Why Resale Merchandise Is Popular And Sales Will Grow Rapidly

Resale merchandise is very popular with young people and now accounts for over 10 percent of all apparel sales. Projections are for sales to grow double digits in the next five years, making it an enviable growth industry.

Resale platforms like ThredUp, Tradesy, Depop, and RealReal REAL are already established and have raised billions of dollars to date, and new companies are joining the fray. Welcome Vestaire Collective, which is completing a round of fundraising for approximately $210 million, and Grailed, which is seeking $60 million. In addition, there are new partnerships – such as Adidas with ThredUp and Net-a-Porter with Reflaunt. This highlights the strength of the resale merchants and the participation of direct sellers. Even Gucci has developed a shop within RealReal.

Reliable estimates have the global fashion market of second-hand merchandise at $130 billion. Legacy retailers are taking the industry more seriously as it has grown and attracts young fashion customers (Gen-Z) who like some of the brands and want to own some of them. These retailers cannot ignore this trend because they need to capture those young customers into the future as well.

Here are some reasons why the growth is accelerating.

1.   Well Managed and Marketed: Platforms that offer second-hand merchandise are organized and more inviting to shop these days.

2.   Brand Appeal: The values and brands attract young people who never dreamed of buying designer labels.

3.   Buy Now Urgency: There are limited quantities of designer fashions – making a discovered gem a ‘must buy right now’ item.

4.   Stigma Gone: There is reduced stigma to buy secondhand fashion as customers see friends brag about their discoveries.

5.   Retailer Validation: Major retailers like Macy’s M , Kohl’s KSS , JCPenney JCP , and Gap GPS have offerings of second-hand clothes. This gives this merchandise a legitimate patina.

6.   Widespread Acceptance: There is a global acceptance of resale shopping – you see it gaining momentum in markets including U.S., Canada, United Kingdom, France and Germany. All these markets are sustaining strong sales.

Resale of second-hand merchandise is not new; it has been strong in durable goods for quite some time. I can think of computers and, particularly, automobiles. And now, the pandemic has pushed demand even higher. Used car sales have been particularly strong in recent months. The frenzy is due to the lack of computer chips (reducing production and availability of new car inventories), and this has boosted used car prices by as much as +45%. Some dealers say they have no used cars for sale. Dealers say that everything is selling from luxury vehicles to basic cars that parents may buy for their teenagers.

POST SCRIPT: Luxury fashions brands are actively entering the field of resale. It is interesting to note that Gucci will manage its brand at RealReal, thus controlling second-hand pricing. I believe other brands need to come up with a strategy to manage this market as well. For instance, one can expect more athletic shoe offerings by other key brands that follow Adidas and its deal already initiated with ThredUp. Rent the Runway also will soon aggressively try to enter the market and one hopes that care will be given to ensure that its garments deserve to be resold.

We are living in the post-pandemic era when luxury goods are desired but often too expensive to be acquired. With the proper control, second-hand merchandise will enhance the retail selling floor.