Neiman Marcus announced Wednesday that it has inked a deal to acquire a minority stake in Fashionphile LLC, a secondhand e-commerce seller of luxury handbags and accessories founded in 1999. It has an inventory of 15,000 items.
And global fast-fashion giant H&M Hennes & Mauritz AB is testing a program with its brand ‘& Other Stories’ and the Swedish secondhand platform Sellpy, adding to the list of brands that are taking a serious look at the potential of the resale market.
H&M HMB, +0.56% says the & Other Stories brand has a “strong presence” in the secondhand market, and is sought-after on Sellpy.
“For us, it’s such a compliment to see our pieces find new homes and get a second chapter,” said Sanna Lindberg, managing director of & Other Stories, in a statement.
It’s not just a compliment. It can also be pretty lucrative.
“This is the biggest opportunity in the supply chain, period,” said Andy Ruben, chief executive of Yerdle, a company that provides technology and logistics for brand resale programs. Ruben previously led sustainability efforts for Walmart Inc. WMT, -0.22% and thinks resale is simply “a smarter model.”
Eco-issues are top of mind, particularly for the all-important millennial shopper who, along with Gen Z, is driving growth in resale. Brands are responding. Gant has used plastic plucked from the ocean to make clothing. And Levi Strauss & Co. LEVI, -0.04% which is newly public (again), has put systems in place to cut down on the amount of chemicals and water used to create its denim.
See: Levi Strauss ‘challenged’ by $1 billion on debt, analysts say
H&M has made take-back boxes available, where shoppers can turn in used clothing for recycling and receive a 15% discount on their next purchase, but recycling isn’t quite as effective as simply getting more use out of garments.
Getty Images
“It relieves us of the overfilling of our lives, but in many cases it’s not a good sustainability option,” Ruben said. “Far better is getting more use out of what’s already made. Bring back an item that’s going to its next wearer.”
Ruben uses Eileen Fisher’s Renew program as an example, which has taken back more than one million pieces since 2009. Items are cleaned, mended as needed, and then resold, with a portion of the proceeds going to charity.
“In recent years, the retail industry has dealt with multiple disrupters (e.g. off-price, fast fashion, e-commerce), and we believe that another key disrupter is emerging: the resale market,” wrote Wells Fargo analysts in a report published this month.
The luxury market is being most disrupted by the resale market and companies like The RealReal “has the ability to buy used luxury goods (at a discount) introduces the brands to new customers, while the ability to earn residual/resale value also spurs more sales through the primary channels,” according to Wells Fargo.
Other key players in the resale space that Wells Fargo highlights are ThredUp and Poshmark, which are creating new business models to overcome the secondhand market challenges, including the stigma of wearing once-worn clothing.
See: Costco shoppers are snapping up more clothes and home goods
ThredUp forecasts that the secondhand market will reach $51 billion by 2023, up from $24 billion in 2018, with one in three among Gen Z buying a secondhand item in 2019.
“Secondhand will be larger than fast fashion within 10 years,” reads the ThredUp 2019 Resale Report, as resale takes market share from retail.
“Our closets are twice as big as they were 30 years ago,” said Yerdle’s Ruben. “There are more items in our closets and we wear them less. That’s an opportunity.”
These barely-worn items may just be clutter in one person’s closet, but to another person, it’s a unique find at a good price. Creating a rotating closet of one-of-a-kind items is appealing to many shoppers.
Besides the additional sales, Ruben suggests that brands increasingly want to get in on the resale action to control the perception of the brand and for quality-control purposes.
“Brands know their items better than anybody,” he said.
However, since some items are worn only a few times, the integrity of the garment isn’t necessarily the biggest question for resale shoppers.
“We get bored of items before we use them up. Some items have been used up and brands will repair them and put it back out there and make a lot more money.”
Don’t miss: Victoria’s Secret showing signs of progress with swim relaunch, fewer promotions
Secondhand shopping has even come to performance clothing that is meant for activities where garments can take a beating. Patagonia and R.E.I., which are known for their stewardship of the environment and their efforts to get people into the outdoors, also have secondhand items for sale.
“We want to dispel a little bit the idea that it’s hard used or just for entry level,” said Eric Artz, the interim president and chief executive of R.E.I. “We can offer various ranges of quality and use that I think our customers will enjoy.”
In addition to selling used gear, R.E.I. also has a rental program that is expanding in 2019 to include items like snowshoes, skis and camping kits. The idea is to offer items for everyone, whether they want to try before buying, can’t afford to buy, or travel so much that renting or purchasing pre-owned items is more practical than buying new.
“By definition, we’re about experience and sharing expertise to get outside,” said Artz. “As long as we stay centered on that and serve the needs of the customer, we’ll find ways to do good business, do good for them, and the planet.”
Whether you’re looking for hiking boots or a cocktail dress, indications are that brands of all kinds are starting to tap into the resale market as another business stream.
“There’s a shift in how we shop and as it’s happening, brands are realizing they can’t cede this ground to disrupters,” said Yerdle’s Ruben. “As brands get into this space, it’s only going to move faster.”
Add Comment