Conscious Choices: Why the booming second-hand market is here to stay
The second-hand, or resale market has been booming over recent years, and it has continued to grow during COVID. Ranging from automotive to luxury watches, from clothing to furniture, the growth seen across recent years has continued or even accelerated.
A sector at the intersection of multiple trends
The recent growth in the resale market had largely been driven by two colliding trends – the challenging economy and the gathering environmental storm. Some consumers had been motivated by the recognition that traditional fashion production and retailing are incredibly environmentally demanding and damaging. Others had sought an opportunity to make money from their underused wardrobe fillers. Of course, there were other factors too: the rise in nostalgia and a desire to express our individuality through non-mainstream clothing choices made those hours browsing through the charity shop and flea market racks worthwhile.
Those factors remain as drivers of the resale market but the COVID pandemic has brought both a new impetus to the cash-in mentality and the time needed to give wardrobes a thorough review and clear out.
The resale sector has diversified to include mainstream brands
As well as the traditional thrift and donations outlets and the specialist resellers highlighted above, we are now seeing mainstream fashion and retail brands including the likes of Levi’s, Gap, IKEA, Zalando and H&M’s COS Resell upping their sustainability game by exploring resale options in a number of ways: starting offshoot sub-brands that focus on resale, partnering with some of the resale specialists mentioned above and by incentivising product reuse and recycling.
Second-hand isn’t just evolving, it’s also big business
There is clearly an appetite for second-hand. Some 44% of consumers think they plan to buy more second-hand items over the coming twelve months (only 18% feel they will buy less), greater than for Amazon fashion, off-price, luxury or department stores. Such attitudes are fuelling great confidence about the long-term future. The second-hand apparel market (valued at about $28 billion today) is forecast to reach $64 billion within five years, and potentially $80 billion by 2029. Second-hand goods are expected to make up 17% of a person’s share of closet space by 2029, up from just 3% in 2009.
There are at least three good reasons to share the bullishness exhibited by those in the sector:
1. Resale is a trend accelerated by, rather than created by COVID
“The crisis accelerated what was already going to be true over the next few years. We were already starting to see a resale generation, emerging players and a market growing. What happened was COVID-19 put a fine point on it”thredUP CEO James Reinhart
2. Resale is a trend driven by young people
Depop’s Generation Z audience group of under 26-year olds are the biggest drivers of growth, often acting as ambassadors. Additionally, the platform is popular among social influencers who further increase traffic when talking about their shopping or buying experiences in their communities.
3. Resale is innovating to keep pace with traditional retail
Many resale specialists are using their investment pots to innovate, often mimicking the offerings of larger-scale mainstream retailers. Many are adding resources such as contactless home delivery and pick up, remote sourcing for sellers and direct and constant communication through our various channels was essential or scaling up their outreach efforts. Here are just a few recent examples:
- ThredUp launched its ‘Shop Her Closet’ auction series on Instagram, where customers could bid on pieces from celebrity closets and let sellers order a ‘Clean Out Kit’ bag free of charge to fill with their unwanted clothes.
- Vestiaire Collective debuted its “Fashion Should Feel Good” campaign in April and reduced commission on products priced from 150 to 300 euros, allowing them to earn more and list items at a lower price.
- DIEM, a.k.a. ‘The Bank of Things’ is exciting in the investment community with its new vision. It provides users with a digital dashboard that instantly visualizes the real-time, resale market value of their goods and then allows them to liquidate those ‘assets’ by selling them directly to DIEM.
The way to hit back
Resale is clearly both a short-term and long-term threat to mainstream retail. Defensive and offensive measures like these are necessary to hit back:
- Partnership: Explore partnerships with existing resale specialists.
- Sub-brand: If you are worried about whether offering resale options will dilute your high-end branding, go the route of starting up a new resale sub-brand.
- Depreciation: In the auto industry the concept of depreciation is well accepted. Fashion and other retail should leverage technology to flag up to buyers of new Items what the item will be worth for trade-in given various assumptions about the age and the wear of the item.
- Incentives: offer consumers incentives to bring their old items into your stores
- Level playing field: Treat resale as an equal player to traditional retail, giving equal attention to your resale branding, communication and digital platforms.
This article was written by Nick Chiarelli, Head of Trends at Unlimited