As Marie Kondo’s https://konmari.com tidying up mantra streams into our bedrooms via Netflix, we stand, touching the clothes in our closets waiting for that spark of joy. The valuable, yet dispiriting items stuffing our wardrobes slump on their hangers, ready for the purge. But wait! The options for exploiting their value have expanded. The practice of playing our apparel forward is doing more than decluttering, it is feeding a thriving, proliferating retail channel, and spurring innovation.
Thrift stores are nothing new. According to the resale platform thredUp, “charity” fairs first appeared In the United States in the 1820s, the Salvation Army opened its first shop in 1879 and by the end of the Great Depression, The Goodwill had opened nearly 100 stores. As a teen growing up in Denver, I was a regular at Value Village, a thrift shop housed in a former grocery store; I binge bought cowgirl chic and loud prints. While my childhood Value Village is gone, resale continues to evolve and valuations are exploding.
On January 18th, a Reuters headline read “Luxury online reseller The RealReal in talks with banks for IPO.” In the summer of 2018, RealReal raised $115 million and was valued at $745 million. On December 12, 2018, WWD announced the purchase by retail platform Farfetch of Stadium Goods, an online marketplace that sells new and second-hand (but unworn) sneakers. As sneakers and streetwear straddle the divide between luxury and pedestrian, the marketplace for all variety of excess apparel continues to expand. Resale joins rental, subscription, and direct-to-consumer in shaking up traditional retail, as well as fast and luxury fashion.
Look at the Numbers
On the innovation stage at NRF’s Big Show 2019, thredUp President Anthony Marino spoke of the expanding secondhand apparel marketplace and the transformation of the modern closet saying that thredUp sold “60 million items of clothing in the last two years.” thredUp predicts that by 2027 the closet share held by department store purchases will be just 10 percent, and 11 percent of the hangers will be holding resold items.
The thredUp 2018 annual resale report culled from research and data collected by outside firms and current customer surveys states one in three women shopped secondhand last year across all categories, and consumers are beginning to think secondhand first. The report pegs the growth rate of the leading “Resale Disruptors” (threadUp, TheRealReal, and Poshmark) at 49 percent for the 2017/2018 year and are predicting a 15 percent overall annual growth rate for the apparel resale market from $20 billion in 2017 to $41 billion in 2022.
Wake Up to the Environmental Effects of the Fashion Industry
A second driver and beneficiary of the rising resale tide is sustainability. Luxury resale platform The RealReal has launched a sustainability calculator, and according to the company it works to determine the water, energy, and greenhouse gas savings from the most popular women’s clothing items (dresses, tops, jackets, and knitwear) consigned on The RealReal since January 2012. The company is now in the second year of an initiative with designer Stella McCartney. The credo of the effort is “Make Well, Buy Well, Resell.” A customer who consigns a Stella McCartney piece at The RealReal will get a $100 credit toward a purchase at a Stella retail stores or online. Stella McCartney’s site states, “The RealReal is a leader in luxury consignment, creating a sustainable and easy way to extend the life of preloved goods with their #NeverThrowAway campaign. Consignment and recommerce can play a significant part in reducing the amount of raw materials we extract from our planet and is key in securing a more circular economy.” According to The RealReal, the number of the brand’s items consigned increased by 74 percent, year over year.
Retailers Who Take Ownership of the Resale Market
Patagonia’s Worn Wear, and Eileen Fisher’s Renew programs have also ramped up recycling and reuse efforts. Both brands have taken the circular approach vertical. The brand will accept their own, used clothing in exchange for a reward card to be credited toward a purchase, and will either restore and resell “gently worn” pieces or recycle the fabrics to create new pieces. Fisher states “We start by designing our clothes to last so they will stay in your closet. When you are done, we will take them back”.
As a retail strategy, the results of these efforts have yet to be quantified but still, the trend is picking up pace. On the Innovation Stage at the Big Show 2019, startup platform Rohvi presented an innovative path to resale that has elements of both the Stella McCartney and the Fisher/Patagonia approaches. I spoke with Rohvi CEO Sara Whiffen who explained the company’s model. The startup works with a retailer’s transactional CRM database to send personalized trade-in offers to specific customers. Whiffen illustrated their approach: “Hi Sarah, we hope you are enjoying that black jacket you bought from us last year. If you love it great! If you find it is spending more time in your closet than you thought, or you would just like to trade it for something else, we can offer you X-dollars toward a new item if you bring it back to us.” The dollar amounts offered and offer frequency are algorithmically based on customer purchase patterns, the purchase price, resale value, and other factors. Rohvi then partners with leading apparel resellers. The end goal is getting specific, valued customers back in the door with a store credit burning a hole in their pocket “to buy something new, or better or more,” according to Whiffen. She continued, “This almost creates ownership without commitment, similar to a subscription-based model.” Rohvi was inspired by Whiffen’s background at Toyota and Lexus “When you buy a car from a dealer, you may get a letter 18 months later with a dollar-amount buyback offer to trade up for next year’s model.”
Whiffen’s analogy to the automotive resale market was echoed by thredUp CEO James Reinhart. thredUp recently announced the creation of the private label brand Remade. Remade clothing is designed with “resale rather than landfill in mind and every garment comes with a thredUp buyback promise,” according to thredUp’s site. Remade’s designs are derived from customer purchase data and will be offered in sizes XS to 3X. thredUp detailed the strategy behind the effort in a Medium post which quotes CEO James Reinhart, “The data-backed collection is aimed at the conscious consumer who considers the resale value and longevity of a garment before making a purchase. Reinhart continues, “Retail is starting to look a lot like the automotive industry, where consumers gravitate toward brands with great resale value,” adding that outside of luxury goods, it’s hard for shoppers to identify brands or styles that would be likely to be resold. “We want to use our data to help consumers buy clothes that can be resold instead of discarded.”
Keep What You Love, Love What You’ve Got
As retailers nod to the unique shopping characteristics of the millennials, accept the realities of fashion’s negative impact on the environment, and follow the money, resale becomes an increasingly intriguing concept. A brand or retailer must reflect on their brand’s values, customer base, and the economics to evaluate a conceptual “fit,” but the notion of buy well, made well, and resell may prove to be long-lasting, as are some of those heirloom pieces hanging in your closet that still spark joy.