Trumponomics Gives Rise To Hand-Me-Down Inc. (#GotBitcoin?)
The garage sale is becoming big business as The RealReal and other upstarts feast on the emerging appeal of secondhand clothes, shoes and accessories. Trumponomics Gives Rise To Hand-Me-Down Inc. (#GotBitcoin?)
Thrift Shopping Is Going Mainstream
It used to be that shopping for secondhand goods meant sifting through piles of clothes and “Everything $1” bins at the local Goodwill or a neighbor’s garage sale. For many, it meant scrolling through postings on one of the first online marketplaces, eBay Inc.
Today, it’s as easy as hailing an Uber or renting a room through Airbnb Inc. Bargain hunting, environmental concerns and the sharing economy have erased the stigma of used goods at the same time technology has made thrift shopping more accessible, reliable and cool. Even Kim Kardashian West wears vintage designer duds.
“Following the recession, there was a mind-set shift when it came to acquiring used goods,” said Oliver Chen, an analyst tracking retail trends at Cowen & Co. “Now, it’s considered a smart bargain. Being fashionable is about getting value for your dollar.”
For many consumers, the opposite was true just over a decade ago. Jessie Char, 32 years old, said shopping at thrift stores wasn’t cool when she was growing up. “It was the Abercrombie & Fitch era,” said Ms. Char, an event planner in San Francisco. “Vintage clothes were frowned upon by the popular kids.”
Today, about half of Ms. Char’s wardrobe is second hand. She said she scours a new crop of websites that are making it easier than ever for people to buy and sell used merchandise such as The RealReal Inc., Poshmark Inc. and thredUP Inc. as well as thrift stores such as Crossroads Trading Co., with about 37 locations, for bargains.
She recently bought a Prada Cahier belt bag for $945 on The RealReal. A similar version of the bag is currently selling at Neiman Marcus for $1,790. Neiman Marcus Group Ltd. made its own foray into the market for what it calls “preloved” handbags and accessories this year when it took a minority stake in Fashionphile LLC.
The RealReal, which resells luxury apparel, shoes, handbags and jewelry, went public in June and now commands a market value of nearly $1.3 billion, larger than that of Abercrombie & Fitch Co. It expects to sell nearly $1 billion of goods this year, though its net loss widened in the most recent quarter.
ThredUP and Poshmark offer used goods from a wider array of brands, including J.Crew and Gucci. Poshmark is planning an initial public offering as soon as this fall, people familiar with the situation said. StockX is the place where sneakerheads go for their latest fix of vintage athletic shoes and streetwear.
These companies are borrowing a page from the car industry, which turned the process of buying secondhand automobiles from agonizing to relatively painless by offering leases on preowned vehicles. The dealers do all the vetting, taking out the uncertainty much the way The RealReal and other secondhand marketplaces authenticate products they sell.
As these sites soar in popularity, it remains to be seen whether they can make money from reselling fashionable clothes and other items. The cost of cleaning and vetting goods is considerable, as is sourcing, industry executives said. Rather than products flowing from overseas factories in large batches, they are coming from people’s closets, often one at a time.
And the secondary market isn’t immune to the pressures facing stores that sell new goods. Discounting by department stores depressed prices of secondhand goods sold by The RealReal in its most recent quarter, according to Julie Wainwright, The RealReal’s chief executive.
The sale of secondhand goods—or recommerce—accounts for a tiny fraction of the $3.8 trillion in U.S. retail sales, but it is growing fast. Sales of secondhand goods are expected to more than double to $51 billion by 2023, up from $24 billion last year, according to GlobalData PLC, which prepared the research for thredUP.
Fifty-six million U.S. women bought secondhand products in 2018, up from 44 million who did so in 2017, according to the report. Shoppers ages 18 to 37 are driving the shift. A third of Generation Z and more than a quarter of millennials will make secondhand purchases this year, the report predicts.
It isn’t just women who are getting into the act. Most of the resale sites also buy and sell used men’s clothing in addition to the plethora of men’s suit- and tuxedo-rental services that have popped up.
Rent The Runway and other rental business are benefiting from similar changes in consumer behavior, including a desire for newness on the part of young selfie-posing shoppers who don’t want to be seen in the same outfit twice. Consumers on average buy 60% more clothing today than they did 15 years ago, but keep the items only half as long, according to McKinsey & Co.
