Retailers selling new clothing aren't worried that the resale market is growing.

Used clothing is hot right now.

Companies like Rent The Runway, The RealReal, Farfetch and Rebag make it easy for shoppers to get their hands on hard-to-find designer goods at a fraction of the price. There’s also ThredUp, Vestiaire Collective, StockX, Poshmark, My Wardrobe HQ, Tradesy and Goat, among others, for shoppers to choose from. Customers can buy vintage or just borrow for as long as they like.

The shift toward minimalism and Marie Kondo-ing everything — especially among younger shoppers — also makes resale appealing. So does the push for sustainability.

A Fendi Baguette handbag from The RealReal. 

Even traditional retailers are getting in on the action, betting rental services will attract new shoppers while giving loyal customers more options.

On Tuesday, Urban Outfitters unveiled the soon-to-be launched subscription service Nuuly. Shoppers can borrow up to six pieces from the retailer for $88 a month.

“Over the years, [Urban Outfitters] has observed several trends impacting consumer’s shopping behaviors,” the company said in a statement. “Interest in sharing-economy platforms and recurring subscription relationships has grown across industries. In apparel, the Millennial consumer, in particular, is seeking out platforms that provide novelty, variety and breadth, while also supporting sustainability. Nuuly seeks to further these shifting behaviors by giving subscribers access to a wide assortment of current fashion at a substantially lower cost-per-wear than retail, solving the paradox of a Millennial’s quest for constant fashion newness alongside the desire for a more sustainable lifestyle.”

It’s no wonder then that the resale market’s value is expected to more than double — from $24 billion to $51 billion — in the next five years.

Used clothing is definitely on trend right now.  Shutterstock / Joshua A Houck

All of this chatter about used goods might leave some traditional retailers concerned whether shoppers are still interested in buying new.

But so far, no one seems fazed.

“We’re seeing no impact,” Ernie Herrman, chief executive officer, president and director of the TJX Companies, said during Tuesday’s conference call. In fact, the off-pricer, which owns T.J. Maxx and Marshalls, among other brands, continues to draw more customers to its stores each quarter.

Hermann pointed out that resale and rentals, much like the off-price channels, are a form of “value shopping” and it’s something his company continues to monitor closely.

“But in terms of anyone having the critical mass to impact us right now, we don’t see that,” Hermann said.

Accessible luxury players, meanwhile — such as Kate Spade, Coach and Michael Kors, brands with products that retail for a few hundred dollars — might have cause for alarm.

That’s because shoppers can spend the same amount of money renting a Birkin bag or Chanel tweeds — and then swap it out later for a new model — as they would buying just one accessible luxury item. Or they can resell it and get some of their money back later. Investment shopping has never been more lucrative.

“It illustrates how luxury brands carry real value,” Ike Boruchow, retail analyst at Wells Fargo wrote in an April note.

A page from the Farfetch Web site.

Farfetch’s e-commerce platform.  Courtesy Photo

Even so, Victor Luis, ceo of Tapestry, parent company to Coach, Kate Spade and Stuart Weitzman, said the current resale market is primarily geared toward watches and jewelry. He estimated that only about 5 percent of resale’s current market, or about $1.5 billion, is in handbags and accessories.

“There is a resaler market, but in essence it’s a parallel market,” Luis said. “Meaning, they’re buying new products in Europe. They’re buying new products in the U.S. and then reselling in Asia, in the parallel stores, at a lower price. Because they’re taking advantage of price difference.”

Luis pointed out that resale has always been around — albeit in different forms — in places like eBay, Amazon and consignment shops. The new opportunity, Luis said, lies in creating limited-edition collections and collaboration that can be found only in certain markets and are then sought out by shoppers around the world.

“For that business model, where [rental and resale companies are] basically taking some of the hottest European luxury “It” bags and reselling them, the average price is about $1,000 bucks,” Luis said. “So there’s a consumer, a luxury consumer, who just wants the next “It” bag. They’ll buy something new, a Chanel or Hermès or other luxury bag, for $3,000, $4,000, $5,000 and then they know that there is some terminal value to it. They can resell it for $1,000 and use that toward the purchase of another new bag that they can buy and continue [the cycle] that way.

“We’re not seeing those core-priced handbags — that could then be resold — as a competitor to the accessible luxury players, where our average price is $300 to $400,” Luis said. “We just don’t see it as the same consumer.”

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