Reuse, share and rent: the new threat for fashion giants

Inditex threat is not only Amazon. Now, the real warning is secondhand. Only in the United States, the size of this market will be even bigger than the conventional one in five years. The same way Inditex made fast fashion the new normal, nowadays is secondhand the one pulling the strings. Giants of the sector are starting to take on, so they don’t miss a piece of the cake.

In the United States, the secondhand market generated 24 billion dollars sales in 2018 and it’s expected that in 2023 the volume will reach 51 billion dollars. The phenomenon is such that it’s motivating other existent models like rental or boosting new like subscription.  

The annual revenue that secondhand moves in the American market it is still lower than the traditional one, around 35 billion dollars per year. But the growing pace of one and other is what marks the difference: secondhand moves at a speed of 16% per year, while the traditional grows at a weak 3% per year. In 2023, if estimations are right, the American secondhand market will be bigger than the traditional one, according to data provided by ThredUp, one of the sector giants and GlobalData.

Its estimated that a total of 56 million women bought secondhand articles in 2018, the equivalent of 64% of the world’s female population older than 18 years old. One year earlier, it was 44 million.  By age, 33% are millennials, but 31% are baby boomers. Gen Z represents 16% of the total consumers and Gen X, 20%.

According to ThredUp and GlobalData, half of the American’s closets in 2008 had big retailers’ garments. In this closet, Amazon didn’t fit and secondhand represented 3%. In 2018, big retailers lost speed because of fast fashion, sales seasons and brands that sell directly to the consumer. In the last 10 years, Amazon and secondhand have also increased but at a slower pace. However, in 2023, secondhand will represent 13% of the American’s closets, Amazon, 4% and subscription, 3%.

Reused garments go back to the origins of civilization. This has been a business that has developed at the same time as the traditional one as a secondary market, very niche and sometimes even rejected. Up until now there was no data available that developed its market though flea markets and vintage stores.

Internet was de detonator that boosted this market to a global phenomenon. From eBay to Rent the Runway, Internet has shaped and professionalized the secondhand universe. Garment rentals for example is one of the businesses with more growth forecast. Its estimated that it grows at an annual average of 10.8% up until 2023, when it reaches 1.9 billion dollars, according to Reuters.

In 2023, the size of secondhand in the US will be bigger than the conventional business  

Fashion system shakes

“Secondhand implies a change of mentality, where you go from buying to renting or to buying recycled garments” states Luis Lara, director of Retalent. According to the expert, the change in the fashion cycle, and in consumption in general, is unstoppable. For the first time, fashion system is in the spotlight because of its productive cycle.

Lara states that this phenomenon is boosted by several factors like sustainability or transparency, but that also has a big relation with Kondo mania (the world popular organizing method of Marie Kondo).

Eduardo Irastroza, marketing professor at EAE Business School states, “there is a change of mentality in the new generations, that are looking more for the experience than the fact of owning”. According to the professor, “rent, reuse and share are powerful tools to follow the fashion trends, consumers prefer having fifty stamps in the passports that a Mercedes in its garage”.

“Rent, reuse and share are powerful tools to follow the fashion trends” states Edoardo Irastroza (EAE)

WGSN points at fashion rentals as one of the niches with the biggest growth potential in the following years “the shift towards fashion rentals indicates not only deeper consumer investment in the sharing economy which has already taken hold in the hotel, property, entertainment and automotive industries but also a growing desire to live, shop and consume more sustainably”, states The rental economy: key retail strategies report.

Who is the fashion equivalent of Airbnb?

Where is the biggest growth? This is the challenge presented by the secondhand boom, a scenario where producing moves to the background. Edoardo Irastroza states that this is not happening only in the fashion industry but also in the tourist market with Airbnb, TripAdvisor in hotels and restaurants and Netflix in leisure. Who will be its equivalent in fashion?

In the United States, brands and retailers have begun to open the doors to secondhand, rental or even subscription, either with their own resale channels or collaborating with specialized marketplaces. They even started seeing this as an opportunity to expand their customer base than a threat. 

A lot has happened since the times of eBay. ThredUp, for example, has stared this year Resale as a Service, to work hand in hand with companies like Macy’s or JCPenny to set up corners in its installations. The company also sealed an alliance with Reformation at the begging of 2019 to resell 75,000 garments. 

Vestiaire Collective, specialized in secondhand luxury goods, has signed similar agreements with Selfridges and the multibrand chain Joyce in Hong Kong. TheRealReal, its direct competitor, appeals to the sector’s giants to create alliances to face the lack of stick in some of the brands, such as Gucci or Louis Vuitton. From an eco-perspective, Stella McCartney offers a hundred dollars discount to those who have purchased any of their garments through this marketplace.

Farfetch has launched the Farfetch Second Life platform, which allowes high-end bag owners to sell them in exchange for credit for Farfetch’s own ecommerce. H&M implemented secondhand sales in April through the ecommerce of &Other Stories after trying it a few years ago and abandoning the project. Neiman Marcus, meanwhile, bought a stake of Fashionphile last April, a company specializing in selling secondhand accessories and last August Hudson's Bay sold Lord&Taylor to the fashion rental company Le Tote.

The rental or subscription formula also begins to be attractive to conventional retailers. Urban Outfitters, Nike or Gap have started testing this business the last summer. Urban Outfitters launched the monthly clothing rental service Nuuly; Nike created the Adventure Club service of footwear for children between two years old and ten years old, while Gap has begun testing this terrain with Banana Republic, through the new Style Passport platform.

 In the United States, brands and retailers have begun to open the doors to secondhand, rental or even subscription, either with their own resale channels or collaborating with specialized marketplaces. They even started seeing this as an opportunity to expand their customer base than a threat. 

A lot has happened since the times of eBay. ThredUp, for example, has stared this year Resale as a Service, to work hand in hand with companies like Macy’s or JCPenny to set up corners in its installations. The company also sealed an alliance with Reformation at the begging of 2019 to resell 75,000 garments.