One of the most important stories of the Covid-19 pandemic is the devastation of retail, especially of companies that relied on physical sales, many of which have filed for bankruptcy or closed entirely due (at least in part ) to The pandemic. But even though discretionary spending has been depleted for many Americans, certain segments of retail are apparently thriving. One is online reselling, meaning sites like Thredup, The Real Real, and Vestiaire Collective.
On Tuesday, Thredup released the results of its 2020 Resale Report, conducted in partnership with research and analysis firm GlobalData, to examine trends and the trajectory of the $ 28 billion resale clothing market. Each year, the report illustrates how consumer spending is increasingly shifting to the second-hand market. (It is worth noting that although the data was collected in association with a third party, it is presented and supports the validity of Thredup.) Their latest findings are no different. But, for the first time, the report reflects the impact of a global health crisis and the resulting economic recession.
While the broader retail segment is projected to shrink by 23% this year, due in part to Covid-19, online thrift stores are expected to grow 27%, according to the 2020 Resale Report. Looking Furthermore, it projects that in the next five years, online reselling will grow by 414%, while general retail will decrease by 4%.
The most obvious answer to why buyers are targeting their web browsers and money toward used goods right now is value. Also, with people trapped at home, browsing e-commerce sites is one way to pass the time.
Thredup found that May 2020 was a record month for new Thredup visits and that overall shoppers spent 2.2 million hours on the site, a 31% increase over pre-Covid numbers. At the same time, the company faces unprecedented inventory levels thanks to what the report calls a “quarantine cleanup frenzy.” As a result, it takes longer to process shipments (a couple of months versus a couple of weeks).
GlobalData also surveyed around 2,000 consumers and found that the majority of respondents are becoming cheaper in various ways in response to Covid-19, ranging from patching clothes to cutting their budgets. It also found that 44% plan to spend more on second-hand, while 66% say they plan to spend less on department stores. Additionally, 52% of respondents said they plan to spend less on luxury.
Of course, value is just one of the perceived benefits of buying second hand; the other is environmental impact. In recent years, there has been a gradual shift in marketing messaging by second-hand retailers towards sustainability that has more or less paralleled the growing consumer interest in being environmentally conscious. The survey found that while shoppers feel guilty about buying quickly, they are proud when they buy second hand. Additionally, 43% of respondents said they plan to spend more on sustainable brands in the next five years, compared to just 18% who said that last year. He also found that younger shoppers are, less stigma to buy second-hand, with more Gen Z-ers buying second-hand than any other generation.
Like many retail experts, Thredup President Anthony S. Marino believes that the pandemic has accelerated trends in consumer behavior that were already underway.
“Shelter-in-place catalyzed the move to buy online,” he shares as one example, adding value prioritization as another. “Consumers who may have taken a little longer to arrive [to shopping secondhand]Covid may have pushed them to our court. “He also feels that, just as the 2009 recession generated interest in out-of-price retailers (Nordstrom Rack, TJ Maxx, etc.), the current economic crisis is generating interest in the second hand. ” .
In virtually any way you cut it, the future looks bright for re-trade.
In addition to consumer interest, the sustainability aspect is driving greater interest from investors and venture capitalists (not that these sites have had difficulty raising money) who intend to grow their ESG assets, i.e. companies that meet certain criteria in environmental, social, and governance factors. “There is a lot of capital out there looking for businesses focused on [sustainability]Marino notes.
Meanwhile, traditional retailers increasingly see the value of participating in the reselling economy, which has resulted in many of them (like Walmart) partnering with Thredup and other reselling sites, such as The Real Real and Fashionphile. Marino says those associations have not disappeared at all during the pandemic: “We still receive emails every day [from retailers]”he says, noting how retailers see value in their e-commerce infrastructure and the ability to quickly process and list items digitally.
Another thing to be aware of, and likely to be of interest to investors as well, is that there is still a large market share for online reselling to capture. According to the report, 82% of the United States has not yet resold any clothing, but 67% of them are open to it. The second hand is expected to double its market share in 10 years, claiming the second largest market share, after (new) off-price. And while rental and subscription models are also expected to grow rapidly, they will continue to account for much smaller portions of consumer spending.
You can view the Full 2020 Resale Report here.
Never miss the latest news from the fashion industry. Subscribe to the Fashionista daily newsletter.