buying 60% more on average than at the turn of the millennium². With the rise in consumption, there has been a notable increase in waste – by 2015 it was estimated that three out of every five fast fashion items were ending in landfill or being incinerated each year³. The fashion industry is thought to be responsible for 4% of global greenhouse gas (GHG) emissions, and is falling ever further behind the trajectory needed to meet the Paris Agreement’s target for 2030.⁴

Against this backdrop an alternative trend is emerging, however, driven by increasingly climate-conscious consumers on the hunt for a bargain. A study by Vestiaire found that 85% of their users “are willing to buy less but buy better.” More broadly, the fashion resale market is now outgrowing the wider sector, as more and more consumers make second-hand their preferred option. As Vestiaire puts it – “old is the new new”.

The fashion industry is thought to be responsible for 4% of global greenhouse gas (GHG) emissions, and is falling ever further behind the trajectory needed to meet the Paris Agreement’s target for 2030

Brand buy-in

When Vestiaire first launched they found little enthusiasm from the brands they planned to sell. Scepticism over whether there would be sufficient consumer appetite combined with fear “of losing potential market share or customers to us,” Sophie Hersan and Fanny Moizant explain.

Today, the story is very different. Recognising that individuals selling their luxury items are often clearing space to buy new, and that the second-hand market may be an ideal way to introduce potential future customers to their products, a dozen leading brands – including Gucci, Chloé, Burberry and Alexander McQueen – now partner with Vestiaire to enable seamless reselling of their clothes, shoes and accessories.

Other brands and luxury outlets have made similar moves, including Selfridges with their in-house resale platform RESELFRIDGES, and Balenciaga via their partnership with resale platform Reflaunt. Research by consultants McKinsey shows that brands that enter the resale market are likely to gain deeper customer loyalty, even among buyers of new products.⁵

Cutting fashion’s footprint

Key to this is a growing desire among many consumers to cut their fashion footprint. In 2020, a large-scale survey conducted by Boston Consulting Group (BCG) found that 70% of used-clothes buyers “feel compelled to shop for preowned goods in an effort to become more sustainable.” This had risen from 62% only two years earlier.⁶ Sustainability is now the second most influential factor driving the rapid growth of the second-hand market.⁷

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Vestiaire’s research suggests that buying second-hand clothes can have a 90% lower environmental impact than the equivalent purchase new, once GHG emissions, waste, land usage, and air and water pollution are all taken into account.⁸

[Vestiaire Collective] now prevents three times more emissions than they generate, a figure that is growing as the business scales

For climate-conscious consumers, this need not be the end of the story, however. Vestiaire’s commitment to sustainability runs deeper than merely cutting the environmental cost of buying new. Across the business, efforts to minimise packaging and energy use, reduce shipping distances, and shift away from air transport, are cutting the firm’s carbon intensity, meaning that they now prevent three times more emissions than they generate⁹, a figure that is growing as the business scales.

Meanwhile, BCG estimates that as resale expands further into the mainstream this potential positive impact is given a further boost, with 70% of consumers saying that the existence of an easily accessible resale market “encourages them to take better care of the items they own”¹⁰ to ensure their longevity and future re-sellability. 

Rapid scale-up brings investment opportunities

The sector is seeing rapid growth. In 2021, Gucci owner Kering was part of a USD 214 million investment in Vestiaire Collective, accelerating the platform’s expansion into new markets. Other high-end resale platforms have also seen interest from luxury brands – in 2018, Swiss luxury goods group Richemont purchased watch resale website Watchfinder; while in 2019, US luxury retailer Neiman Marcus took a stake in Fashionphile, a resale site for luxury bags and accessories.

A similar story is being told across all segments of the ‘re-commerce’ landscape, where non-luxury has seen a similarly precipitous rise. In July 2021, for instance, online marketplace Etsy bought fashion resale platform Depop for USD 1.6 billion; while this year it was reported that US private equity group TPG is in talks to buy a stake in Vinted which would value the resale platform at EUR 5 billion, up from a valuation of EUR 3.5 billion just three years ago.

With a forecast compound annual growth rate of 15-18% it’s likely the market will reach as much as USD 460 billion by 2030

For investors the appeal is simple – second-hand clothing and accessories sales are now growing as much as six times faster than the overall fashion industry, which is seeing sluggish growth of around 3%¹¹. In 2020, the resale market was estimated to be worth between USD 30 and 40 billion¹²; in just the last four years it’s thought to have tripled to USD 100 billion¹³, and with a forecast compound annual growth rate of 15-18% it’s likely the market will reach as much as USD 460 billion by 2030¹⁴.

Re-commerce essential for brand growth

At Lombard Odier, we see the rise of fashion resale as a key component of the move to a circular economy, where we extract and waste less, turn over less land to cultivating materials such as cotton, and reuse, repair and recycle more, creating new employment opportunities and keeping more value within the value chain. As the market expands, a virtuous feedback loop will be created. Greater availability and choice will attract new buyers and sellers, potentially pushing second-hand towards a tipping point where buyers are as attracted to re-commerce as to buying new.

While some incumbent fashion brands and design houses will overperform, we believe that slow growth in the virgin fashion¹⁵ industry means that re-commerce is likely to be the main, or even the only, source of growth for the ‘average’ established fashion brand in the mid-market and premium segments between now and 2030. For these brands, exposure to re-commerce is fast-becoming essential.

Investors must, of course, take care. While the outlook for re-commerce platforms is bright, as the marketplace becomes increasingly crowded there will be winners and losers. But with thorough understanding of the evolution of this exciting new sphere, investors will have an opportunity to achieve potential long-term market outperformance while spurring the shift to a more sustainable fashion industry.