CARLSBAD, Calif. -- Tucked away in a nondescript office park, the luxury resale business Designer Vault recently opened a chic, chandeliered, appointment-only showroom to market what it claims to be the largest collection of vintage Chanel in the nation -- more than 1,500 handbags and accessories worth an estimated $2 million.
Less than 3 miles away, the headquarters for Fashionphile, which has boutiques in Beverly Hills and San Francisco, has floor-to-ceiling shelves and walk-in safes brimming with high-end designer purses, wallets and jewelry by Louis Vuitton, Prada, Dior, Cartier and many others. The bustling operation and abundant inventory is prompting the company's move to a new 30,000-square-foot warehouse in Carlsbad in July.
Welcome to the booming business of selling swank.
While demand for lower-market, so-called "gateway" designer bags -- Coach, Michael Kors, Kate Spade, Tory Burch, et al. -- is in decline, premium luxury resale is one of the fastest growing segments of the retail industry, generating from $16 billion to $25 billion a year, according to several studies.
Sales are being fueled by a seemingly insatiable and recession-proof desire for exclusive leather goods, brands that retain much of their original value and the ease of online sales, consignment, authentication and global shipping.
"We're bursting at the seams," said Sarah Davis, 44, co-owner of Fashionphile, which has been in the pre-owned luxury business since 1999.
From an aspirational first-timer in San Diego looking for the cachet of a designer bag without the baggage of a full-retail price, to luxury house VIPs in New York unloading their freebie logo trinkets, to the brand-driven affluent consumer class in China, resale shoppers are increasingly turning to upscale e-commerce companies for their treasure hunts.
"People buy and sell for all sorts of reasons. Sellers, of course, are looking for cash, which many turn around and use on another bag," said Christina Samoylov, the 27-year-old owner and founder of Designer Vault.
"People who buy vintage, where there's only one anywhere, are making a statement. They've got a unique sense of style," she said. "Today, people are more money-conscious, and I think with all that's going on [online], it's much easier to afford luxury."
San Diego only represents a small share of the market for these costly Chanel clutches or cult-favorite Hermes Birken bags, with most goods shipped to New York, San Francisco, Los Angeles and China. The owners of Designer Vault and Fashionphile estimated that as much as 95 percent of their sales are conducted online.
"We ship out at least 300 bags a day," said Fashionphile's Davis.
Earlier this month, the company's website touted its resale prowess:
"This week's payout: $707,083.29; Items paid this week: 1053." In a press release, Fashionphile reported year-over-year growth of more than 50 percent in 2015 and record sales of $3 million in February.
The company's slogan, "Shop. Sell. Repeat," is an indicator of the constant flow of goods that come through Fashionphile's "procurement department," which logs in about 120 items a day for consignment or resale, from Rolex watches to Balenciaga bags to one-of-a-kind Chanel surfboards.
On a recent Monday, an employee was inspecting a newly arrived lipstick pink Hermes Birken bag. Among the most coveted luxury items on the market, a brand-new Birken from Fashionphile can sell for more than the retail price from Hermes itself.
"There's demand and no supply," Davis said. "These are limited edition items, VIP only, wait-list only."
Earlier this month, Fashionphile's website displayed nearly two dozen Birken bags, ranging from $7,950 to $21,500, including a lipstick pink Epsom Candy Birken 35 for $12,500.
Over at Designer Vault's newly minted Parisian-like salon, owner Samoylov displayed a sampling of rare, limited-edition Chanel pieces that at first glance looked more like novelty items. They included: a black and gold Lucite jewelry box handbag, complete with makeup mirror ($5,000); an oversized, clear plexiglass Chanel perfume bottle on a chain shoulder strap ($11,500); and a plexiglass sphere that looks like a giant pearl and opens up as a small carrier, or minaudiere, on a chain ($25,000).
The products' uniqueness factored into their value, as did who had owned or worn them before -- Rihanna, Kim Kardashian, Miley Cyrus and others.
"When celebrities are seen with something on the red carpet or in a movie, it definitely raises the price," Samoylov said.
The idiosyncratic Cyrus, for example, wore the perfume bottle bag, filling it with Froot Loops cereal.
"That was it," said Samoylov. "Everyone had to have it."
Business on 06/28/2016