Neiman Marcus has purchased a minority stake in Fashionphile, allowing shoppers to drop off used luxury items at some of its department stores.

Neiman Marcus is making another play into the growing luxury resale market.

The luxury department store retailer, No. 51 in the just-released Internet Retailer 2019 Top 1000, has purchased a minority stake in Fashionphile, an online retailer that buys and resells luxury goods. Neiman Marcus did not disclose the amount of its investment.

Fashionphile has four stores—in New York City, San Francisco, Beverly Hills and Carlsbad, California—where shoppers can bring in their second-hand goods. Fashionphile authenticates the product and will give consumers a quote for how much it will pay for the product. Fashionphile then resells the items online or in its stores. Shoppers also can purchase second-hand luxury products in Fashionphile’s stores, as well as search each store’s inventory on Fashionphile.com.

With the Neiman Marcus investment, some Neiman Marcus locations (although the retailer declined to specify how many) also will serve as Fashionphile drop-off locations, allowing shoppers to receive a quote for their pre-owned item, as well as immediate payment from Fashionphile. Neiman Marcus says it will not sell Fashionphile products in its stores or on NeimanMarcus.com.

“Over half our customers already engage in pre-owned luxury, and this exclusive partnership exemplifies our commitment to providing our customers with services and offerings they want and need,” says Geoffroy van Raemdonck, CEO of Neiman Marcus.

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The 20-year-old Fashionphile says it has 15,000 items in its inventory and is profitable, with sales growing 50% year over year for the last five years. The reseller expects its sales to reach $200 million in 2019.

“Together, [Fashionphile and Neiman Marcus] will reimagine how both buyers and sellers participate in luxury and drive increased access to the most coveted brands on the planet,” says Sarah Davis, Fashionphile’s founder and president, in a blog post announcing the investment. “The ability to cash in on your luxury handbag and accessories investments puts more money back in your wallet for that next shopping trip—whether it be with Neiman Marcus or Fashionphile.”

This isn’t Neiman Marcus’s first foray into the resale world, however. In 2015, it briefly partnered with online luxury consignment retailer The RealReal Inc. (No. 182), so that consumers who sold their items on TheRealReal.com had the option of receiving a Neiman Marcus gift card worth 10% more than the cash value of the items sold, instead of cash.

The department store retailer hopes to engage younger shoppers that are already participating in reselling luxury goods, while also introducing those shoppers to Neiman Marcus stores, Raemdonck says.

73.6% of Neiman Marcus’ shoppers are female, according to web measurement firm Similar Web Ltd., with most of its consumers falling between ages 25-34 (31.7%) and 35-44 (21.5%). Fashionphile skews younger but captures similar demographics. 75.0% of its shoppers are female, but 37.5% are ages 25-34. It also has a larger share of younger shoppers—ages 18-24—at 12.4% compared with Neiman Marcus at 9.5%, according to Similar Web.

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“Neiman Marcus is doing this to get a relatively low cost look into a rapidly growing and likely quite sizable related market segment that could be both an incremental growth opportunity as well as a potential meaningful threat to some of their core business,” says Steve Dennis, president and founder of Sage Berry Consulting and former senior vice president of strategy and multichannel marketing at Neiman Marcus. “Most retailers need to not only be willing to compete with themselves but to place a series of bets on future growth segments. From this standpoint pursuing this sort of strategy seems sensible for Neiman Marcus.”

The secondhand and resale market is expected to grow to $51 billion in five years, according to online fashion resale business thredUP’s 2019 Resale Report. The report includes research and data from retail analytics firm GlobalData that it determined through consumer surveys, retailer tracking, official public data, data sharing, store observation and secondary sources. The secondhand market reached $24 billion in 2018, according to the report.

ThredUP’s report also featured consumer surveys conducted by GlobalData of 2,000 U.S. women over 18 in January 2019, asking specific questions about their behaviors and preferences for secondhand goods, with findings such as:

  • 56 million women bought secondhand products in 2018, up from 44 million in 2017;
  • 60% of consumers would increase loyalty to a brand if a recycling program was offered;
  • 40% of consumers now consider the resale value of an item before buying it—nearly a two-times increase from five year ago; and
  • 26% of luxury shoppers also buy secondhand.

Internet Retailer’s 2019 Top 1000 found that luxury resale retailers are a fast-growing bunch. WatchBox, No. 299, grew the fastest online of the five Top 1000 retailers that sell used luxury goods. Plus, these e-retailers increased their web sales by an average of 23.0% in 2018—well above the Top 1000 average web sales growth of 16.2%.

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