The sale of secondhand apparel and accessories, referred to mainly as resale or “recommerce,” has gained significant traction as consumers increasingly seek out value (both from a pricing and sustainability standpoint), as well as clothing that expresses individuality and is easily shared via social media. In fact, the overall resale market has grown 21X faster than the retail apparel market over the past three years and is expected to reach $23 billion by 2023 ($51 billion when accounting for thrift stores and donations), according to the thredUP 2019 Resale Report.
The rapid growth has been spurred by a group of disruptors in recent years, including Poshmark, The Real Real, Vestiaire Collective, thredUP, Threadflip, Depop, Rebag and StockX, and has convinced some of retail’s biggest traditional players to hop on the bandwagon.
The resale market appears to be shaking up the majority of the fashion industry, regardless of what consumer the retailer is intending to capture, but one specific segment will have to continue adapting to changing consumer preferences if it intends to keep shoppers interested in 2020 and beyond.
“Specialty retailers are the ones that are being super-affected by this,” said Lee Peterson, EVP of Thought Leadership and Marketing at WD Partners in an interview with Retail TouchPoints. “Specialty goes all the way up and down the line — from fast fashion to couture, those are specialty stores. Some of my friends that are still merchants at those companies have told me that they are hyping the fact a shopper may wear that brand’s jeans with a used jacket or someone else’s belt. They know you’re mixing and matching, but they’re acquiescing and acknowledging the fact that they’re not going to try to sell them a uniform.”
Can Department Stores Capitalize On Resale Growth Opportunities?
Department stores are the latest retail segment to jump into the resale genre in yet another attempt to differentiate their physical presence. Macy’s, JCPenney and Stage Stores all debuted secondhand apparel sales within their stores through partnerships with online consignment store thredUP. Between the three retailers, thredUP will offer secondhand apparel in approximately 115 stores.
“Really, we are merchandising into where we see holes in our inventory,” said Macy’s CEO Jeff Gennette in an earnings call. “This idea that merchandise was pre-owned is very attractive to many customers, not just because of the price, but also because of the sustainability, so that’s how we approach that.”
In a RetailWire discussion, Shikha Jain, Senior Director of Simon-Kucher & Partners, posed two questions that would determine whether the thredUP-Macy’s partnership (and the other partnerships) is a success:
“Does thredUP help drive traffic to the Macy’s store that is either purely incremental or increases trip frequency of the current Macy’s shoppers? Will having thredUP help sell Macy’s merchandise once those shoppers are in the store? If the answer to either of these questions is no, then this move may not work,” said Jain.
While the success of these partnerships within the department stores remains to be seen, it’s clear that thredUP has plenty of faith that its business model will scale. In the wake of a $175 million funding round, bringing its total raised to more than $300 million, thredUP launched its “Resale As A Service” (RaaS) platform that offer numerous options for potential retail partners: a store-within-a-store, inclusion into the thredUP online marketplace and recycling rewards designed to incentivize shoppers to send their clothes to thredUP.
With the RaaS platform, thredUP hopes it can convert more customers to resale even while they’re buying brand new goods. But these services, and the secondhand apparel choices that they offer, appear to benefit off-price retailers such as TJX and Ross Stores far more than Macy’s and JCPenney. As many as 56% of shoppers would buy more from off-price retailers if they had secondhand apparel, according to the thredUP survey. This percentage is 2X the 29% that say they would buy more from department stores if they carried resale items.
Gen Z, Millennial Shoppers Spearhead Sustainability Push
Sustainable fashion brands such as Allbirds and Everlane could capture 52% of shoppers if they offered secondhand apparel, illustrating that the continued popularity of sustainability among consumers be a significant factor in resale’s growth. As many as 36% of Gen Z shoppers say they would spend at least 25% more on sustainable products and apparel, with another 6% saying they would spend 50% more, according to data from MakerSights. Nearly one third of Millennials would spend at least 25% more, while another 8% would pay 50% more on sustainable products.
In fact, 68% of Gen Z shoppers made an eco-friendly purchase in 2018, according to CGS. The potential for more of these purchases would certainly ease the burden on retailers seeking to prevent unnecessary waste. The Environmental Protection Agency estimates that clothing waste has risen to 16 million tons in 2015 from 1.7 million tons in 1960, a problem that increases with each passing year.
“[Sustainability] is actually giving people permission to wear used goods,” said Andrew Lipsman, Principal Retail Analyst at eMarketer in the “Behind the Numbers” podcast. “If you think back a decade or two ago, the notion of used or consignment didn’t have the same cachet, but there’s a cachet associated with sustainability. It’s allowing people to take part in this, feel okay about it and be able to tell their friends about it.”
Patagonia, Eileen Fisher Bring Buyback Incentives To Life
Patagonia, a brand known for its environmental conservation efforts, developed its own brand of recycled clothes in 2017 and is already benefitting from the launch. The “Worn Wear” brand is already profitable, and has inspired the outdoor retailer to open a temporary store in Boulder, Colo., this fall dedicated to selling pre-owned goods, its first such location.
Shoppers can mail back used items or drop them off at one of the retailer’s 34 U.S. stores, and receive a credit of up to $100 for use on future purchases.
In 2009, Eileen Fisher launched a clothing buyback program specifically for employees to enter into the resale market. The company later launched a program for all shoppers under the “Renew” line, which consists of clothing that shoppers sent back in pristine condition. It hit almost $4 million in sales last year and is profitable.
Today, Eileen Fisher sells used clothes in a handful of its 67 namesake stores, its e-Commerce site and its two free-standing Renew stores. In total, resale accounts for 1% of Eileen Fisher revenue. Apparel buybacks have increased 15% year-over-year, the retailer told Vogue Business.
The growth in buyback incentives is a promising direction for resale, primarily since these businesses can struggle to procure the right amount of secondhand merchandise if they don’t have a consistent process in place to gather inventory.
“In the used business, the most important thing is actually acquiring the inventory,” said Peterson. “In a regular business you don’t really worry about that — you worry about a budget, you worry about the product quality itself, whatever it might be, it could be apparel, could be music or anything, you’re thinking ‘I need to get what my customer really wants.’ For used businesses, they’re usually thinking, ‘I need to get just about anything or I don’t really have a business. I’ll settle for less or pay less to get some kind of inventory, otherwise I’m not in business at all.”