February 3, 2022
BEIJING – For young luxury lovers in China, as the saying goes, old is new. Again. Second-hand luxury retailers have capitalized on the opportunities of live-streaming platforms and offline stores to provide a better ubiquitous shopping experience as overseas travel has been affected by the COVID-19 pandemic , which boosted luxury spending by returnees.
In Sanlitun, one of the most popular shopping areas for young consumers in Beijing, a store named Panghu recently opened and sells second-hand luxury items. The spacious store, which covers an area of 1,200 square meters, displays luxury bags at a claw crane, with stacks of Hermès and Louis Vuitton on the shelf.
The store layout is divided by brands. Stepping into the store is like riding a ride at the Transformer Zone at Universal Studios theme park. Its modern interior design and layout appeal to young consumers. From blind box to trendy IP artwork, the store has sought to become a hip spot in town.
Ma Cheng, founder of Panghu Technology Co Ltd, said displaying a large number of bags aims to differentiate them from first-hand luxury stores while providing a pressure-free shopping experience, a gathering point for a variety of brands, buy-back service and reliable supply chain.
With an investment of 200 million yuan ($31.5 million), the store attracted more visitors than expected, with crowds and queues during weekends. In the first month of its opening in November, the store made a profit when 15% of visitors became its customers.
Even at night when the store closes, the live broadcast on Douyin helps extend their working time. The live-streaming business is capable of achieving sales of 1 million yuan or more on a daily basis, Ma said.
One of the incentives offered by Panghu is free maintenance for bags purchased from its offline store, as well as lifetime battery and polishing services for their watches.
In addition, used goods can be repurchased by Panghu within six months of their purchase by the customer.
Kate Zhang sold a Louis Vuitton light purple leather quick bag for 6,999 yuan in Panghu, and can net 5,999 yuan after service charges.
“Nowadays everyone carries a small bag, I don’t need a big bag anymore. It’s a good deal for me to upgrade to something mini,” she said.
Ma plans to turn Panghu into a mid-to-high-end consumer distribution channel as China’s Farfetch. The company also supports domestic designers and emerging Chinese brands such as Color Point and Babi. Last year, Focusstar Capital and ATM Capital led the third round of investment of $50 million, after its first and second financings of nearly 300 million yuan. Its circulating merchandise in 2020 exceeded 150,000 pieces, with a GMV of over 1 billion yuan. Ma said they are considering the prospect of listing in the future.
When luxury shopping was seen as a symbol of social status and wealth earlier in the country, shopping for luxury brands for Gen Z consumers was more about pursuing lifestyles.
According to Luxury Consumer Research 2020 conducted by iResearch, consumers under the age of 30 account for approximately half of luxury consumers in terms of spending.
The domestic second-hand luxury market has great potential compared to overseas markets as consumers have seen a shift from preferences for new items to those of “good quality and price”, according to the China Secondhand Luxury Market Report 2022, published by Isheyipai.com, a luxury goods service provider.
The industry reached over 1.2 trillion yuan in transaction revenue in 2021, while lagging behind developed markets, according to the report.
The majority of second-hand luxury goods consumers are in first- and second-tier cities, according to the report. But more growth is expected to come from third- and fourth-tier cities, he said.