That has resulted in more waste. Nearly 60% of the more than 100 billion garments produced annually end up in incinerators or landfills within years of being made, McKinsey estimates. The production of one kilogram of fabric generates an average of 23 kilograms of greenhouse gases, the consulting firm says, making the fashion industry a big polluter.
“I used to buy the $15 fast-fashion shirt that fell apart after I washed it a few times, until I realized how wasteful that was,” said Jessica Fletcher, a 25-year-old project engineer, who lives in St. Louis, Mo. She started buying used clothes after she graduated from college. “It was a good way to get better quality at a quarter of the cost.”
Shoppers at the high end have become more bargain conscious, too, particularly as prices for luxury goods have soared over the past 15 years, placing many items out of reach, even for the affluent. McKinsey estimates that prices of fine watches and jewelry have nearly doubled since 2005, while the price of Louis Vuitton’s Speedy 30 handbag has increased 19% a year since 2016.
“I can afford to buy new clothes, but I like buying them used, because it lets me try different styles without spending a lot of money,” said Kuromi Hendrix, 28. Ms. Hendrix, who lives in Boston and works as an IT specialist, recently scored a Tadashi skirt for $12.99 on thredUP. The resale site estimates the original price was around $107.
As more shoppers buy used products, they are spending less at traditional chains, from fast-fashion retailers to department stores. Some established players are fighting back by launching or expanding their own resale programs, including Macy’s Inc. and Levi Strauss & Co.
GlobalData predicts that sales of secondhand merchandise will exceed those of fast fashion within a decade. And at the high end, used goods will account for 9% of the global luxury market by 2021, up from 7% last year, according to Boston Consulting Group.
The technology that created the boom in online shopping has turned the local thrift store into a mainstream phenomenon by providing consumers with more confidence that their purchases are authentic and making it easier for them to browse at times that better fit their schedules.
“You can shop for secondhand goods in a way that you never could before,” said James Reinhart, thredUP’s founder and chief executive.
When Hannah Stephenson, a 36-year-old writer, needed to update her wardrobe for a new job, she didn’t have time to sift through piles of clothes at her local Goodwill. Instead, she browsed thredUP’s website in the evening while she lounged on her couch.
“I’d rather buy second hand than go to a mall, because you can find more unique items,” said Ms. Stephenson, who lives in Columbus, Ohio.
Buying is only part of the equation. A growing number of shoppers also sell their clothes and accessories on secondhand websites and in thrift shops, creating a virtuous circle that clears out their closets so they can buy more.
According to a survey of 12,000 luxury consumers by Boston Consulting Group, one-third of respondents said they sold items to empty their wardrobe and finance new purchases. At The RealReal, 53% of consignors were also buyers as of March, according to securities filings.
“This is a trend that is not going away,” said Sarah Willersdorf, a Boston Consulting Group partner.
On Second Thought, Traditional Retailers Make Room for Used Clothes
Venerable names like Macy’s, J.C. Penney and Stage Stores embrace thrifting in push to jump-start sales and lure younger, environmentally conscious shoppers.
Some of the country’s biggest retail names are following online startups into the cult of thrifting, casting aside long-held fears that selling secondhand goods would cannibalize the market for new goods.
Macy’s Inc. and J.C. Penney Co. this past week unveiled partnerships with resale marketplace thredUp Inc. to sell used clothes and accessories in some of their stores. Outdoor brand Patagonia plans to open a temporary store in Boulder, Colo., this fall dedicated to selling pre-owned goods, its first such location.
Thrifting is gaining traction as shoppers have grown more bargain conscious and concerned about the environmental impact of fashion, particularly the throwaway clothing model popularized by fast-fashion chains.
“We looked deeply at Generation Z consumers, and recommerce came up over and over again,” Macy’s Chief Executive Jeff Gennette said in an interview, referring to the burgeoning resale market. “It’s not a downside that something has been preowned.”
Thorsten Weber, chief merchandising officer of Stage Stores Inc., which has thredUp shops in about 45 of its department stores, said traditional retailers are just beginning to wake up to the impact of resale. “Just like off price became a disrupter, resale will be a disrupter,” he said. “It will be a force in the industry.”
Other chains, including Bloomingdale’s, which is owned by Macy’s, Urban Outfitters Inc. and Ann Taylor, are taking a slightly different approach by launching services that let shoppers rent clothes instead of buying them. Customers can even rent home décor at West Elm, which has partnered with Rent The Runway Inc. for the program.
