Secondhand stores feed frenzy for top-end goods

Buying, let alone carrying around, a secondhand purse may be unpopular in China, but the nation's obsession with luxury goods is driving its young nouveaux riche into bargain basements looking for brand-name bags on the cheap.

In big cities such as Beijing, Guangzhou and Shanghai, service shops that mend, exchange, buy back and sell secondhand luxury goods are emerging. Outlets of secondhand luxury chains from Hong Kong and Japan are expanding and feeding on China's luxury market.

Julie Zhu, 56, is among the earliest secondhand luxury store owners in Beijing. Zhu, inspired by Milan Station, a pre-owned luxury retailer in Hong Kong, opened her first store 10 years ago.

But Zhu, who named her store Milan Fashion and who has two shops in the capital, said it was not until recently that her business has grown. She said Chinese consumers used to shy away from secondhand bags.

"The first five years were a difficult period and we had to educate customers because they didn't get on board with our new business model," she said.

Business grew after 2008 when the recession hit. She said the global downturn "turned" wealthy customers into loyal ones, shifting their eyes from full-price shops to retail outlets that offer discounts or secondhand luxury products.

Recently, on a trip to Zhu's 40 square meter store, customers packed the shop looking for designer bags including Bottega Veneta, Prada, Louis Vuitton, Dior and Hermes. It was a clear sign that more consumers, at least in Beijing, are looking to the secondhand market for luxury goods.

Zhu said the company has grown more than 20 percent in recent years and has hundreds of bags to sell.

But secondhand designer goods do not always come cheap. A Dior bag, which seemed brand new at the store, sold for close to $4,000, about 20 percent of the retail price. Items that are limited editions or hard-to-find products sometimes sell at higher prices.

"People are changing their perception about used luxury goods," she said. "As Chinese customers who used to think that they were too rich to buy pre-owned luxuries are traveling more and are being exposed to overseas trends, they become more accepting of secondhand stores."

Lucy Liu, 32, who shops frequently at Milan Fashion, said she likes the concept of buying used luxury goods.

"One woman's trash is another woman's treasure," said Liu, who checked out a beige Chanel bag and hung it on her shoulder. "Women get bored easily with the new discretionary items that they bought, but it is a waste if they throw them away and buy new ones."

Tony Chan, Milan Station's chief promotion officer, said many of his most recent handbags are trendy and are from women who got bored with their new "toys".

"This is how we receive the most innovative programs," he said, adding that many women get bored even before the bag is displayed on the shelf.

Cecilia Zhang, an English translator who regularly shops at Milan Station, said she does not care whether a bag is used. She mostly cares about its condition and how the current price compares to its original price.

"Secondhand goods don't necessarily equal lower quality and someone's cast-off," she said. "We all grew up wearing our big sister's or brother's worn clothes, so if you think that way, the whole concept of buying secondhand goods is kind of green."

At the shop, a secondhand Bottega Veneta bag sells for more than $3,000, compared with its $6,000 original sticker price.

Zhu said the secondhand luxury goods market has recently been hit hard because more people are turning to the Internet to shop for luxury items.

"The thing about online shopping is that you can't tell whether it is fake or real," Zhu said. "Sometimes shoppers are attracted by the low price online, but it might be a fake with cheap leather or it is missing details. You wouldn't know if you don't see it."

Zhu plans to expand one of her stores into a place where consumers can find a secondhand purse for only $100, far cheaper than it would be online.

"I've been in the luxury goods market for more than 10 years and I have accumulated much in my inventory during this period," she said. "The place will be somewhere I can clear my stock and at the same time enable genuine luxury to be within reach of the average Jane."