Johannesburg - During the Covid-19 pandemic, wealthy consumers who were not financially affected by the novel Coronavirus traded in luxury experiences for luxury items.
This is because many people were confined to their homes in a bid to curb the spread of the deadly virus, so as a means of escape, they spent their money on opulent clothes, jewellery, shoes and accessories.
And this week, Michael Zahariev, the co-founder of Luxity, South Africa’s largest pre-owned luxury reseller, explained to The Saturday Star that this has led to a new movement and an entirely new customer base that has continued to grow after the pandemic.
“This increase in new customers has remained resilient as consumers become shifted towards higher quality products that hold their integrity and value over time,” he said.
“As the pre-owned market makes luxury more accessible and therefore widespread, this added to greater demand in atypical markets.”
Luxity also this month released a new report, “The State of the Luxury Market in Africa 2022.”
The fifth edition of the luxury-market report tracked the state of the luxury market in Africa and how individual brands fare. This research is compiled based on a variety of factors including sales, searches, and external data.
It found that the global luxury resale market is booming and is forecast to be worth US$51.77 billion by 2026, up from US$32.61 billion in 2021. And according to recent findings in the 2022 report, South Africa and the rest of the continent are seeing similar trends.
The research revealed that Louis Vuitton took the top spot with high performance across all of the areas considered in this report.
While Chanel and Gucci tussled for second and third place, Christian Louboutin ranked fourth, knocking Burberry off the list.
Zahariev believes that this was spurred by strong demand within the shoe category and appeal across genders.
Meanwhile, Hermès dropped down to fifth place, just narrowly making the list this year. “Perhaps the brand’s lack of supply and presence in Africa may finally be showing its downside,” he said.
The report also revealed that Chanel, Louis Vuitton and Celine were the most popular luxury bag items and Louis Vuitton, Gucci and Christian Louboutin are the most desired shoe brands.
When it came to clothing, Louis Vuitton once again took the top spot, followed by Fendi and Burberry while Rolex, Hublot and Breitling were the most popular luxury watches.
“The top brand in South Africa is undoubtedly Louis Vuitton, making up one in five searches. When looking at shoes, we see Gucci and Christian Louboutin featuring as some of the favourites due to their cross-gender appeal, something that has become vitally important for brands as men begin to make up an ever-increasing market opportunity,” he added.
Zahariev believes that the surge in the purchase of pre-owned items is due to its many benefits.
“By purchasing pre-owned, not only do you have greater access due to lower prices, and payment plans, as well as greater access to many models outside of the current range, but you are also contributing to a circular economy,” he explained.
“‘This circular economy allows for greater sustainability as items are not sent to landfill; rather, they are reused and passed onto others but, additionally, the funds to purchase these items also stay in the local economy and pass onto other consumers in the pre-owned circular economy.”
Luxity also found that another growing trend was people buying and selling and continuously using the funds raised to fund their new purchases.
“Although this trend is only at its beginning, with only 5% of Luxity customers being buyers and sellers, this small group accounts for 25% of total revenue.”
He also believes that one of the biggest drivers behind Africa’s penchant for pre-owned luxury was access.
“Consumers are looking for the best way to access luxury brands and pre-owned offers this superior access – not only through lower prices but also the ability to access payment plans, shop online, as well as shop ranges and brands not available on the continent.”
He added that South Africa is one of two countries in Africa that has the presence of luxury stores.
“In South Africa, as internationally, we have seen the luxury market flourish with many new retail stores in the luxury market opening in malls and even in new cities. We can see this clearly when looking at Durban with the opening of Luxity, Gateway, and the Oceans Mall with Gucci and Dolce & Gabbana set to open soon,” he said.
“Although consumers in Africa are generally turning to pre-owned luxury for status and access rather than sustainability, the demand remains resilient and growing.”
This movement, Zahariev believes, is also a result of the pandemic.
“As retail was one of the first sectors of the market to open up after lockdowns, we saw many spending-starved consumers rush into the luxury goods industry, many reassigning their typical luxury-experience spends into luxury goods due to experiences being restricted.
“This increased demand and limited supply due to Covid-19 supply disruptions led to many fashion houses raising prices at some of the fastest rates seen in recent history – demand, however, has remained resilient through price increases as well as the opening of the economy at large.”
He also believes that many thought that the pandemic would have led to a permanent shift to online purchases, but this has not necessarily been the case.
“Most consumers have reverted back to the habit of in-store purchases and this is especially true for luxury goods, whether pre-owned or new, as the in-store experience is part of the benefit or joy of purchasing luxury – which explains why these stores are leading the recovery of traffic and revenue in malls.”
He added that with consumers being prepared to pay more for pre-owned luxury items, this also points to factors beyond price, such as increased access, propelling African consumers into the pre-owned luxury market.
“The upsurge of omnichannel retail on the continent in the wake of the pandemic, for instance, has had a profound impact, with customers now having access to pre-owned luxury retailers across multiple channels including physical, online, and social.”