The popularity of consumer resale companies is growing at impressive rates. What’s more is that companies like The RealReal, a luxury consignment store is inspiring larger brand retailers to jump on the resale bandwagon. Consignment is the word on the fashion street, and it’s hot!
Like any disruptive industry, what the future holds for consignment as the mainstream catches hold is still very much in flux. Thrift stores have been around for decades, but with the availability and improvement of technology, bringing resale into the homes of fashion-forward consumers is as real as it gets.
Last year the RealReal went public on the U.S. Stock exchange and was estimated to grow to a $200 billion valuation in the coming years. As the first of it’s kind to go public as such is setting the pace for the resell industry to outpace fast fashion within the next ten years.
Secondhand fashion is scaling at massive rates as Gen X shoppers adopt consignment shopping 2.5 X faster than nearly any other age group.
With trends continuing on the up and up, the resale customer will no longer be relegated to become someone else’s customer. They are appealing to every market, including home decor, accessories, and shoes. The simple truth is that if a consumer can find a product for less, they’re gonna buy it.
Secondhand luxury is at a particularly exciting crossroads.
Second-Hand Goes Mainstream
For decades, early adapters were keen on consignment shopping. Digging for treasures at the local thrift shop, or at buyback places such as the Buffalo Exchange. Arguably the first branded resell shop was founded in 1974 with humble beginnings and now has 50 stores nationwide.
The bell curve of these early adapters was slow, as we saw fluctuations in fashion and how we make, ship, and buy clothes evolve over the past several decades.
But as more consumers become keen to shop at consignment stores, the trend is quickly turning mainstream. Secondhand clothes have reportedly accounted for $28 billion of revenue (compared to $35 Billion for fast fashion). The predicted growth of $64 million in the next ten years is expected to surpass that of Fast fashion by more than $20 billion.
A Shift in Top-Down Fashion Trends
Market trends within the fashion industry have historically come from the top down. What the designers were sharing on the runway has typically been what ends up on the rack. Rarely there are instances of bottom-up fashion (sneakers are an excellent example of this, having started as streetwear and then appealing to top designers and luxury brands).
When it comes to secondhand fashion, influencers, social media marketing strategists, and a movement toward sustainable individualism have brought the boom. This consciousness of sustainability presented a specific fashion challenge: how to stay on-trend, but not contribute to the growing amount of waste created by the fashion industry.
For many, the secondhand market has provided the answer—consumers can refresh their wardrobe, add trends to their closet, and leave a lower carbon footprint at the same time.
The Major Players of the Consignment Market
The RealReal is one of the original online luxury consignment shops which opened in 2011. Since then, others such as Poshmark, and fellow online luxury retailer Farfetch have tested handbag resale to significant success. ThredUp sees massive profits in the resale of economy, fast fashion, and high street brands.
As the major players in the industry continue to vie for position at the top, infrastructure and monetization of the industry will shift. Trends in pop culture will likely also prove influential.
For example, ThredUp reports that demand for their “Clean Out Kits” rose 80% after Mari Kondo’s Show, “Tidying Up” hit Netflix last year.
Forecasters also expect that how consumers think about a future purchase will be influenced by the ability to resell an item. This is especially true for The RealReal, which boasts up to 80% commission on some highly sought after luxury items. Items that consumers may not otherwise want to invest in unless they know they have the potential of getting back most of the cost.
Researchers see this “trading asset” effect on purchases at even the fast-fashion price tag. Whether a brand can be “traded” for another item, or resold is worth considering within the initial investment.
Traditionally as consumers reduce their wardrobes, they’d simply purchase new items to replace the outdated ones. But now, more than ever, consumers are buying second hand, particularly for high trend pieces and then reselling them. And thus, the circle of fashion continues.
Researchers believe that because of reduced costs and that “do-good” eco-friendly feeling of buying used items, consumers are swapping out their clothes far more frequently than before.
Lauren Reilly, Merchandising Manager for The RealReal, explains how her team and staff curate editor pics to make shopping for on-trend items (and for popular items) even easier. “
“In women’s, it is essentially a curation of what we, as merchants, would want to add to our own closet,” Reilly explains.
“We consider all products that are uploaded every day. When choosing these items, we take into consideration what is new and relevant in fashion as well as items that have unique details to them.”
“We look for items that are in high demand, specifically items we don’t get a lot of or that sell out quickly when we do,” adds Lindsey Taft, Merchandising Manager, Fine Jewelry & Watches.
Resell Transcends Generations and Financial Means
The boom is primarily fueled by growing interest from Gen Y and Gen Z’s as well. Even the boomer generation is getting in on the secondhand action. This is a trend that appeals to everyone. At the root of the interest: Sustainability and the option to rotate a wardrobe inexpensively.
The socio-economic ramification of a circular economy is best seen in the work the RealReal has done to corner the market on luxury resale. Offering more than just retail, the RealReal also sells used furniture and restores some items when needed.
No garment is too big or too small for the circular economy of future consignment. As this industry continues to grow, adapt, and evolve, we’ll likely see more brands recognizing the value of resale. There will also be more opportunities for scalable growth within the industry as specific niche markets open up.
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