The profitable world of previously-owned is not just for Mercedes anymore. Consider the emerging retail reality: Empty storefronts on Main Street, shuttered malls, bankrupt chains. Could it be that consumers have lost interest in the acquisition of new stuff? That a consumer economy has, yes, morphed into the long-foretold experience economy? That LVMH’s decision to enter the luxury cruise market is simply one further storm cloud serving as the forerunner of the retail tsunami on the horizon?
My 19-year-old daughter’s absolute favorite shopping experience wherever we go – Paris, London, Dublin, Peoria, Savannah and, of course, Manhattan, is evidenced by her predictable plea to go “thrifting.” I have come to understand that in the precious and overly-curated chains which should be her go-to brands, she finds boring predictability, bored sales staff and uninspired merchandise. Yet, the goal of a great shopping experience is straightforward: Discovery in the pursuit and Lucky in the acquisition. And not lucky because the merchandise is perennially marked 40 percent off.
The Great Narrative
Thrift stores embody that seductive discovery journey and self-discovery. Touching blouses that evoke a different place in time enhances the experience with an almost folkloric quality imagining the woman who wore this blouse in the imagined world in which she protested the Vietnam War and sung songs of protest along with other college juniors who worked hard to sound like Joan Baez. Or the jeans from an era in which they might well have been worn to that Queen concert. Or the tee-shirt obviously used and abused at a first-generation Jingle Ball. There is a thrill in the imagined, the evoked, the what-if of stuff with backstories enhanced by its prior lives.
This notion of thrifting is not limited to the world of $10 a bag. The larger strategy of monetizing the second and perhaps third lives of products is illustrated by the success of companies specializing in buying your no-longer-wanted fine jewelry. Once viewed as upscale pawn shops, they are now seen as charming boutiques providing a sophisticated and confidential service. Rent the Runway is another path to the time-sharing of designer merchandise. Poshmark.com at the lower end and TheRealReal.com for the upscale provide equivalent own-it-until-you’re-bored-by-it service. Do you think this is simply a dotcom play? Not so much. Consider the L Train and Vintage Twin. Both retail shops with a previously-owned panache, but no frisson of helping the homeless with each purchase. No these are for-profit endeavors, for sure. All these approaches allow us to own the brand tropes we care to use as personality badges; and then shed them when they no longer reflect our new image of ourselves.
This approach isn’t a retail panacea for all products. The type of brands that don’t work in this model, that have no resale value are the fast-fashion knock-offs and cheap-at-twice-the-price offerings of big box stores, down-market chains and online behemoths. These brands are nearly unbranded, except by price point. In the world of $28 jeans, who cares who made them or how long they’ll last?
Goodwill stores, Housing Works and many churches’ “Second Time Around” fundraisers have served an equivalent role for large-scale items. Ready to redecorate the dining room? Call for removal by one or another non-profit and they’ll hand you a tax-deduction in exchange for that embarrassing sofa from your first marriage and the tea cart you inherited from a great aunt.
In short, in every case, except automotive and housing, the management of the secondary market has been left to interlopers. New entities emerge, whether to buy and resell your grandmother’s ring, or buy and resell that Louis Vuitton emblazoned tote you’re too embarrassed to carry any more or to accept the tax-deductible donation that fold-out sofa that doesn’t quite fold out anymore.
Into this mix, however, comes a new idea, just announced by Ikea. It seems this classic stop on the just-graduated-college-and-getting-my-first-apartment highway is exploring a move in its business model. This same cohort is seen to eschew products which are not sustainably made, which are not well-designed, which are not solidly built. Suffice it to say, Ikea’s warehouse model, chock-a-block with mothers shopping with their recalcitrant sons and their new roommates does not proffer a long-term, repeat business opportunity. And, Ikea has noticed.
Enter Ikea into the secondary market, deciding to make better furniture and offer it for rent. Yes, that’s right. For rent. The mind reels, of course. Will they take apart the furniture when it’s returned and make new customers schlepp it home and re-assemble it? Will the warehouse look-and feel be disbanded for a new, more urban vibe? Will Ikea deliver? Offer assembly at home? Will it Wayfair itself? In short, does this one bold announcement auger an entirely new retail approach? Imagine that it does. This is the first moment in this emerging secondary market of a brand insinuating itself into the model. This isn’t a reseller intervening, this is the manufacturer/retailer recognizing that as it currently makes and sells its products, there is no one waiting to buy used Ikea furniture.
I know the low value of used Ikea furniture from the online bulletin board in my apartment building. Scores of three-drawer Ikea chests are on offer weekly, rolling out at a suggested $60, then “best offer” and then “free, take it today.” We know all too well what the brand stands for, affordably priced, irritatingly merchandised and manufactured with a “use by date” that coincides perfectly with the end of the lease on that first apartment.
Sure, Mercedes, BMW, Lexus and others have developed “previously-owned” propositions. But furniture and home furnishings not so much. Imagine if Bloomingdale’s offered a buy-back, trade-in proposition for the amazing goods showcased in upper reaches of the Lexington Avenue store? Or ABC Carpet & Home? It’s a game changer. Almost like a subscription to Peet’s Coffee or Amazon’s Subscribe and Save.
The pulse points of major home purchases are well documented. Remember Gail Sheehy’s Passages? I always wanted her to write Marketing Passages. We move into new needs every seven years. Ikea nailed the first one: First apartment, mother in tow. Next is the move-into-together apartment, e.g. the roommates are gone, but the love interest is very much present. Then, first marriage and usually first home. Then, first child and maybe another, then larger home. Of course, the downsizing moment eventually arrives and then the relocation to the gated community. Predictable? Of course. Life stages are inevitable. And each is a catalyst to a remarkable series of purchases.
Ikea’s historic reliance on the first rung on the ladder has worked wonderfully for the brand. Get them in early, when all things in life are possible, including reading and understanding assembling instructions. But, the fall-off is pretty steep. Perhaps the brand survives a shopping trip arranged by the newly ensconced couple, but most probably the ‘old’ Ikea choices from the earlier vintage don’t survive.
In this new version of the Ikea experience, that young person rents the basics and then turns it in at each step along the path. A previously-owned, well-made and well-maintained sofa arrives with complementary side chairs at a price point well within reach vs. the investment required to purchase new from the more usual suspects. The costs are significant to furnish the Cape Cod in suburbia, replete with nursery, child’s room and, well, a man cave somewhere out of sight.
Ikea is invigorating the “previously owned” model, introducing it into the world of mainstream merchandise, without waiting for the home goods version of The RealReal or Poshmark. Could Ralph, Calvin or Tiffany be far behind? Imagine a retail setting that includes not one Bloomingdale’s Outlet, Neiman-Marcus Last Call, Nordstrom Rack or any of the countless other factory outlet varietals, but rather has the “previously-owned” showroom of fabulous merchandise. Sure RealReal, Poshmark and Salvation Army thrift stores will be unhinged, but think what it might mean for customers, brands and a gee-whiz thing called brand loyalty.