Consignment Shops Diversify to Boost Sales as Consumers Pull Back

As the impact of inflation reverberates through consumer spending, luxury consignment shops feel the pinch, experiencing a surge in haute couture stress.

In a recent development reported by PYMNTS, The RealReal has embarked on an overhaul, aiming to reap the benefits in the first half of 2024. This initiative includes changes in the commission structure, a reassessment of its supply dynamics, and the implementation of third-party advertising.

Read more: The RealReal Gets Real Revenue From Advertising

Meanwhile, Fashionphile, a luxury resale platform based in San Diego specializing in preowned ultra-luxury accessories, is taking a different path.

The company is venturing into B2B wholesale after its acquisition of the Canadian preowned luxury omnichannel retailer LXRandCo. (LXR).

Founded in 2010, LXR specializes in the curation, sourcing and authentication of premium preowned products from luxury brands like Hermès, Louis Vuitton, Gucci, Prada and Chanel. The company directly sells these items to customers through its website and indirectly through partnerships. Additionally, LXR engages in wholesale, collaborating with retail partners throughout North America.

Fashionphile announced the acquisition of various assets, including inventory, intellectual property, domains and other intangible assets from LXR Luxury Products International, Groupe Global LXR, and LXR Canada. These entities represent the operating subsidiaries of LXRandCO, a Montreal-based omnichannel retailer specializing in authenticated, preowned luxury accessories. LXRandCO filed for bankruptcy in Canada earlier this month.

“With this acquisition, we are excited to forge a new path in wholesale and provide trusted, authenticated, branded accessories to even more sectors of the growing second-hand market,” Ben Hemminger, co-founder and CEO of Fashionphile, said in a statement.

Through this acquisition, Fashionphile aims to move beyond the direct-to-consumer (D2C) model. This encompasses elevated circular retail experiences, clienteling, and a strategic foray into B2B wholesale, as well as the implementation of new omnichannel operations.

Additionally, Fashionphile will leverage the expertise and experience of LXRandCo, specifically in omnichannel retail and the integration of physical stores with online platforms.

LXRandCo’s established presence in the Canadian market will provide Fashionphile with a strategic entry point into a new geographical region.

Other Players Diversifying

In a different avenue, Season 2 Consign is amping up its presence in the resale sector — through franchise.

In an interview with PYMNTS this month, CEO and Co-Founder Erika Schrieber of Season 2 Consign, told PYMNTS CEO Karen Webster, “We found that there was a void in the industry for something that combined really the best of both worlds, and we used technology to really fuel the growth of Season 2.”

According to Schrieber, Season 2’s business model centers on the online luxury resale sector. The company operates an online marketplace exclusively for authentic fashion items, and the platform is powered by franchise owners.

Moreover, at Season 2, the policy is “all sales final.” This not only backs their franchise owners but is also made possible by their authenticity guarantee, offering protection against counterfeit items for both customers and the platform. Their dedication to combating counterfeiting is evident on social media.

The reason for this is because Season 2 is confident in their ability to guarantee authentic goods as Schrieber emphasized that every franchise owner bears the responsibility of authenticating the merchandise they manage. This process is facilitated through a partnership with software provider Entrupy, which uses artificial intelligence (AI) technology and specialized hardware to meticulously scan both the exterior and interior of each item.

“If you follow us on a social media platform, you’ll see us sometimes destroying fakes and making a really big deal about that,” Schrieber said.

Read more: Main Street Meets Luxury Consignment Shops With a High-Tech Update