The second-hand clothing market is booming. Retail Week looks at how some retailers are already taking advantage of this growing trend and why it’s important to get on board.
The word ‘sustainability’ is on the tip of everyone’s tongue, with protests on climate change becoming rife and the well-being of the planet and living in a circular economy high on the public’s agenda.
The fashion industry now accounts for more than 8% of global climate impact – more than international airline flights and maritime shipping trips combined – according to a report on the environmental impact of the clothing and footwear industries from sustainability strategist Quantis.
Shoppers are increasingly turning to the second-hand clothing market to get their fashion fix without the environmental impact of buying their clothing new.
According to resale platform ThredUp, the second-hand clothing market has been growing 21-times faster than new clothing over the past three years and is on track to be larger than fast fashion by 2028.
This month, luxury brands Farfetch and Burberry both announced partnerships with resale platforms – the former with Thrift +, a start-up discovered through its incubator scheme Dream Assembly – and the latter with designer resale platform The RealReal.
Both partnerships allow customers to resell old items and buy second-hand designer items at a fraction of the cost.
It goes without saying that consumers are happy to snap up better than half-price designer goods. But what can middle-market retailers whose clothes aren’t originally as expensive do to capitalise on growing demand for second-hand, a trend which, according to ThredUp, is set to be worth $51bn by 2023?
Although more retailers are branching out into the resale market, GlobalData analyst Chloe Collins says the presence of resale in the UK isn’t that significant yet. According to ot research by GlobalData, only 17.6% of shoppers say they regularly purchase from fashion resale websites.
Nevertheless, analyst Chloe Collins believes businesses should consider how to monopolise on the resale market now, while consumer interest is high.
“With sustainability at the forefront of consumers’ minds, and the fashion industry often coming under fire for its overconsumption, the potential for resale sites is high, and retailers should invest to show their commitment to the environment while capturing extra sales revenue,” she says.
There is plenty of scope for more retailers to get on board and capitalise on this market. Mintel data highlights that “over half of fashion shoppers say they are trying to shop more sustainably”.
And Mintel senior retail analyst Tamara Sender says: “Retailers are increasingly looking at the benefits of adopting a more circular fashion model.
“The macro trends on sustainability and reduction in spending power – especially in the middle class and millennials – is overlapping”
Petah Maria, WGSN Insight
“Once a piece has become tired, it should be repaired or redesigned, then – rather than being binned – rented, swapped or sold second-hand. While technology can support initiatives in circular fashion, large-scale adoption in the industry could quickly lead to economies of scale, and commitments are already in place.”
H&M UK sustainability manager Giorgina Waltier agrees: “It’s vital that players in the fashion industry, from designer to high street, consider how to adopt a more circular approach to their business.
“Collaboration across the entire industry is key to drive real change and ensure that we as an industry operate within our planetary boundaries.”
However, Collins says for most of the shoppers at mid-market retailers, sustainability is expected at the point of product production, rather than resale.
“I don’t think the lack of a resale site would put them off [shopping there] more than it would if their clothes weren’t sustainable or they didn’t have these initiatives to be 100% sustainable cotton by 2025, for example.
“That’s more important to shoppers, especially the youth – they want to know that what they are buying is ethically sourced,” she says.
And WGSN Insight senior editor Petah Marian agrees the word sustainability is not the only thing driving the market growth. The fact that consumers have less disposable income is pushing up the resale market, she explains.
“The macro trends on sustainability and reduction in spending power – especially in the middle class and millennials – is overlapping, so if you’re not participating you’re leaving yourself open to consumers deserting you, ” Marian says.
Stuffstr founder and chief executive John Atcheson adds that another reason is because our outlook on second-hand clothing has changed.
“There is now an evolved definition of ownership, where passing clothing on or wearing something that has been worn before is a more practical way of shopping,” he says.
A different kind of thrifting
Although the resale market has been around for years, there is now a host of new kids on the block offering a different kind of thrifting.
Depop, Vestiaire Collective and ThredUp are just some of the online platforms elbowing for resale market share.
Depop has over 10 million users and recorded £300m of sales in 2018– a figure that has doubled year on year; Vestiaire Collective has a catalogue of around 600,000 pre-owned designer goods and had a pop-up store in Selfridges; and US platform ThredUp sells 35,000 brands at up to 90% off the retail price.
However, these platforms are predominantly for higher-end or cult brand goods.
For middle-market retailers looking for a solution, companies like Yellow Octopus and Stuffstr are just a couple that are providing them with resale and recycling initiatives.
Yellow Octopus has two solutions – Reflaunt and ReGain – that cover both the luxury and mainstream markets.
