Is it time for mainstream retail to go all-in on the resale market?
Secondhand is in. That’s the finding of the new “2021 Resale Report” published by thredUP.
Annual sales of resale clothing, defined as the more curated segment of secondhand, currently stand at $36 billion, and that number is forecast to more than double over the next five years to $77 billion, 11 times the pace of overall apparel retailing.
The market is expected to grow as more consumers buy secondhand and more retailers offer the products for sale. Around 33 million people purchased secondhand apparel for the first time ever last year, even as many cut back on buying new clothes. The average resale shopper bought seven secondhand items in the past year, replacing the equivalent of 542 million new items in the process.
Many mainstream retailers and consumer-direct brands are beginning, albeit slowly, to move into the resale market and others are exploring ways to enter. Gap, Macy’s, Nike, Nordstrom, Levi Strauss, Lululemon, Rent the Runway, Target and Walmart are among those doing so.
The upside appears clear, with secondhand apparel only making up one percent of the total volume of retailers that have moved into the business. Forty-two percent of retail apparel executives said they believe that curated selections of secondhand clothing will become an important part of their businesses over the next five years.
Among mainstream retailers reluctant to enter the market, the reasons given include concerns over cannibalization of their existing sales, inadequate merchandise supplies and lack of operational expertise to manage the business properly.
Karen Clark, thredUP VP of marketing communications, told RetailWire that the company launched its resale as a service model to address these concerns. The online consignment and thrift business is not “supply constrained” as its free clean-out service kit allows customers to place their clothing in bags and ship them with a supplied label via FedEx or UPS. This provides retailers and brands with access to “thousands and thousand and thousands of items” that fit their specific merchandise criteria.
“We also can help them monetize all those brands that they can’t sell because we have a marketplace where we can sell those brands for them,” said Ms. Clark. “So we’re making it really easy for consumers, which then unlocks the product that is otherwise locked up.”
DISCUSSION QUESTIONS: Are retailers and brands moving too cautiously or at the right pace into the resale market? What factors are limiting the participation of mainstream retailers and consumer-direct brands in the resale apparel market and how will they be overcome?