Category: Economic

You’ve probably heard of e-commerce. But what about re-commerce?

It’s the business of buying and selling used items.

There’s a Canadian company, LXRandCo, that’s carving out a niche for itself in this category. It deals in the vintage luxury market, which is growing 14 per cent every year, according to the experts at Canaccord Genuity, a financial services company.

At first look, a $34,000 used handbag doesn’t sound like a deal. But upon closer inspection, the Hermès Bolide 45 Shark Palladium Hardware travel bag, shown above in perfect condition, crafted in France, is on offer for about half of what it retails for new. That’s the appeal of re-commerce.

“We have a unique business proposition in that we offer great brands such as Louis Vuitton, Chanel, Hermes, among other brands at great value,” LXRandCo CEO Fred Mannella told CBC’s On The Money in a recent interview.

“We do this by offering products that are slightly used or pre-loved.”

According to the company’s latest financial snapshot, business is brisk, and ramping up. The company’s second quarter revenue rose 73 per cent in the past year to $7.2 million from $4.1 million.  

That company has 61 stores with plans to expand to 122 by year’s end.

That may sound like a daunting task, but its stores will piggyback on existing department and discount stores, including Hudson’s Bay in Canada.

Rather than building a retail space from scratch, it will open pop-up kiosks, as it has already done in this country, the U.S., Germany, Belgium and the U.A.E.

LXRandCo continues to do business online as well, but many of the company’s new initiatives are focused on enticing customers to set foot in their stores, driving traffic into their partner stores.

Right now, they purchase most of their goods from wholesalers and auction houses in Japan but the company is looking to increase the amount of items it buys from people who come into their retail locations.

Mannella says that plan has the potential to boost LXRandCo’s bottom line.

“We want to increase our gross margins by having a very interesting new category of our business which is the in-store buying program. We’re currently doing this in about 29 of our stores and we’re buying directly from the consumer in-store,” he says.

Letting people come into the stores with their high-end vintage goods and sell them for cash on the spot is meant to make the experience more fun for customers. “It allows great retail entertainment,” Mannella says.

Canaccord Genuity analyst Derek Dley writes that key people are among LXRandCo’s greatest assets. Specifically, retail icon Joe Mimran (the founder of Club Monaco and Joe Fresh), who is director and chair of the company’s international business development committee. Mimran is also a former Dragons’ Den dragon.

The people behind the company are such an asset, Dley says, that losing someone like Mimran is one of the biggest risks the company faces.

And there’s the danger of what the discovery of a fake could do to the company’s reputation.

“If LXR were to retail a counterfeit item, we believe the company would face serious challenges in retaining customers and meeting growth targets,” Dley said in a recent report on the company.

LXRandCo has a system for authenticating its luxury vintage offerings that, thanks to state-of-the-art technology, can verify a product’s legitimacy in about an hour.

This process is used for all its items, which range in price from a few hundred, to several thousand dollars. The average price of an item is about $750.

“These are the creme de la creme, these are the best products that are out there,” Manella says of his company’s wares. “We like to say we’re offering a little piece of luxury for everybody.”

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A judge has approved a hardship fund for former Sears Canada employees that will come from a pool of money set aside to pay bonuses for key employees.

The $500,000 fund will help former employees facing difficulty who would have otherwise been eligible for severance payments when they lost their jobs at the retailer.

Sears Canada was criticized last month when it received approval to pay millions in bonuses to keep key employees on board while not paying severance to laid-off workers during its court-supervised restructuring.

The retailer announced a plan in June to close 59 locations across the country and cut approximately 2,900 jobs, without severance, while under the Companies’ Creditors Arrangement Act.

The $500,000, which will come from the $9.2-million retention bonuses earmarked for executives, will provide very little relief to very few people, employment lawyer Lior Samfiru told Metro Morning’s Matt Galloway on Thursday.

“If it was distributed amongst all employees, it will be somewhere around $170. So I don`t know that this provides any relief and I`m not sure this is anything more than a PR move,” said Samfiru who represented some of the employees.

The court did not hear a motion filed by a group of creditors that wants to sue the company’s executive officers and directors, alleging negligent misrepresentation and oppression.

The retailer’s court-appointed monitor says the group wants an Ontario judge’s permission to launch its case against the company.

The next hearing is scheduled for Tuesday.

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It’s no secret financial traders have always been predominately male.

So, when a group of researchers with the Ivey Business School at Western University in London, Ont., set out to at look at the role of testosterone on the markets, it wasn’t a far-flung idea.

“We wanted to simulate what happens when people are at elevated levels … how would they trade with high testosterone,” said Ivey assistant finance professor and researcher Amos Nadler in an interview with CBC Radio’s London Morning.

For their “experimental market” study, researchers divided 140 men into two groups and let them do mock trading amongst themselves. One group received a placebo treatment — the other, a topical gel containing testosterone.

The result? The testosterone-fuelled group was more reckless in its trading, willing to bid well above the value of a given commodity in hopes of a higher return. Researchers say the behaviour increased the odds of a market crash.

By comparison, the placebo group was trading more rationally, buying low to sell high, instead of buying high to sell higher.

“Your body produces more testosterone when you prepared for a challenge … even more testosterone when you are winning,” said Nadler.

The Wall Street experience

When the financial crash hit Wall Street a decade ago, a funny thing happened. Male financial executives started turning to doctors for testosterone supplements in hopes it would boost their output and sharpen their faculties.

 “All of these men are under tonnes of stress, and stress will reduce their levels of testosterone,” said Manhattan-based Dr. Lionel Bissoon in a story in the Financial Times in 2012

Nadler said studies based on gender rather than the male hormone found that women also tend to keep a more level head in the high-adrenalin setting of a trading floor.

“Single males over-traded and lost the most money, while women tend to be more conservative and actually make more money than men,” said Nadler   

Impulsive trading can sometimes be good 

The Ivey study was done in collaboration with the University of Oxford and Claremont Graduate University in Claremont, Calif.

While it found that testosterone clearly played a role in more reckless trading and spending, Nadler cautions male traders aren’t all bad.

“Being slightly more impulsive can be a good thing … there are some results that showed the higher-testosterone guys made a bit more money than their counterparts,” said Nadler. 

“It can also be very harmful in some situations if you are being impulsive.”  

The research paper, titled The Bull of Wall Street: Experimental Analysis of Testosterone and Asset Trading, will appear in an upcoming issue of the publication, Management Science.

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