Source: thredup.com
Target launches new program for used apparel
Target’s is selling used apparel through a new relationship with ThredUP.
The retailer, as of late March, has its own page on ThredUP featuring a selection of used apparel curated by its team from the resale platform’s assortment, according to CNBC. The selection consists of clothing from Target’s private label brands and from its past designer collaborations, as well as some luxury clothing items not usually found at Target. There are about 400,000 pieces total on the Target ThredUP page with discounts up to 90 percent.
Target has worked with ThredUP before. The earlier partnership in 2015 consisted of a test program that allowed shoppers to get Target credit for items resold through ThredUP.
More big box retailers are getting in on selling secondhand goods, as it appeals to both consumers’ concerns about sustainability and their desire for affordability.
Walmart, for instance, entered into a relationship with ThredUP in 2020. The retailer began offering 750,000 pre-owned, “gently-used” items on the marketplace.
Retailers that are exclusively apparel-focused have also been getting into the resale market, going as far as to start their own services to avoid losing sales to the big emerging online marketplaces.
At the end of 2021, Urban Outfitters launched an online second-hand marketplace called Nuuly Thrift, according to The Wall Street Journal. The marketplace allows Urban Outfitters to collect a commission on resold apparel that the chain misses out on when its products are resold on Poshmark or ThredUP.
ThredUP’s “2021 Resale Report” placed the annual sales of curated secondhand clothing at $36 billion and projected that the number would rise to $77 billion within five years. That would represent growth 11 times faster than apparel retailing as a whole.
In addition to its perceived environmental friendliness and cost savings, marketplaces like ThredUP have gotten a boost from the pandemic. ThredUP experienced an influx of product thanks to people cleaning out their closets and reassessing their clothing needs during the pandemic, according to The Street.
The trend is also catching on outside of apparel.
IKEA, for instance, recently expanded its buy back/resell initiative to all of its 37 U.S. stores after a successful pilot last summer.
- Target tiptoes back into resale with new ThredUp deal, as it makes sustainability push – CNBC
- Urban Outfitters to Take On Poshmark With Its Own Thrift Store App – The Wall Street Journal
- Walmart Partners with thredUP to Enter Popular Fashion Resale Market – Walmart
- 2021 Resale Report – ThredUP
- ThredUp Wants to Clean Out America’s Closets – The Street
- Is it time for mainstream retail to go all-in on the resale market? – RetailWire
- Is IKEA’s furniture buy back initiative sustainable? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Do you see Target succeeding with resale through its ThredUp relationship? How likely is it that Target in the future will begin selling used products in its own stores or its own online marketplace?
Poll
Loading …BrainTrust
Melissa Minkow
Director, Retail Strategy, CI&T
Shikha Jain
Partner, Simon-Kucher & Partners
Target’s re-entry into the category is telling. No doubt lessons were learned from their first attempt, and one of the lessons must have been that this category has serious traction. The hard part is executing it successfully. I wouldn’t bet against Target on a re-do in this category. Target just continues to keep innovating. While it would be easy to rest on their laurels and coast for a few quarters, that’s not what they do. They keep innovating, experimenting and learning.
The resale trend continues to expand as retailers respond to consumers’ sustainability concerns. Selling used apparel also creates an incremental revenue stream from consumers that are intent on purchasing used products. Most major retailers have entered the resale market as there is no end in sight for this trend.
I think it’s highly likely that eventually Target will tackle resale completely on its own. The retailer has made it very clear that it’s serious about sustainability recently, so this is a good test run for another eco-friendly initiative. Considering Target supports a price-sensitive shopper and is such a winner with Gen Z already, this path makes sense and should be very successful.
Succeeding is a relative term. One cannot really imagine the amount of returns coming into big companies like Amazon, Target and Walmart.
There needs to be a whole portfolio of methods to deal with these kinds of items that are continually tested and updated. It’s big business, and it’s the right thing too.
This “test” is 400,000 items. That’s not a trivial number and will give the data science team at Target a lot of information on what to do next.
When Target tried secondhand back in 2015, the U.S. apparel resale market was worth $15.6 billion, and a lot of that was taken through traditional consignment and thrift stores. Around 17 percent of consumers shopped resale in that year. Now, the market is worth around $43 billion and a majority of consumers shop resale. The other thing that’s changed is Target’s own apparel offer: it now has more compelling own brands and occasional designer collections which consumers can thrift. This is a compelling market and Target is right to reenter it.
Target is built for scale, and this doesn’t seem like a scalable opportunity. So it will be interesting to see if this is a long-term initiative.
I believe Target will succeed with this relationship. This is a smart move, with consumers trading down in this new economy and prices going up. Off-price and Goodwill always get a pop when the economy shifts, so look for more copycat activity in the marketplace. Recycled clothing checks all the boxes for Millennials and Gen Z shoppers, exactly the people Target must connect with to continue growing. It seems as if Target is curating and limiting its SKUs on thredUP in such a way that it should minimize cannibalizing in-store clothing sales.
