Neiman Marcus will acquire a minority stake in Fashionphile, a pre-owned luxury handbag and accessory retailer, marking the department store’s entry into the resale market. The size of the investment was not disclosed.
As part of the alliance, Neiman Marcus in-store shoppers will be able to receive a quote on their items from Fashionphile, along with immediate payment that can be used to purchase new items from Neiman Marcus. However, pre-owned merchandise will continue to be sold exclusively through Fashionphile.
“Our investment in Fashionphile is an exciting step in Neiman Marcus Group’s transformation into a luxury customer platform, as we work to better serve our customers, continue to shape the future of luxury and position Neiman Marcus for long-term and sustainable growth,” said Geoffroy van Raemdonck, CEO of Neiman Marcus Group in a statement. “Over half of 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.”
Neiman Marcus is becoming involved in the luxury resale market just as the e-Commerce dominated industry starts to put down brick-and-mortar roots. Rebag, a luxury handbag resale marketplace, is expanding its number of stores from five to 30, while The RealReal opened a second permanent store less than a week after raising $115 million in a July 2018 fundraising round.
While Neiman Marcus hasn’t released plans to add luxury resales to its physical stores, exploring this potential market could help the retailer fuel its turnaround effort. Neiman Marcus is aiming to generate more than $5 billion in total sales and $700 million in adjusted EBITDA within five years.
Investing in Fashionphile gives Neiman Marcus a foothold in the overall pre-owned segment, where sales are expected to reach $23 billion by 2023, according to ThredUp. The new service could also help Neiman Marcus attract additional interest from younger shoppers, as 33% of Millennial shoppers say they use the second-hand market.