Luxury shoppers have a completely new attitude, and it's killing traditional retail

As evidence that high-end retail has lost its footing continues to mount — from companies pivoting out of luxury to a crisis in the Swiss watch market — there is at least one bright spot to be found: pre-owned.

No longer looked at with disdain, the pre-owned market is growing in both dollars and prevalence.

"There's been a major shift here over the last four to five years where people really understand value in a different way," Alexis Clarbour, director of pioneer luxury accessory consignment website Portero.com, told Business Insider.

Clarbour says that her customers are now seeing beyond the original purchase and considering how the value of the item will hold up if they decide to resell it. These customers aren't seeking thrift-store bargains, either. They're true luxury seekers — the average sale price on Portero, for example is $2,200, and its most popular brand is Hermès.

Watches are also seeing a major shift to vintage and pre-owned.

"For the same reason a consumer chooses to buy a certified pre-owned car, they also desire to purchase a certified pre-owned watch since it's a smarter, more financially beneficial way of buying luxury," said Hamilton Powell, founder of luxury vintage and pre-owned watch consignment site Crown & Caliber.

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9 retailers that bombed in 2016

J. Crew

The apparel retailer has had a difficult few years

J. Crew announced in November that sales at stores open at least a year dropped 8%, following a decrease of 11% in the same period last year.

Now, the company is attempting to change things up. In November, the retailer axed its popular bridal line. A month earlier, J. Crew launched an athleisure line with New Balance — a collection that Business Insider felt failed to live up to competitors' standards. 

Sears

Sears' sales continued to plunge in 2016. In the most recent quarter, revenue fell 13% to $5 billion, with losses widening to $748 million from $454 million in the third quarter last year.

The retailer is closing hundreds of stores, with more than 170 Sears and Kmart locations shuttering this year. 

And, things are only getting worse — many analysts say 2017 is likely the year that Sears goes bankrupt.

Macy's

In August, Macy's revealed plans to close down 100 stores in early 2017 as the retailer looks for a solution to slowing sales and the growth of online competitors. 

In November, the retailer reported that net income for the third quarter fell by 87% to $15 million, following a 46% decline over the same period last year. Same-store sales at stores open at least a year fell 3.3%.

"These figures show a company grappling with what looks like terminal decline," Neil Saunders, CEO of the consulting firm Conlumino, wrote in a note to clients.

Hugo Boss

Huge Boss simply isn't cool any more. 

In a UBS report released in Decemberonly 20% of people surveyed said that Hugo Boss was a cool and fashionable brand, compared to nearly 40% a year ago.

Being off-trend is seriously impacting sales. In November, the company adjusted its sales prediction for 2016, saying sales could decline up to 3% in the year. 

Coach

The handbag maker stopped selling merch at more than 250 department stores in 2016 in an effort to regain its premium, luxury status.

However, the move hasn't paid off yet — in November, when reporting the company's the most recent quarter, Coach said it had its slowest growth in four quarters.

Nasty Gal

A decade after it was founded by then 22-year-old Sophia Amoruso in 2006, Nasty Gal filed for bankruptcy in November. 

"Filing for bankruptcy is actually the most responsible decision for the business," Amoruso said at an event in Sydney, Australia when the news broke, the Independent reported.

The trendy fashion retailer had been through some tumultuous times in recent years. Amoruso stepped down as CEO in 2015. In her absence, the retailer laid off employees and former workers complained of a toxic environment.

It looks like Nasty Gal could get a fresh start in 2017. On Wednesday, British online fast-fashion retailer Boohoo.com announced it was bidding $20 million for Nasty Gal's brand and customer list. 

Lands' End

In December, Lands' End reported a 14.3% drop in same-store sales in the third quarter, with a 49% drop in apparel sales. That marked the ninth consecutive quarter of declining sales for the company. 

To make matters worse, Lands' End has also been dealing with problems in its executive suite.

In September, Federica Marchionni left her position as CEO. According to the Wall Street Journal, her departure was triggered by employees' disagreements with Marchionni's more high-fashion approach to the brand as well as the limited time she spent in the office — just one week every month. 

Aeropostale

As teens' interest in the brand waned, Aeropostale filed for Chapter 11 bankruptcy in May.

After declaring bankruptcy, the retailer announced it would close 154 stores in the US and Canada. 

"Back in the day, all of the cool kids had trendy brand names plastered across the front (or back) of their clothing. The trend has changed, and style today, perhaps encouraged by social media, embraces individualism and uniqueness," wrote Nicholas Rossolillo in finance publication The Motley Fool. "Online ordering and heavy discounting have also taken a toll on the industry, especially mall-based retailers. Aeropostale simply hasn't been able to adapt."

Kate Spade

Kate Spade's sales have suffered in 2016 as tourists' visits declined and discounting grew more popular, making it harder to sell items at full-price. 

Now, the company is reportedly working with investment banks on a possible sale, the Wall Street Journal reported Wednesday.

The news comes six weeks after New York-based hedge fund Caerus Investors sent a letter to Kate Spade pushing the retailer's board to consider a sale.

"We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote.

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The information available on the internet is perhaps the biggest factor for resale websites. As it becomes easier for customers to educate themselves about items like handbags, watches, and sneakers, they seek a greater value for their dollar in the luxury space. And they'd rather not be bothered by pushy salespeople in boutiques, as these savvy customers already know what they want and what it's worth.

"Today's consumers are smarter than ever due to the vast amount of information at their fingertips provided through the Internet," Powell said.

Powell says education is "the reason for the rise in pre-owned," but adds that the "result is an iconic, classic suave look" akin to the days of Cary Grant and Don Draper.

This education means it's easier than ever for customers to become enthusiasts.

Another category — sneakers — has also seen more attention. Venture capital firm Forerunner Ventures, which invested in Birchbox, Bonobos, and Dollar Shave Club, recently made an investment in sneaker consignment store Stadium Goods. It was the firm's first investment in a consignment company. Sneakers are not considered a luxury category traditionally, but they can have luxury-level prices at resale to fanatical consumers.

"The whole ecosystem is going through a lot of change," Kirsten Green, Forerunner's founder, told Business Insider. "A lot of sneaker-buying was happening in malls. And people's shopping patterns are changing away from malls."

It's also removing the barrier that traditionally separates customers from shopping pre-owned luxury: fear of fakes. Websites like Portero and Crown & Caliber both offer 100% authenticity guarantees, and they sell products in as good condition as possible while preserving that.

"Given the growth of the online jewelry/watch segment, we believe consumers are getting more comfortable with buying online rather than from a brick-and-mortar establishment," Powell said, noting that sales for 2016 increased by 70% when compared year over year.

Clarbour said she's seeing a similar phenomenon, adding that it's her website's reputation that makes customers feel safe.

"If we were known to sell inauthentic goods, we would've been put out of business by now," Clarbour said of Portero, which was founded in 2004.

Choice is another benefit of pre-owned luxury items, Clarbour says. If you walk into a boutique, they will only have the brand's latest offerings, but online there's the entire history of the company to choose from, including hard-to-find items like the Hermès Birkin bag.

"It's not like when you go into a boutique and you have a salesperson bossing you around, putting pressure on you," Clarbour said.

Most of the luxury items sold on eBay are new, but the auction site is also implicated in this attitude shift. It's releasing an expanded authentication program called eBay Authenticate later this year, in an effort to court these luxury pre-owned customers.

NOW WATCH: Here's how a sneaker collector made 6 figures buying and reselling rare and limited release kicks

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SEE ALSO: Athleisure is not just a trend — it's a fundamental shift in how Americans dress


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