Luxury’s Gray Market Is Emerging From the Shadows

New platforms and dealers able to offer steep discounts on the latest styles are becoming a powerful — and disruptive — force in the fashion industry.

Imagine you are hunting online for a pair of square-toed slides from Bottega Veneta, one of the most-hyped luxury brands of the moment. A new season pair can cost more than $550 from the brand’s website, an old-guard department store like Neiman Marcus or a newer e-commerce player like Net-a-Porter. But what if you chose to buy from Cettire, a website offering discounts of up to 30 percent on the latest fashion styles? You would be a player in the multibillion-dollar luxury “gray” market, a fast-growing sales sector that has historically operated out of sight of most Western consumers. However, with the arrival in recent years of companies like Baltini in Italy, Italist in the United States and Cettire, which listed on the Australian Stock Exchange at the end of 2020, gray sales have been ending up in millions of digital shopping baskets. Unlike the illegal counterfeit goods often found on the black market, the gray market sells authentic luxury products — but at a significant discount, usually between 15 and 35 percent, and with no contact with the brands. Through a practice sometimes known as parallel importing, gray market sellers tend to take advantage of the varying pricing strategies and taxation requirements for luxury products across different regions in order to get certain hot products to those who want them for less.