With the total secondhand market projected to reach $51 billion in five years from today’s $24 billion, resale is a high-speed train that more consumers are riding. Don’t even try to stop it. That’s the conclusion of ThredUp’s annual Resale Report with research and data from third-party retail analytics firm GlobalData.
“More people are shopping secondhand than ever before,” said James Reinhart, cofounder and chief executive officer of ThredUp. “It’s this onward march. We don’t anticipate the resale industry getting smaller over time. [The question] is, who will be the winners and losers over time and how will consumer preferences change. One of the starkest things to come out of this report is the data point that 72 percent of secondhand shoppers said they’re shifting spending away from traditional retail.”
Clearly, department stores are among the losers, with 39 percent of shoppers saying they’ll shop them less, and only 13 percent reporting they’ll shop them more. Mid-priced specialty stores are also coming up short, 28 percent less, 21 percent more, and fast fashion, 20 percent less, 12 percent more.
Resale has grown 21-times faster than apparel retail in the past three years, according to the ThredUp 2019 Resale Report.
One persistent question is whether luxury brands such as Chanel and Hermès will one day bring resale in-house. Chanel, for example, has been extremely litigious as it tries to control the distribution channels where its exclusive products are sold — even after the consumer has completed the purchase. The Paris-based fashion house has brought lawsuits against luxury resale platform The Real Real and vintage retailer What Goes Around Comes Around.
“Chanel and this notion that they’re the only ones that can authenticate items seems a little unreasonable,” Reinhart said. “It reminds me of every industry historically that’s been subject to disruptions. Companies start suing, for example, cities versus Uber and Airbnb. It’s part of the playbook of those who feel threatened. It means resale is on the mark and on the march.”
While it would seem desirable for luxury brands to control a product throughout its life cycle, in addition to ensuring the brand’s goods don’t find their way to the gray market, resale could become another revenue stream with retailers incentivizing clients to consign their unwanted items.
“I think you’re starting to see a lot of retailers starting to bring secondhand into the fold,” Reinhart said. “It’s the story we’ve been telling for a long time. [Brands] need to figure out how new and used work together. Everyone is starting to figure out what is the right way to engage the customer. You see it around the Marie Kondo-mania and how people are thinking about ownership.”
Reinhart was referring to the creator of the KonMari Method, a popular program on Netflix that preaches the virtues of organizing one’s life and belongings. It’s been called a boon to thrift stores and e-commerce resale sites for epiphany-inducing moments such as, “those dresses in my closet are worth what?”
“Every brand is currently developing a point-of-view on how to coexist with secondhand,” Reinhart said. “It’s the same way the car dealership figured out how new and certified pre-owned vehicles would coexist. The conversation is happening now more than ever. If ThredUp and The Real Real and Poshmark continue to have success, it’s a matter of time before retailers figure out how to work with one of us rather than bringing resale in-house.
“We’re spending our time working on the platform. That’s where we’re putting most of our energy. It depends on how you position. There’s a collection of goods that are brand new this season but done carefully, you can show the availability of products you’ve launched over time. Consumers love uniqueness. If you were a brand and could provide customers a 10 year look-back at all the interesting things you produced over that time and have small section of the store devoted to ‘vintage,’ there’s a winning strategy there.”
Reinhart said ThredUp is having discussions with retailers and “we continue to work with a large group of folks that we’ll be talking about in the future. That’s very exciting.”
“There are a bunch of trends where people are going to own less stuff and rotate garments out at a higher rate,” Reinhart predicted. “Young people are really driving the shift. We have a data point about one-third of Gen Z buying secondhand in 2019. You roll this out seven to 10 years ahead and they’ll be buying at a rate that nobody even has in their business models.”
Lest anyone suggest that Gen Z’s interest in resale is simply a passing trend, Reinhart said, “Coming up on 10 years, not only are Millennials diving resale, but now the next generation, Gen Z is driving resale. This is not just a blip that was experienced with the recession.”