The Vestiaire Collective Case
The public health crisis we are currently experiencing has had an unprecedented impact on the fashion economy worldwide, on both the supply and the consumer demand sides (store closures during the lockdown period, event cancellations and reductions in the consumer’s purchasing power because of the economic downturn were all consequences of the pandemic). According to McKinsey, in 2020 the industry has seen a decline of 90% in profits, and an average reduction of 30% in sales at a global level, with Europe leading the phenomenon.
In addition to the considerable impact on the industry from an economic and financial point of view, the crisis has also highlighted some of the weaknesses of the global fashion system, pointing out how much its activity is harmful for both the people and the environment; it has raised questions about excessive production and over-consumption, driving the need for a more sustainable fashion expenditure.
A change in purchasing behaviors
Focusing specifically on fashion’s country of origin, France, the pandemic has contributed to spread a change in the mentality and new consumption tendencies among the French population. In fact, during the lockdown, people have started to think more about the manufacturing conditions and the social and environmental impact of fashion products, consequentially starting to make less – but more thoughtful – purchases. Moreover, while being forced to stay at home, consumers had the time to look deeper in their wardrobes, taking photos of their unused clothes and selling them on second-hand websites.
Considering the uncertain economic situation the pandemic has brought, these factors have boosted the sales on all second-hand platforms, since they allowed people to both act in a sustainable way and save some money, thus combining sustainability and recovery from the crisis.
Among these platforms, Vestiaire Collective is now a very fast-growing company which has confirmed to be the leader in the second-hand luxury fashion market since the beginning of the pandemic. Since its foundation in 2008 after the financial crisis, its mission has been to find a solution to some of the main issues of fast fashion.
The rise of a new business model
After being significantly frustrated by seeing a lot of beautiful products sleeping in the bottom of people’s closets because of the fast-paced rhythm of the collections, the founders decided to allow people to resell luxury pieces they no longer wear for cheaper than the original boutique price, revolutionizing the ways of consumption and promoting circular fashion as an alternative to the harmful practices of the fast fashion industry. Therefore, Vestiaire Collective is a successful business model since it allows young customers to access quality luxury and fashion brands in a sustainable and more affordable way.
Four main factors have driven the platform’s significant growth during the pandemic:
Eco-responsibility: consumers are increasingly basing their purchases on sustainability, while a few years ago saving money was their primary motivation;
No more owners: nowadays people prefer not to buy brand-new fashion items but to invest in pre-owned ones, especially for special or once-in-a-life occasions;
Accessibility: the second-hand market is a way to access the luxury world for consumers who couldn’t normally afford new items;
Generation Z attractiveness: vintage clothes attract the younger generations, who are looking for extravagant and rare pieces at less expensive prices.
What to remember from Vestiaire Collective's success
In conclusion, we can say that the economic and health crisis will have irreversible and long-term consequences on the global fashion system. First of all, the recovery will likely coincide with a recessive market, forcing fashion players to adapt their business model; consequently, the priority of companies will be to stabilize their activities before searching for new markets or growth opportunities. In addition to that, the complete shutdown of physical trade has strongly demonstrated the need for brands to be flexible in their procurement methods. Indeed, those firms that are involved in distant supply chains have proven to be particularly vulnerable because of the discretionary nature of the industry.
To deal with these changes, fashion and luxury companies must revise their supplier base to identify potential disruptions in certain geographic areas, or strengthen regionally integrated supply chains, to avoid having their factories blocked because of the absence of raw materials produced in distant countries (such as China).
Furthermore, it will be important to fully embrace new consumer demands, by creating an engaging and a comprehensive customer experience and meeting all the ethical and the ecological considerations that are spreading across the client base.
Therefore, only those companies capable of reorganizing themselves will survive and successfully compete in the new post-crisis fashion landscape.