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- While the early years of the resale market growth may have been driven by early adapters, it's fair to say the whole phenomenon has gone very mainstream.
- Research suggests that customers are now thinking of their clothing as a ‘tradable asset’, which is influencing buying decisions around the secondhand (or thirdhand) value of their purchases.
My wife and I recently drove from Minneapolis to Chicago to visit our youngest daughter, who is in PR and social media marketing, she is also a life-long fashionista. So besides hitting a few of Chicago’s many terrific eateries, we indulged in some retail therapy; primarily in the trendy Wicker Park neighborhood. For those not familiar with this area, it’s a magnet for GenY professionals, and has a rich mix of upscale indie retailers, digital native brands, and an unexpectedly large offering of resale and consignment stores.
It became clear to me that much of what I’d been reading about the ‘second hand economy’ was alive and thriving here. Also, the notion that this segment was a one-note play on the rummage or thrift store of the past was quickly negated. A high level of merchandising and creative display made many of these stores highly engaging; and it’s clear that in watching the customers immersed in the hunt, that there is something special, even primal, going on in these highly curated shops.
Thrill of the Hunt
While the early years of the resale market growth may have been driven by early adapters, it's fair to say the whole phenomenon has gone very mainstream. It’s been reported that in 2018, the secondhand market accounted for $28 billion, compared to $35 billion for fast fashion. However, what’s more startling is the fact that within ten years the secondhand market is expected to nearly triple, reaching $64 billion, while fast fashion is predicted to only rise to $44 billion. Not surprisingly, Gen Y’s and Gen Z’s are fueling the growth, yet Boomers are not sitting it out.
As I’ve written in the past, these kind of market fluctuations are always a result of multiple factors, or converging trends. In the case of the secondhand phenomenon, it’s impacted by a shift from top-down style influence, which used to be directed by the fashion industry, to bottom-up forces, led by influencers, and social media’s encouragement to cultivate one’s personal style. The other factors at play are consumer’s increasing sustainability consciousness, and how the newly refined buy/wear/sell model enables fashion conscious consumers to change out their wardrobe easily.
Major Players Emerging
Of equal importance is the fact that some major players have emerged, refining the methodology, perfecting the monetization model, and turbocharging the trend. One of the parties responsible for the 56 million women who bought secondhand products in 2018 is ThredUp. They experienced an 80% increase in demand for their “Clean Out Kits” after Netflix’s first airing of Marie Kondo’s show. According to ThredUp’s, 2019 Resale Report, over half of retail-resale customers also expect to spend more over the next five years. In fact, it’s altering the way consumers even think about their clothing purchases.
Research suggests that customers are now thinking of their clothing as a ‘tradable asset’, which is influencing buying decisions around the secondhand (or thirdhand) value of their purchases. Additionally, trending suggests that with this new mindset consumers are reducing the number of items in their closets at the same time they are swapping out their wardrobe more frequently. This is fed by the fact that ThredUp is listing 30,000 new items each day – take that, fast fashion.
Transcends Age and Income
This new circular economy has no socio-economic boundaries, in fact the RealReal has been selling luxury consignment online, since its 2011 inception. CEO Julie Wainwright set out to change the perceptions of what luxury resale could be and has managed to raise $288 million to build her stealth web phenomenon, which now also includes two stores and nine drop-off point. Her brands include Stella McCartney, Alexander McQueen, Versace, Rolex, Cartier, and Patek Philippe. Additionally, the online store extended beyond fashion, to include home furnishings.
Beyond just offering the luxury goods a second life The RealReal has taken their role of authentication and restoration very seriously. Wainwright employs gemologists, watchmakers and brand authenticators to guarantee both product authenticity and correct restoration when warranted. Additionally, the company offers free expert evaluation of their customer’s luxury goods. Welcome to fashion's new circular economy.
