The Gray Market--Not Just Watches

[The Sultan of SoWhat]

Story at the New York Times about the growing gray market in luxury goods.

https://www.nytimes.com/2021/08/24/fash ... arket.html

[Robotaz]

Blocked by the pay wall.

Is there a conclusion?

[The Sultan of SoWhat]

Blocked by the pay wall.

Is there a conclusion?

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Some excerpts:

Luxury brands are now effectively competing against themselves. Exactly how much they stand to lose is difficult to quantify. But most are acutely aware of the gradual thinning of the veneer of exclusivity that they have worked hard to establish and that has already been partly diluted by the heavy discounting of off-season stock by department stores and outlets.


Now, many brands are working with consultants and local governments to develop new ways to combat the gray market after previous attempts to control the practice — like buying back and destroying unsold stock — led to backlash over sustainability issues.

“If brands don’t want to be a victim of these platforms, then they have to button up their distribution and reduce wholesale volumes to protect their image,” Mr. Solca [Luca Solca, an analyst at the research firm Sanford C. Bernstein] said. Brands like Gucci, Prada and Burberry have recently trimmed wholesale orders in an attempt to cut back on the appearance of ubiquity and the risks of heavy discounting. The eyewear producer Luxottica is creating chips for its glasses that will allow it to better track products. Others are exploring using blockchain technology or improved auditing measures to identify problem suppliers and retailers.

Still, incentives remain for customers to look to the gray market. Brands like Chanel raised prices as much as 15 percent in the past year as a result of changes to raw materials prices and currency exchange rates.

In July, weeks after the controversy that had roiled its stock, Cettire suggested it would expand into children’s wear and said it was “still assessing new opportunities for growth.”

“Eventually, this market will contract, but for now there are plenty of price-sensitive luxury consumers who are willing to purchase authentic goods at a discount through gray channels,” Mr. Solca said. “That demand won’t go away any time soon.”

[watchpalooza]

Add to this that the market for vintage luxury goods (not just used) is also spiking.

[MoT]

Blocked by the pay wall.

Is there a conclusion?

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Now, many brands are working with consultants and local governments to develop new ways to combat the gray market

Sort of related; This is what happened with European cars in the 1980s. Brands like Mercedes, BMW and Audi were losing sales to grey market importers because they were able to bring in Euro-spec models that the brand dealers could not.

Mercedes ended up successfully lobbying, and the result was an import ban on vehicle models not sold for this market if they are less than 25 years old.