Sales of secondhand apparel are trending upward, but by how much depends on whom you ask. Poshmark sees apparel resale by 2022 reaching $41 billion, from about $20 billion today, a 49 percent uptick, while ThredUp predicts $51 billion in five years, from $24 billion. With resale’s growth coming at the expense of traditional retailers, it’s no surprise that department stores can’t embrace it fast enough.
Millennial and Gen Z consumers have made no secret of their dissatisfaction with uninspired assortments and uninspiring environments of department stores. The disconnect is partly responsible for department stores’ collective existential identity crisis. Now, apparel resale and rental are seen by some as a possible savior.
ThredUp launched its Resale-as-a-Service platform to power apparel resale for Macy’s Inc. and J.C. Penney Co. Inc. through a pilot revealed last week, when ThredUp announced it had closed on $175 million in funding.
Neil Saunders, managing director of GlobalData, said, “Admittedly, the tie-up will be very good for ThredUp, as it increases brand exposure. For Macy’s and J.C. Penney, it will only be marginally helpful. The partnerships won’t solve the problems in the rest of their businesses, nor will it transform their financials. It’s great that they’re thinking outside of the box, but both [retailers] have a lot more work to do before they’re on an even keel.”
“Fashion is all about newness,” said Craig R. Johnson, president of Customer Growth Partners. “That means people go through their wardrobes and cycle out of stuff they haven’t worn in a year or two. What that says is that there’s an opportunity. You can trade in a portion of your wardrobe and acquire some used clothing you didn’t know about, and instantly renovate your wardrobe at very low-cost.”
Cynthia Holcomb, chief executive officer and founder of Prefeye, said of resale e-commerce sites and partnerships with retailers, “They’re going to have a lot of growing pains. There are a lot of investors in these companies founded by men who’re looking to disrupt the marketplace and have been able to garner big sums of money, round after round. It’s a feeding frenzy. When will it all settle down? Unless it’s heavily curated and there’s some really cool stuff there, I think it’s a mixed bag.
“They all have different business models,” Holcomb said, referring to the sites. “The vendors need to be taken care of. Care has to be given to the product and the seller. The customer experience is important both on the buy side and the sell side.”
Holcomb said the distinctly populist ThredUp must be heavily curated to succeed at Macy’s and Penney’s. “Poshmark is for the fashion person,” she said, noting that founder and ceo Manish Chandra has segmented the site into “Poshmarkets” for everything from sneakers to plus-sizes, making it easier for consumers to find items they’re looking for, and interact with members of like-minded communities.
Luxury resale e-commerce sites are making inroads with brick-and-mortar retailers, although they haven’t received much interest in partnering from the brands themselves. For example, The RealReal is being sued by Chanel, which has accused it of selling counterfeits. The RealReal in 2015 created a gift-card program with Neiman Marcus that offered the luxury resale e-commerce site’s consignors commission payment in Neiman Marcus gift cards with 10 percent added to the value of the payout. The program encouraged consignors to put their money back into the luxury retail market and consign again with The RealReal once they’re done with those items, completing the full luxury life cycle.
Neiman’s went even further in April, revealing it had acquired a stake in secondhand retailer Fashionphile and will bring the site’s digital inventory of 15,000 products to its consumers. Luxury online retailer Farfetch in May launched a platform that lets consumers trade their gently worn handbags — the long list of designers includes Chanel, Balenciaga, Dior, Fendi and Gucci, among others — for store credit.
With sustainability often cited as one of the draws of preworn fashion for younger consumers, there was some irony in H&M’s announcement that it will sell secondhand and vintage clothing in a test on the Swedish web site of its & Other Stories brand. H&M reportedly burned 60 tons of new and unsold apparel from 2013 through 2018.
“There are believers [in apparel resale] in the investment in community,” Holcomb said, adding that the success of secondhand apparel in department and specialty stores will be determined by consumers, who’ll vote with their vintage or spanking new pocketbooks.