The new wave of luxury has seen the emerging of sentimental values as a result of the relevance between roots and history. It is the homage to a long, endless line of good taste and sophistication; indeed, the added sentimental value of these items places them as precious and unique pieces, treated with reverence and respect, giving them a stronger sense, as if they were a talisman.
It represents a mix of history, roots and devotion. Old becomes new, enriched and reinvented through. Trends come back to life, in a continuous cycle of tradition and innovation, in the value of personalised excellence.
Today’s high-end consumers seem to be going through a phase: the drivers of consumption are being turned upside down, and the very notion of luxury is progressively changing. Rather than revolving only around exclusivity, their focus is now unique. To be an object of desire, that object must be truly one of a kind. And this is possible thanks to customisation tailored to specific customer preferences, which in turn is fuelling the growing phenomenon of product customisation in the world of luxury. 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 a great part of the total luxury market by 2030.
In more and more categories, consumers are choosing to rent rather than own goods outright. In fashion, the shift to new ownership models is driven by growing consumer desire for variety, sustainability, and affordability, and sources suggest that the resale market, could be bigger than fast fashion within ten years. This is a fundamental evolution in consumer behavior, and we expect it will have an impact on the fashion business in the years ahead.
The last two years certainly boosted this growth as an increasing number of customers are adopting new ways of shopping more socially and digitally, which is likely to continue after the crisis. People sitting at home have been spending more time shopping online and looking for special items with an interesting story or for vintage trends that are different from the contemporary aesthetic.
In recognition of this consumer shift, start-ups will not be the only players making their mark in these segments – established luxury brands will also accelerate the pace with which they embrace new ownership models to further their relevance to consumers.
Meanwhile, luxury brands are raising prices significantly. So, even affluent consumers are looking to alternative models of acquisition for relief. These demands are catalyzing the successes of rental and preowned models.
Although established brands have traditionally turned a blind or scorning eye toward second-hand retail, they are now wading into the preowned and rental markets. Other luxury players have purchased resale or rental businesses outright to control how their products and brands are marketed on the secondary market.
In a context where consumers are getting more and more used to the philosophy of pay-per-use, the world of luxury 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. From environmental concerns to a new wave of minimalism, wealthy consumers are shifting toward the economy of sharing rather than the absolute ownership of luxury goods.
It’s been called the end of ownership — consumers forgoing personal possessions in favour of renting and borrowing items. The sharing economy and the notion of consuming without having to buy have certainly reached new demand levels. People are simply becoming less interested in owning things, but still, want access to things and experiences that bring them joy and excite them. It can be easily seen that short-term renting and sharing provides an effective way to lighten the load of one’s belongings, give access to previously unattainable luxury items, minimise an individual’s contribution to the global culture of “things” and lessen the negative environmental impacts of mass consumerism.
This trend is partly driven by the young generation’s hunger for newness while embracing sustainability. This is especially true for young consumers caring about the environment as nine in ten Gen Zers like the idea of buying pre-owned apparel. They are also walking away from fast fashion and its detrimental impact on the planet to turn to the pre-owned fashion sector that comes as an affordable and higher quality alternative expected to become almost twice the size of fast fashion by 2029. 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.
The distinction between owning and renting is a slippery one. The emotional and cultural meanings of the two practices do not always map onto their economic functions. This creates opportunities for a kind of arbitrage – allowing businesses to extract higher payments from consumers by presenting a transaction as a purchase or rental, depending on what consumers value in the context. However, within the luxury world, there is a combination of framing effects and cultural meanings that still associate ownership with wealth. As the middle class approaches the world of renting, including it as a habitual behavioural practice of the consumer, the distancing from the luxury product will be re-established, which will assume an additional intrinsic value thanks to the importance of possession.