That’s according to ThredUp’s recent 2021 Fashion Resale Report, which found retailers are taking notice of the secondhand trend and jumping into the market. Resale, the subsector of the secondhand market that includes more curated assortments, is driving the growth, the report found.
Already, a number of high-profile brands, including lululemon and Nike, have opened their own recommerce marketplaces, enabling customers to send in gently used items for credit on their next purchase. Customers can shop the secondhand items, as well, enabling the brands to recoup some of the resale demand for their products while also meeting sustainability goals.
The value of the secondhand market was also highlighted when Etsy announced it was acquiring Depop, a global fashion resale marketplace loved by Gen Z with a huge secondhand offering. The mostly cash deal was valued at $1.625 billion.
“We are in the early stages of a radical transformation in retail. Consumers are prioritizing sustainability, retailers are starting to embrace resale, and policy makers are getting on board with the circular economy,” James Reinhart, thredUP co-founder & CEO, said in the report. “Pollutive industries have the power to transform when technological innovation collides with the motivations of consumers, businesses, and government. We’ve seen it with electric cars, solar energy, and next, circular fashion. With this year’s Resale Report, we hope to shine a light on the positive power of resale, and create a catalyst for further collaboration and action across the industry.”
Consumers have been increasingly purchasing secondhand items over the past several years, but the COVID-19 pandemic influenced many to thrift instead of buying new clothing items. Apparel purchases fell sharply during 2020 as lockdown measures were in place. Secondhand buying is more popular among Gen Z and millennials, with 53% of these demographics saying they will spend more on secondhand in the next five years.
Sustainability and price were some of the top reasons consumers are turning to secondhand markets, according to the report. And that also means consumers are looking for higher-quality items they could potentially resell later. Just more than half of consumers are more opposed to eco waste and 60% are more opposed to wasting money than before the pandemic, the report noted.
More retailers are expected to jump on the trend--60% of retailers have or are open to offering secondhand to their customers. That’s nearly 24,000 retailers interested in offering secondhand. A big part of the reason retailers want to open their own secondhand markets is because 62% of their customers are already participating in resale. As much as 42% of retail executives cited resale as an important part of their business within five years. Retail executives cited being more sustainable, attracting new customers, attracting younger consumers, driving revenue and staying relevant as the top reasons for entering resale.
Plus, consumers say they will engage more with brands that offer resale:
43% say they are more likely to shop with a brand that lets them trade in old clothes for brand credit
34% say they are more likely to shop with a brand that offers secondhand clothing alongside new
32% say they are more likely to view a brand as high quality if the brand sells both secondhand and new clothes
The majority of retail executives (60%) see partnering with an executive resale business, such as ThredUp, as the best approach to enter the secondhand market, while 28% say they want to build their own marketplace from scratch. Most retailers stated they are not set up to handle the logistics of resale. Another 8% saw acquiring another resale business as the best approach.
Overall, the secondhand market only makes up a tiny fraction of overall apparel sales. Secondhand items made up less than 1% of the total apparel volume sold by retailers who have launched resale shops in 2020. That represents a huge opportunity for retailers to significantly increase their offerings, despite new challenges, as the demand continues to soar.
“The secondhand market is booming, and brands are piling in. But selling pre-worn clothes online is challenging,” Cathaleen Chen, correspondent at The Business of Fashion, said in the report. “Every item must be sorted, priced, photographed and described in a listing. Resellers have giant warehouses where that work is automated. With resale far outpacing the growth of the overall fashion sector, brands must consider their options.”