By the way, kudos to thredUP, along with Poshmark, for being in the right place at the right time. No, I wouldn’t expect Target to dedicate even one square inch to used clothes. Doing this online, via thredUP, is how they’re getting into this game. So, I think this is a smart move by Target. But Target is big enough to bring this in-house if the ROI makes sense.
This is not only smart and trend-right, it’s just plain good business. The resale market reached $30 – $40 billion globally in 2020 and will grow at a compound annual rate of 15-20 percent through 2025, this according to Boston Consulting Group just a couple of weeks ago. And personally, I can tell you, of my three Gen Zers, not one of them has bought anything but resale, including furniture, clothing, hardware for at least five years. It’s also a move to sustainability. I hope Target really blows this up. Another A+ move IMO.
There is indeed a market for this but I don’t want to see this product in a Target store. Keep it online.
Target will not only succeed with resale, but the retailer will lead other brands to consider circularity more seriously.
I can only hope they are very successful. Reusing clothing has tremendous environmental benefits, as noted in the discussion. And the corollary, the annual disposal of the fabric causes massive ecological damage, both in manufacturing and landfills.
I recently saw a news piece on the amount of clothing thrown away in the U.S. each year. I wish I could remember the comparisons they made in the weight of the throwaway. But I was stunned by the comparisons.
If anyone can make resale mainstream, Target can.
Resell retail continues to grow. IKEA recently announced its buyback program will expand to all stores. Urban Outfitters launched its own resell platform with Nuuly. Mass merchants are playing catch-up but Target always follows the path to catching the next gen consumer and this is a smart move. I’m sure it’s also an avenue to handle the issue of returns plaguing the industry from e-commerce as well.
I’m not sure I understand the business model here. Target is curating product “from the resale platform’s assortment.” I’m not sure what that means about whose register this is ringing through. Sounds like Target is taking advantage of a marketing opportunity presented by ThredUp. And it’s a gateway into Target having a venue for it’s own inventory. Either way, it’s great to see Target being creative (again) about how to tap into an emerging retail opportunity. Resale is clearly here to stay.
I wonder if resale will be the next off-price.
With a growth rate for resale that is 11x faster than regular retail and a continued consumer trend toward sustainability and saving money, Target will have success. After several months of evaluation of the ThredUp program of 400,000 items, they will be informed of the next strategic move.
Resale at quality retailers can work. Having recently purchased previously used shoes that were of excellent quality from REI, I have witnessed that this can work even for the most skeptical consumers. Shoes, shirts and pants, shorts, and other clothing can have a second life and the retailers with a sustainability focus have an opening right now to launch their own approach to resale.
This is another “right time, right place” move for Target. I think the combination of the move’s sustainability and continued inflationary pressure on prices ensures that this will be a success. A key difference this time will be that consumers are actually buying a product, not just getting a credit. Customers are going to appreciate that.
Sustainability has become important to the consumer, so it’s become important to the retailer. In Target’s case, the ThredUp relationship looks great in terms of living up to its promises. However it’s highly unlikely they’ll bring this into the store – except as a separate brand. One aspect of Target’s appeal is status, and it’s unlikely that Tarzhay seeks to be in the same market as thrift stores, even with high-end designer labels. There will also be competition with Target’s private label brands. This will remain online and under a separate brand (ThredUp or a separate Target brand).
Big retailers like Target and Urban Outfitters are hopping on the resale train, making this rising trend one of their top initiatives in order to keep up with the ever-changing consumer behavior and desire for both sustainability and affordability, specifically with Gen Zers. This new generation of shoppers has normalized resale as part of their daily consumption, given that it mirrors their values and is widely seen as “trendy.” The question is, will the addition of this new marketplace drive the consumer to make more purchases from the retailer itself?
We all like diversity…right? Well I’m going to fill out the fold by being the voice of gloom here! No, seriously: I’ve just never been keen on this idea, and no amount of telling me about it — however enthusiastically — has managed to warm me to it (maybe it’s a generational thing that equates
used“pre-owned” with poor more than chic).So go ahead, by all means try it. But I wouldn’t bet the store on it … either figuratively or literally.
This is among the first of many of these type of schemes. Progressive retailers are looking at this in a lot of detail — perhaps because they are worried about a backlash from environmentally conscious consumers. Expect to see more collaborations between retailers and organisations like ThredUp but also acquisitions in this arena.
The online marketplace approach makes a lot of sense – sending product to stores becomes difficult — although there are those such as Asda in the UK that have done this.
Target’s customer base is made up of value-conscious shoppers. Resale platforms are ideal for attracting such customers. So, Target’s resale initiative has a good chance of success. Speaking of selling resale products through its own online marketplace, the industry is still in its early stages so it would be premature to make assumptions about its scalability.