“Customers are looking at dead inventory in their closets,” Mr. Gennette said. “They may wear an item once or twice, but why do they have to own it?” And if they can save a garment from going into a landfill, so much the better, he added.
For traditional retailers, many of whom are struggling with sluggish sales as shoppers buy more online, resale and rental is a way to bring younger customers in the door.
Phil Graves, Patagonia’s director of corporate development, said shoppers who buy used clothes from the outdoor brand are typically a decade younger than those who purchase new gear from the chain.
Patagonia began selling used goods in 2017 under its Worn Wear label, although it has provided repairs of existing gear since the 1970s. Shoppers can send back used items by mail or drop them off at one of the retailer’s 34 U.S. stores. In return, they get a credit of up to $100 that they can use on future purchases.
This fall Patagonia will launch Recrafted, a line made from old clothing and other gear that couldn’t be resold in their current state. The items are refashioned into new garments, including jackets, bags and vests.
Resale is still a small business for most traditional retailers, but it is growing fast. At Eileen Fisher Inc., which pioneered resale a decade ago, it accounts for about 1% of sales. Sales of Levi Strauss & Co.’s authorized vintage garments have tripled since the line was introduced in 2017, but are still a tiny fraction of overall sales, said Jonathan Cheung, Levi’s senior vice president for design innovation.
Many traditional chains, particularly luxury brands, continue to sit on the sidelines, worried that a booming secondary market will depress demand for new goods.
“If you’ve sold new cars your whole life and all of a sudden you’re going to start selling used cars, the immediate fear is, what if all the customers just buy used cars?” said Andy Ruben, the CEO of Yerdle Recommerce, which operates resale programs for brands. “The reality is that people who want used items are going to find them anyway.”
That is what has been happening with Michael Kors handbags, said John Idol, chief executive of parent company Capri Holdings Ltd.
“There’s no question that resell in North America impacted the Michael Kors accessories business,” Mr. Idol recently told analysts. “There is a substantial amount of product that is resold on numerous websites. We don’t sell to those companies directly. But you can find our product on there.”
Nevertheless, Mr. Idol said Michael Kors isn’t rushing to launch a resale business of its own. “We’ll be very slow” in evaluating these new opportunities, he said.
One issue keeping traditional retailers at bay is sourcing. Old-school chains are set up to sell thousands of the same item, not thousands of one-of-a-kind pieces that need to be vetted and cleaned.
“It’s not that easy to find the goods,” Levi’s Mr. Cheung said.
Mr. Cheung said employees scour thrift shops, yard sales, websites and vintage dealers for jeans from the 1980s and 1990s that Levi resells in its eight flagship stores.
“There has been a change in the perception of vintage goods,” Mr. Cheung continued. “When I was growing up, they signified that you couldn’t afford new clothes. Now, it’s a status symbol. It says you’ve made an intelligent and sustainable choice.”
As a fast-fashion retailer and pioneer of the throwaway-clothing trend, H&M isn’t usually top of mind when it comes to sustainability. But the Swedish chain has been working to change that. In 2013, Hennes & Mauritz AB launched a program that lets shoppers drop off used clothes at H&M’s nearly 4,500 stores world-wide.
The items, which can be from any brand, are collected by a recycling company. Roughly 60% are resold through local thrift shops and markets; the rest are turned into other products or fibers for new garments.
Eileen Fisher was one of the first traditional brands to dive into resale in 2009 when it launched a program for employees. It eventually opened it to the public, and resale took off in 2013, when the company posted signs in its stores that read, “We’d like our clothes back, thanks very much,” said Cynthia Power, director of Renew, the brand’s resale and recycle program.
Today, the company sells used clothes in a handful of its 67 Eileen Fisher stores, as well as in two free-standing Renew stores and on its website. Used clothes typically cost about a quarter of the price of new items, Ms. Power said.
Ms. Power said selling used clothes hasn’t hurt sales of new clothes. “It gives customers another reason to come to the store,” she said. “It’s an add-on purchase.” Trumponomics Gives Rise To, Trumponomics Gives Rise To, Trumponomics Gives Rise To, Trumponomics Gives Rise To, Trumponomics Gives Rise To, Trumponomics Gives Rise To, Trumponomics Gives Rise To