The Supply Side: Secondhand apparel market continues to grow

According to GlobalData, the U.S. secondhand apparel market grew 11%, or seven times faster than the broader retail apparel market, to $43 billion last year. The report estimates that resale sales online and at traditional thrift stores could reach $73 billion by 2028.

GlobalData, a data analytics firm, found that inflationary pressures on household incomes have helped to fuel the demand for secondhand apparel. Most consumers (62%) said shopping for secondhand apparel gives them the most bang for their buck, and 55% plan to spend more on used clothing and accessories if the economy does not improve. Nearly three in four consumers say value is king in apparel spend.

“With more than half of all consumers shopping for secondhand apparel last year, it’s evident that resale is now firmly embedded in the fashion landscape,” said Neil Saunders, GlobalData managing director.

The report found that online resale is gaining favor over buying secondhand in stores, particularly with younger generations. Forty-five percent of younger generations prefer to buy secondhand apparel online, compared to 38% who choose to buy in a brick-and-mortar store. The rise in consumer interest in secondhand purchases has prompted retailers from Amazon to Walmart to offer used items at a discount.

Walmart partnered with ThredUp, a leading apparel reseller, to open a storefront on Walmart.com in 2020. ThredUp now offers nearly 750,000 pre-owned items across women’s and children’s clothing, accessories, footwear and handbags for a fraction of the retail price.

Walmart sweetened the deal for consumers, who can also take advantage of Walmart’s free shipping threshold on orders of $35 or more and free returns to Walmart stores or ThredUp. Retail analysts heralded this partnership as a game changer, with designer brands such as Coach, Gucci, or Michael Kors sold on the website at deep values.

ThredUp has said the partnership with Walmart.com democratized high-end brands that all incomes can afford when bought secondhand. ThredUp describes its storefront on Walmart.com as an online consignment store that connects top brands with value-seeking consumers.

Abercrombie & Fitch also partnered with ThredUp, a partnership that allows shoppers to send in used or unwanted clothing and accessories in exchange for gift certificates that can be used to buy new products at any Abercrombie & Fitch store.

Before Walmart and Abercrombie, Amazon partnered with ThredUp to offer used items. Amazon has said that in the United Kingdom, it has been selling secondhand items for 18 years, but interest has risen more recently as households seek to cut costs. Those same behaviors are seen in the U.S., where ThredUp has an online store, and Amazon’s Warehouse sells used or returned items.

GlobalData found that nearly two-thirds of consumers who purchased secondhand apparel in 2023 made at least one purchase online. Online resale is expected to more than double, reaching $40 billion by 2028 and growing at a compounded annual rate of 17%.

Saunders noted that secondhand buying transcends generations, changing its role throughout consumers’ lives.

“Younger shoppers turn to secondhand for self-expression and to help create their style; parents rely on secondhand to outfit their families in a cost-effective and eco-conscious way; and older generations turn to secondhand to snag affordable, higher-end brands and for the thrill of the hunt,” he explained. “Secondhand’s flexibility in meeting such varied needs is a key reason it’s become so popular and has such a promising growth trajectory.”

More brands use resale to generate revenue, advance sustainability goals and acquire new customers. The report found that 163 brands now offer resale shops. American Eagle, J.Crew, and Kate Spade launched new resale programs on ThredUp’s marketplace in 2023.

The report found that nearly two-thirds of retail executives who offer resale say it will generate at least 10% of the company’s total revenue within five years. GlobalData also reports that 87% of retail executives who offer resale say it’s advanced their sustainability goals.

Sustainability is a growing reason why some consumers prefer secondhand. The report found that 38% shop secondhand to afford higher-end brands. Younger consumers are more likely to seek secondhand apparel as the first place they look. The report found that half of consumers between 18 and 42 look for secondhand bargains first, and more than 41% of older adults.

Consumers are not just taking advantage of purchasing secondhand apparel; they are selling their unwanted items at consignment shops. The report found that 33% of younger adults sold some apparel in 2023 to raise additional money and clean out their closets.

The report also found that buying secondhand and selling unwanted items spans all age demographics. Baby Boomers aged 59 and older said they prefer to shop for secondhand items in brick-and-mortar stores rather than online. This group also said they enjoy the thrill of the hunt as the main reason they shop secondhand. Gen X consumers aged 42-58 are like their older cohorts in that they enjoy the treasure hunt in brick-and-mortar stores over online, but the main reason they shop secondhand is to get more expensive brands at a value.

The younger cohorts have different reasons for secondhand shopping. Gen Z consumers (18 to 26) prefer shopping secondhand online than in a brick-and-mortar store. Their favorite way to shop online is via Livestream events. They overwhelmingly said they buy secondhand to better express personal style than any other generation.

In the millennial generation (27-41), 55% said they prefer to shop secondhand online instead of brick-and-mortar. Their favorite online destination is a managed marketplace like Amazon or Chinese marketplace Shein. According to the report, this group is also more likely to outfit their entire family in secondhand clothing than any other age group.

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 Firebend.