Lynn Chen, a 25-year-old Shanghai native, recently snagged a luxury handbag at a bargain price, but it's nothing she wants to brag about to her friends.
Chen bought a Louis Vuitton handbag for around 8,000 yuan (US$1,264), a 50 percent discount to its retail price. It looks just like those sold in Shanghai's posh luxury boutiques, but if you look closely -- very closely - there are a few stains on the leather trim.
The handbag is second-hand.
"As long as it looks like a new one at first glance, I am fine with it," said Chen, who had concluded three months ago that she couldn't really afford a new luxury handbag at retail prices.
Chen may be the face of a new breed of luxury shoppers in China -- people with a fashion-conscious bent in a budget-conscious reality who want a showy lifestyle without losing face.
It is an emerging market that takes a lot of nerve to crack. Second-hand luxury goods does sound like an oxymoron in a country where hand-me-down products are traditionally considered inferior in quality and status.
When Brand Off, a dominant second-hand luxury retailer from Japan, first came to the Chinese mainland last September, it had some difficulties making any inroads.
'Almost new' are top sellers
"But the business is getting better as our name catches on among bargain-hunters," said Takayuki Shimata, a store manager of Brand Off in Shanghai.
The company, which has two shops in the city, specializes mainly in handbags and watches, with offerings divided among "never used," "almost new" and "used" categories at proportional discounts.
Besides the product's condition, the pricing factors in design specifications, edition, and brand.
Shimata said the "almost new" products are generally the best sellers because they look pretty much the same as brand-new ones but carry price tags that are more palatable.
The discount for a never used Louis Vuitton handbag is around 20 percent, while that for the "almost new" category is higher than 25 percent.
Brand Off is not alone in cashing in on consumers' newfound acceptance of what some euphemistically call "pre-loved" clothing and accessories. Right next to its store on Nanjing Road W. stands Milan Station, a Hong Kong-based rival.
That retailer reported a 20 percent surge in sales last year, with most of its customers mainland Chinese, including the 60 percent of visitors to its Hong Kong stores. To further unleash their buying potential, Milan Station has opened two stores in Shanghai and plans to open two more in Beijing and another in Guangzhou this year.
"We believe that the second-hand luxury goods market is becoming popular in Shanghai and China," said Tony Chan, chief marketing officer for Milan Station said. "Previously, the Chinese thought that buying second-hand goods was inferior and shameful. However, this concept has changed in recent years."
He noted that buying used merchandise in China has turned from being a sign of financial straits to a sign of problems in the "new urban lifestyle." Some people now see buying second-hand as being fashionably friendly to the environment.
Customers can trade in their old handbags to purchase never-used ones. More than 80 percent of Milan Station's stock comes directly from the public, the remainder from traders who buy the unused products locally or overseas and then sell them in to the secondhand retailer.
Customers at Milan Station usually fall into two groups: young women looking for a cut-price handbag and wealthy customers looking for unused limited editions, many of which, thanks to their rarity, cost even more than they originally did in the store.
Yet the retailer makes most of its money from these so-called "premium products," which cost HK$50,000 (US$6,444) or more and account for more than two-thirds of its takings.
