Coming out of 2022, we saw customers shifting their spending preferences toward the retail secondhand industry to save money as inflation continued to drive prices up. In ThredUp’s recent annual report of the top 100 branded resale shops, 72 out of the 100 were launched in the last year. Retailers are continuing to see the benefit in offering secondhand options for shoppers who are looking for more affordable and sustainable ways to consume their favorite brands. In our last piece on secondhand retail’s rise, we discussed the potential resale options that exist for retailers. So, what’s happening today in the secondhand retail industry? In this piece, we dive into what trends we’re seeing as the secondhand market continues to become another sales avenue for retailers.
Secondhand Retail Industry: Resale Growth is on the Rise
While retail sales have been holding stable over the last few years, resale and secondhand have far outpaced the overall market. In 2022 alone, the market is projected to have grown by 24%. One estimate claims that the market could be worth upwards of $300 billion by 2031 and is growing 3x as fast as the primary retail market, with an emphasis on luxury retail which is growing 11x faster.
This growth can be translated to existing retail businesses by incorporating resale into both online and store experiences. Many retailers who have implemented a secondhand strategy have seen it help drive traffic to stores, whether that is via offering resale or being a place where shoppers can turn in items for credit, as well as online, especially with integrated shops on their existing websites. Ikea, for instance, has seen great cross-purchasing between new and used merchandise when it’s offered in stores. Customers line up to get first access to their resale area, but then often end up shopping in the store afterwards, which has led to higher basket totals.
Unique Takes on the Secondhand Experience
At the 2023 National Retail Federation’s (NRF) Big Show in January, resale was a hard topic to miss. Conversations across the annual conference continued to highlight the benefits of offering resale as a part of the omnichannel shopping experience for shoppers. With resale in general being on the rise, it’s important for retailers to find ways to make the secondhand experience unique for their customers.
J Crew recently announced an evolution to their resale approach with an online and in-store secondhand experience. Resale is not new to J Crew – it has been a focus over the last couple of years across its namesake brand as well as Madewell. Their new program will allow consumers to shop used styles online via a co-branded ThredUp store (as a part of a third-party partnership) and send in their gently worn items as part of ThredUp’s resale system in exchange for shopping credit. They will also be offering vintage pieces from the 1980s and 1990s in select locations. The addition of the vintage pieces adds an extra thrill for thrifty shoppers looking to snag one-of-a-kind pieces. Together, their resale approach has the goal to grow the circular business to be more sustainable and profitable.
Resale as a Pipeline for New Customers
Another benefit of offering secondhand items is allowing new customers to gain exposure to the brand at more accessible price points. As more shoppers shift away from fast-fashion brands, they’re looking to replace these items with higher-quality, secondhand pieces. Searches for higher-end brands like Patagonia and Reformation increased on Poshmark’s platform during Q4 of 2022 while fast-fashion brands like She-In and Fashion Nova dropped by over 25%. Other high-end brands are continuing to see resale as a way of bringing in new customers or enticing existing consumers who are feeling the pressures of inflation.
Canada Goose, a high-end outerwear and clothing brand, recently launched their first resale program in partnership with Trove. The goal of the program is to not only bring in new customers, but to also add value to existing customer experiences by offering a more affordable way to shop. The RealReal has seen a similar trend within its consumer base. Gen X and older shoppers tend to make up the majority of people selling their luxury items to the online consignment store, but Gen Z and Millennials are the ones most often shopping these pre-loved items in order to gain access to luxury brands at a more affordable price.
Technology Advances Will Continue to Make Resale More Attainable
Websites like ThredUp, Poshmark, Fashionphile, and others have led the charge in making secondhand shopping more accessible and enjoyable for customers. As the market continues to grow and evolve, a new set of tech startups has started to emerge. Tech company Archive recently raised $15 million in funding to continue building upon their flexible reCommerce technology, developing custom platforms that allow for everything from peer-to-peer sales, vintage goods, secondhand styles, and in-take programs. Beni, a web-browser extension technology, also successfully raised $4 million recently to expand their product capabilities. Their extension allows shoppers to also see resale options from leading resale platforms for similar products when shopping their favorite brands’ website. This simple extension can help shoppers find secondhand items in a more convenient manner.
What is Your Resale or Secondhand Strategy?
With more companies offering resale solutions for retailers and shoppers looking for more sustainable purchases, now is the time for retail organizations to start exploring and implementing a resale strategy. If you are looking to incorporate resale into your business, reach out to our retail experts. Our team can help support with every step of the process.
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