Will Resale Retail Prevail and Is Secondhand Becoming First Priority?
Trends never occur in a vacuum. The ones that create major changes and stick around longer than “fads” are bolstered by the “convergence” of many factors. The more points of convergence, the more likely that they will “take hold” and create powerful change, culturally, in the marketplace, or both.
Trend convergence is like a fire. It can start very small, smolder a bit, but with the right conditions it can become a blaze. Such is the case with the secondhand market. The sources of “combustion” are many and varied, including the contraction of the middle-class, the internet and social media, to Generation Y and Z’s recognition of the fashion industry’s detrimental environmental effects. These are coalescing to build a highly sustainable, sustainability movement.
And the kicker is that this trend knows no societal or socioeconomic boundaries. All segments of mainstream fashion, the gig economy and even teen fashionistas are becoming players. And its only just begun. What started as economically motivated “thrifting” has become something altogether different. And before the smoke clears it will have a lasting and profound impact on both our culture and the marketplace. To get a better grasp on the phenomenon we should deconstruct it, using three “trend drivers”, Cultural Influence, Market Forces, and associated Amplifiers.
Social media acceptance - Without a doubt, the celebration of secondhand by social media influencers, as a means of establishing one’s unique style has been a trend amplifier, providing permission and promoting anything goes personalization. Influencers from closet clean-out queen Marie Kondo to Gen-Z international flea-market Depop (more on that in a moment) are moving the bottom-of-the closet lint- catchers to top-of-mind fashion fodder and even spawning teen-entrepreneurs.
Storytelling, history and heritage - Looking at two of the History Channel’s break-out cable shows of the last decade, American Pickers and Pawn Stars, I believe we are seeing “trend amplification” at work. In addition to antics of the show’s highly entertaining characters-turned stars, these programs celebrate the history, rich stories, and cultural relevance of even the most utilitarian and common commodities of the past. It’s a kind of modern-day mythology, that elevates a mundane item’s intrinsic value to something much greater. My wife and I have watched, and re-watched episodes of the “Pickers”, rummaging through warehouses, junkyards and barns. Like legions of fans we shake our heads in wonderment when a handful of newly exhumed dirty dungarees turn out to be worth more than an entire wall of Levi’s 501’s at Macy’s.
Similarly, the “from mold to rusty gold standard” applies in today’s classic car market. A new appreciation of originality has led to “preservation classes” where a tattered and tired, yet original condition “barn-find” can be worth more than the comparable car that received a six-figure restoration. But you don’t dare disturb the dirt or spoil the patina, because even the dust and rust become an intrinsic part of the story.
Recession hangovers and contraction of the middle-class - Certainly sheer economics has played a role here. Even with the great recession now over a decade behind us, consumers from multiple income groups have had to adjust their spending habits, which has helped fuel the core resale market. However, the market forces behind the tsunami-like growth of secondhand retailing are nuanced and stem from both bottom-up as well as top-down drivers.
One of the bottom-up trend drivers is a niche-segment of retail-resale that has taken the industry to another level, from that of commodity to specialty. One need only visit a hotbed of Generation Y inhabitants, like Chicago’s Wicker Park neighborhood, to appreciate this resale trend transformation. Here storefronts feature carefully curated secondhand and vintage offerings, employing “High-street” visual merchandising techniques. These “shoppes” are imbued with millennial magnetism that are having a noteworthy effect on the industry.
Venture capital-backed, digital native re-sellers - While the origins of secondhand may have been bottom-up, it’s clear that the recent explosion has been fed by top-down entrepreneur-ism, thoughtful execution and money. The tinder for this fire has been legal tender. Companies like Poshmark, ThredUp, and The RealReal, turned the industry upside down and is driving resale sales to eclipse fast fashion by 2028, when an estimated 13% of the items in a women’s closet will be secondhand compared to 6% in 2018.
This has become one of the latest equity market love stories. Poshmark has raised in the area of $160 million, ThredUp has raised $300 million and the now public The RealReal raised $300 million in their IPO alone. The equity market’s draw to this shinny category has some unexpected Amazon-ness associated. That’s because the financial construct of consignment doesn’t require a heavy outlay of cash for inventory. Certainly, there significant front-end data, marketing, operational and infrastructure costs. Additionally, as is the case with upscale The RealReal the onus is on them to be certain that they are offering the “real deal”. Accordingly, they keep a vast group of authenticators busy, making certain that what’s advertised are bone fide goods.
Gig-economy skews younger – Depop combines the bazaar-like atmosphere of e-Bay with Instagram-like sensibilities and serves it up to a Generation Z audience. And their loving it. From its origins in an Italian magazine called Pig, to its 2016 re-embodiment by CEO Maria Raga, Depop has raised over $100 million in funding. It’s reported that 90% of its over 15 million users are under 26.
This app-platform for second hand is turning even teens into selling machines, with its shoot-and-sell simplicity. It’s even bringing social-media influencer-stardom to some. And the sources of “inventory” for many of these Depop devotees often go beyond their closets. I fact, many young entrepreneurs make repeat trips to Goodwill with a buy and flip mindset. Forget babysitting to earn a little extra, there are now throngs of teens getting an early taste of the gig-economy and savoring it.
What’s Next, Re-Tailors?
I personally think that we are at the beginning of a whole new “secondary-economy” that will morph and proliferate in ways that couldn’t have been imagined during the “shop till-you-drop” days. It’s entirely imaginable for “Re-Merch Malls” to bring together re-sellers, local digital-native crafters and a new generation of Re-Tailors, who combine fashion design savvy with social media marketing and influencing skills. These next-gen seamstresses could draw in legions of Gen Z’s, toting once worn items to get re-tailored into renewed, personalized and highly prized merch. In the process they would be moving money away from consumption, and toward growing a higher-level service, and artisan community tailor-made for social media. What could possibly be better than having a one-of-a-kind new/old jean jacket combining a pair of your grand-dad’s overalls, some 90’s era 512’s with vintage Chanel buttons, all RE-MADE IN THE USA. Now that’s a story.