The Supply Side: Resale interest rises among traditional retailers

The National Retail Federation said the rise of resale continues to be a significant focus, with more retailers entering the growing market at the urging of consumers. Morningstar estimates the global resale market could reach $300 billion by 2030, with resale growing at three times the rate of the primary retail market.

A December survey by WD Partners found that the secondhand market grew 24% last year, with 88 new brands launching resale operations in 2022. The study found that 52% of U.S. consumers shopped for secondhand apparel last year. One in three apparel items bought in the previous 12 months in the U.S. was secondhand; among Gen Z (under age 26), that number was two in five. The U.S. secondhand apparel market is projected to reach $70 billion by 2027. Leading the growth is the luxury resale market at 11 times faster than traditional retail, according to the report.

Consulting firm Kearney said resale holds many retail opportunities, and it’s not just good for the planet. It can also benefit the business as it moves beyond niche to mainstream.

American Eagle recently announced plans to offer a curated secondhand collection through a partnership with online consignment company ThredUp that features used and vintage clothing on a dedicated page on the ThredUp site.

“We are passionate about finding new and exciting ways to connect with our customers. … The digital-first, circular shopping experience provides an opportunity to refresh your closet by shopping pre-loved, iconic styles from a brand that has defined youth culture for decades,” said American Eagle President Jennifer Foyle.

She said that standing behind the commitment to help create a more sustainable future, the partnership with ThredUp gives new life to clothing and accessories that might otherwise contribute to the throwaway fashion culture more retailers are working to eliminate. American Eagle pieces will be virtually displayed and arranged as a vintage store. Shoppers can click on products for details and obtain secondhand sustainability information. Each product will link customers directly to the AE page on the ThredUp site for checkout. The assortment includes styles from the 1980s, and items are priced between $10 and $40. The assortment consists of all-gender clothing.

The new resale initiative is part of a broader corporate effort to be carbon-neutral by 2030.

American Eagle joins over three dozen retailers who have accessed ThredUp’s third-party platform-as-a-service to streamline the cumbersome process. J.Crew, Kate Spade, Target and Walmart have all joined the resale market with the help of ThredUp.

“What’s happened is that brands and retailers are really acknowledging that the customer is engaging in the active purchase of secondhand products,” ThredUp President Antonio Marino said.

Lee Peterson, marketing executive at WD Partners, said secondhand sales have evolved into the mainstream, with a diverse and growing set of retail chains offering or experimenting with resale. WD Partners reports that retailers who add resale into their operations can see more traffic to physical stores and online and increase revenue. At the same time, they provide solutions for consumers eager to have the option to buy secondhand.

“Everything is multi-channel now, so I could see some form of resale or even donations are done online to be authentic about circular commerce, but clearly, the best results will be taking the hard road and doing it in stores,” Peterson said.

According to WD Partners, consumers are attracted to secondhand goods for their value, especially at a time of high prices, for their perceived sustainability benefits and the joy of discovery that comes with a unique find.

In July 2022, Saks Off 5th began selling pre-owned premium and designer fashion from Rent the Runway for as much as 85% off. Saks added more than 60 authenticated brands through a designated section on its website. Saks execs have said customers are looking for access to luxury brands at a discount. The resale market is one way they can acquire designer fashion at more affordable prices, noting that 80% of Saks Off 5th customers want the retailer to offer used items.

“I think resale is a kind of gateway to luxury,” said Molly Taylor, chief merchant at Saks Off 5th.

Walmart joined the resale game in the summer of 2020 by collaborating with ThredUp. Walmart said as many as 750,000 resale items are curated by ThredUp that are deemed “new” or “like new.” For now, the resale merchandise will only be sold on Walmart.com and not in stores.

But shoppers can return items for free at Walmart stores or to ThredUp, and will also get free shipping once they hit a threshold of $35.

Walmart has kept its ThredUp partnership exclusive to women’s apparel. The resale venture by Walmart allows the discount retailer to add more designer fashion brands it does not already sell, such as Coach, Nike and Calvin Klein. On April 27, Walmart had thousands of used fashion items listed for sale on its ThredUp page, including brands like Ann Taylor, Vera Wang, J.Crew, Coach and Michael Kors.

In early 2022, Ikea began a program to buy back its products and resell them. The Swedish furniture and home goods chain said its Buy Back & Resell program is available in 37 stores. Ikea inspects each item for its condition, age and functionality at participating stores, and if it passes muster, customers will get a store credit. The company said all “gently used” items approved for resale are available in stores at discounted prices in a designated “as is” section. Ikea has recently made the “as is” furniture available online for in-store pickup. The company said the program had driven store and online traffic.

“As-is online joins our other services like Buy Back & Resell and the spare parts program that help our customers live a more sustainable life at home with various ways to prolong the life of their furniture,” Ikea CEO Javier Quiñones said.

WD Partners said that whether brands partner with third-party providers like ThredUp or go it alone, the time to be in resale is now.

“Those who are not resale are definitely behind the customer,” Peterson noted. “We just did this research a few months ago. We all really need to start to think about how we’re going to get this done. Fail fast and get it going.”

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.