‘Big Evolution’ Coming to Fast-Growing Fashion Retail – Sourcing Journal

Bargain hunters will have plenty to look forward to in 2023 as the resale revolution continues to change the way people shop for clothes, industry experts said.

2022 was just the beginning, said Noelle Sadler, marketing director of ThredUp. More than 120 brands launched resale programs in the past 12 months, three times the number in 2021, according to the secondhand retailer’s Recommerce 100 index. These included Hot Topic, Tommy Hilfiger and Torrid, each using ThredUp’s resale-as-a-service platform to grab a slice of what is worth $218 billion globally by 2026.

Reselling is becoming not only mainstream but necessary, agreed Karin Dillie, vice president of partnerships at Recurate, a resale-as-a-service platform that last year brokered partnerships with Steve Madden, Mara Hoffman and Michael Kors in the United States and Zara in United Kingdom. As brands increasingly seek to appeal to the conscience of younger consumers – without overstepping their green claims – resale has become a shortcut of sorts for sustainability.

“[Take] Mára Hoffmanová. Of course they have another sale; they are Mara Hoffman and they care about sustainability,” said Dillie. “This is a core pillar of who they are.

Brands will continue to double in resale in 2023, Sadler said. “As retailers continue to face an inflationary environment with unpredictable consumer spending in 2023, I predict brands’ investments in resale will accelerate as they look for different ways to engage consumers, attract new customers and ultimately deliver greater value ,” she said.

Venture capitalists are also spreading the word in a big way. Just last month, The North Face-backed Archive raised $15 million in Series A funding, while second-hand browser extension Beni raised $4 million in a seed round. Earlier this month, South Korean internet giant Naver closed on its $1.2 billion acquisition of Poshmark. Recurate, no loud, secured $14 million in May, bringing its total funding to more than $17.5 million.

In addition to reaping potential profits from third-party marketplaces, brands are also realizing that secondhand can be a low-cost acquisition tool in the face of rising digital advertising prices, Dillie said. Recurate estimates that around half of pre-owned fashion buyers are new to the brands they choose.

“People want to try brands at a lower price, and rather than taking advantage of discounts or going to an outlet, this can be a way for people to try brands, see quality and understand value,” she added.

The numbers speak for themselves, said Andy Ruben, founder and CEO of Trove, which creates branded resale solutions for names like Eileen Fisher, Lululemon and Patagonia. In a recent study she conducted with First Insight, 72 percent of 2,500 customers surveyed said they would be interested in shopping with a brand because it had another sale. And if a brand offered resale on its own platform, 70 percent of them would head there first.

“This is a huge opportunity,” he said. “Customers trust it [when] doubly so for luxury brands, who will not be able to ignore the growing “threat” of third-party sellers cashing in on their patches, or the possibility of missing out on the often substantial markups that can rare and collectables to obtain.

And if retail success is indicated by sell-out levels, then resale is doing well, retail analyst firm Edited wrote in a blog post in November. For example, the majority of products stocked on the unique sales platform Vestiaire Collective arrived online within the last three months, and only 5 percent of products remained unpurchased for more than a year. In contrast, 25 to 34 percent of listed products at traditional luxury retailers have been sitting online for more than 12 months.

With all signs pointing to brand resale becoming “inevitable,” the question managers should be asking is not whether they should use secondhand, but how they can expand it, Ruben said. Plenty of room for growth remains, particularly at multi-brand retailers, according to Edited, which found second-hand goods made up 3 per cent of products stocked at Farfetch and 1 per cent at Selfridges. The impact on smaller brands, on the other hand, is more visible, with used products accounting for 24 percent and 16 percent of Coach and Diesel products available online, respectively. Similarly, at Trove, some partners have doubled, even quadrupled their translated offerings, “which is starting to make a lot of sense.”

For retailers, understanding that reselling is part of their broader business rather than a separate add-on has been key to shifting the atmosphere, said Recurate co-founder Wilson Griffin. But with that also comes increased expectations of how such programs work.

“They have requirements in terms of reporting and data, which shows that they’ve put some serious thought into this,” Griffin said. “Whereas before, a lot of brands were curious about it. And I think that’s going to be the big evolution, with brands being a lot more strategic about that.”

There is no way to handle the resale, experts warned. Of course, third-party marketplaces, including ThredUp’s own, continue to proliferate. And even in the case of branded resale, brands can opt for a less practical peer-to-peer route, or they can go all-in on take-backs and verification. That’s a good thing, said Dillie.

“I believe resale will be like retail in that there are many different ways you can buy new,” she said. “You can go to Nordstrom to buy Steve Madden, you can go online and buy Steve Madden, or you can go to a Steve Madden store. Meeting customers where they are will also apply to secondhand.”

Still, Ruben said he foresees further industry consolidation in 2023, with Naver’s purchase of Poshmark just one recent example. Last year, Bleckmann bought The Renewal Workshop, which refurbishes previously unsaleable stock, while Goat Group agreed to buy streetwear retailer Grailed. There will be a few third-party marketplaces that will be successful on their own in the long run, he said, but others will become part of other businesses. The B2B space could also see some M&A activity, but “it’s still early days.”

One thing Sadler would like to see this year is for brands to more closely integrate their resale programs into their sustainability strategies. Right now, she said, they’re only “scratching the surface.”

“In 2023, I would like to see more brands tying additional sales to their overall sustainability initiatives and long-term goals,” she said. “Tommy Hilfiger is a great example of a brand that has started a reselling program [with the larger] soccer goal [of becoming] a fully circular brand by 2030.”

Wilson believes it may not be long before brands start touting public statements about how re-commerce can play a role in separating financial growth from environmental impact — a topic gaining momentum in conversations about fashion’s over-the-top proportions. There could also be a more coordinated effort to link resale to carbon accounting.

“I think it’s only a matter of time before the industry makes the connections we need to really understand the environmental improvement of resale,” he said. “We all know this intuitively, but to calculate it in such a way that you can use it as a lever to improve greater sustainability [metrics]…will be incredibly powerful.”

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