Luxury with a used tag still holds ample value

Pre-owned, pre-loved, luxury resale — all names for the increasing trend of buying or renting used fashion items from shoes to handbags, clothes, jewellery, watches and others. With the rise of social media, and the ubiquitous selfie, there is increasing pressure to always be on trend, and in many instances, not to be seen wearing the same thing more than once.

As individuals share more through the various digital channels, they are also expected to showcase more variety of what they own and can afford, indicating a certain social standing. However, in many instances, first-hand buys are not always affordable, and alternative means are used to gain access to more choices.

As a result, consumers in the region, and women in particular, are increasingly tapping into the pre-owned or renting category to diversify their wardrobe without breaking the bank. In the pre-loved economy, buyers — or renters — can own up to 10 luxury goods for the price of one.

Sellers — or owners — can in turn monetise on items sitting idle in their closets, and in some cases while still owning them, which has proven to be a great source of alternative income. Hence the value for pre-loved marketplaces is becoming increasingly relevant since it offers unique opportunities for both the sellers and buyers.

The market for personal luxury goods in the Middle East, at $7.5 billion (Dh27.54 billion), is one of the largest in the world, including offline and online sales. The biggest two markets in the region are the UAE, with 70 per cent of market value, followed by Saudi Arabia, with a large inflow of supply such as luxury bags, clothing, and watches. The opportunity for the pre-loved luxury market in the Middle East and North Africa (Mena) overall is also huge, with an annual 5 per cent growth rate expected to reach almost $1 billion in sales by 2020.

To date, Middle East Venture Partners (MEVP) has invested in three pre-loved fashion marketplaces in the region and we strongly believe that the market is constantly growing because of the recent changes in consumer behaviour. These regional champions are The Luxury Closet (TLC), Modacruz and Designer-24 — all three of which have successfully replicated business models proven globally by The RealReal, Poshmark and Rent the Runway.

TLC, founded by Kunal Kapoor, introduced the pre-loved luxury model in the Mena region, based on the premise that the hardest-to-find and most exquisite items are in people’s closets and not in malls, which represented $500 billion worth of hardly worn luxury around the world.

It has curated a community of “first-time sellers” in the GCC by offering a conduit for luxury buyers to liquidate high-value items. It is currently Mena’s largest online marketplace for pre-loved luxury goods and is continuing to grow.

Similarly, when Melis Gutas Esin founded Modacruz in Turkey, the pre-loved fashion concept was not only a non-existent culture, but also a taboo amongst Turkish women. Modacruz, which raised $2 million in a Series B investment round led by MEVP, was able to turn this around by enabling users to purchase clothing directly from other sellers at a fraction of the retail cost. Today, hundreds of thousands of women experience pre-loved fashion through the platform.

On the other hand, Designer-24 tapped into the luxury rental marketplace, which is proving particularly to be popular with millennials, who are more interested in paying for access to experience than they are to invest in assets for ownership. D24’s success in markets such as Dubai and Lebanon indicates a change in mindset happening in the region with regards to the fashion-sharing economy.

Roupen Karageuzian, CEO of Designer-24, said that dresses contributed by users are three times more likely to be rented out compared to those sourced from suppliers, indicating the power of network effects and that people in the same community tend to have similar tastes and needs.

With rising awareness and adoption of the pre-loved asset sharing concept, and new platforms dedicated to enable seamless access to this rich pool of assets, the behavioural shift in this direction sets the tone for a completely novel way of owning fashion.

Walid Hanna is founder and CEO of Middle East Venture Partners (MEVP).

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