“In retail, money talks. You can talk about saving the planet and hugging the trees, but they don’t understand the concept”
Jack Ostrowski, Yellow Octopus
Reflaunt allows customers to resell their old clothes directly back to the brands, and ReGain tackles the problem of wardrobe clear-outs being sent to landfill by offering shoppers money-off coupons in return for their old clothes, which are then sent to be recycled.
Founder and chief executive Jack Ostrowski argues that Yellow Octopus’ schemes can offer retailer insight into how their clothes fare in the real world once they leave their stores, as well as gaining insight into shoppers’ buying and selling habits.
Ostrowski says: “In retail, money talks. You can talk about saving the planet and hugging the trees, but they don’t understand the concept. If you talk about additional revenue and data on customers and extra traffic, then they listen to you.
“Retail is a very dynamic environment where a lot of the companies are struggling for survival. Sustainability isn’t the first thing on the agenda, but if you add additional income to the balance sheet, everyone is interested.”
However, Collins is sceptical when it comes to non-luxury retailers expanding into resale.
“It’s much less desirable to buy resold goods that are from mid-market players as consumers would rather buy the goods first-hand because there are concerns about quality and hygiene ,” she explains.
Ostrowski concurs with this view, and says that, for the middle market, incentivising clothing returns for recycling is a more viable option.
“The commercial side is much easier for luxury than value market, that’s why [Yellow Octopus] created a portfolio of products suitable for different markets,” he says.
“If you buy something for £5 you’re not going to resell it because there is no value in the resale market, but you can use incentivised recycling like ‘Regain’ to access discount coupons for future purchases,” he explains.
Stuffstr’s model allows those middle-market retailers to buy back used clothing so it can “go on to lead another happy and productive life and stay out of landfill”.
The platform has partnered with Adidas and John Lewis, with its partnership with the latter producing good results. Shoppers who used the service at the department store retailer sold back nearly 20% of everything they had previously purchased from it over the past five years.
Atcheson says Stuffstr’s “friction-free” service makes it as easy as possible for the consumer to recirculate their clothing. “The service benefits retailer and customer alike, building customer loyalty by bringing customers back in-store and giving them financial rewards.
“Stuffstr has placed tremendous focus on making it easier, faster and more monetarily attractive for people to keep their things in the loop, rather than letting them pile up and eventually go to landfill,” Atcheson says.
H&M’s recycling initiative rewards customers with a £5 voucher when they bring back a bag of clothes to be recycled.
“To prevent these vouchers from being spent on impulse purchases, the vouchers can only be redeemed against a purchase of £25 and over,” Waltier explains.
H&M-owned brand & Other Stories is trialling an online resale offering on its Swedish platform with the aim to extend the offer to other brands and countries in the future.
And there are other retailers that have followed suit and launched more traditional second-hand fashion offers.
In September, Asda launched a ‘Re-Loved’ pop-up shop in its Milton Keynes branch selling second-hand clothes from a number of different brands – with all the proceeds going towards Asda’s Ticked Pink charity campaign – and Zalando has ventured into the second-hand market too.
Following the successful launch of the Zalando Wardrobe app, which allows customers to buy and resell their clothes through the app to each other or back to Zalando, the online fashion platform launched Zircle – a second-hand clothing shop in Berlin. Each item is sold at a fixed price of either €3, €5 or €7 and has been sourced from the Zalando Wardrobe app.
Developing something that is easy to use, and in return offers great monetary value either in actual cash or in exchange for discount coupons while the consumer feels like they’re doing their part for the environment, is a win-win situation for everyone involved.
Now that buying and wearing second-hand clothing is a trend in itself and with several platforms already out there to help retailers solve the problem, Waltier says it’s vital that players in the fashion industry – both designer and high street – consider how to adopt a more circular approach to their business.
“Moving to a circular model is [H&M’s] ultimate goal since this is the only way to protect our planet and ensure we have a viable business to run in the future,” Waltier says.
“It’s non-negotiable. Our planet simply doesn’t have the resources for the fashion industry to continue on this trajectory,” she warns.
And Marian agrees. As natural resources become more expensive she says the fashion industry’s bigger long-term focus is about “future-proofing the business model and being ready for changing behaviours”.
Although the luxury market seems ahead of the game when it comes to resale – with the help from higher demand for the products on – there is still plenty of scope for the middle market to capitalise on this growing trend through resale apps and initiatives and various iterations of second-hand stores.
Whether sustainability issues, creating extra revenue or being in line with your customers’ values is the driving force, expanding into resale looks set to be a trend that is unlikely to fall out of fashion.