COVID-19 put retail in a tough spot
As potential shoppers navigate a maze of store closures, reopenings, and even bankruptcies, retail clothing sales have plummeted, dropping by 78% in April. Even athletic wear juggernaut Nike saw its sales drop by more than 30% this past quarter as the clothing industry expects a 23% overall decline during 2020. But the latest report from ThredUp and GlobalData Retail suggests a different story about a sector of shopping that's far from shrinking: online resale.
But the resale industry is red hot
Resale, the online market for used and reused clothing, has transcended its niche status, growing into a $28 billion industry, with over 64 million customers in 2019. According to major resaler ThredUp, this is just the beginning: their latest report expects the online resale industry to grow 414% to more than $68 billion in sales by 2025. That's 25 times the rate of growth traditional clothing retail expects, marking a surprising turn amid general pandemic shopper reluctance to touch items others have had contact with.
Why is resale winning out right now?
It's the closest thing to pandemic-proof clothes shopping can get. While traditional brick-and-mortar retail's advantages, like changing rooms and tactile displays, disappear during a pandemic, resale businesses operate almost entirely online, leaving the customer experience unchanged. And resale clothing is typically cheaper, an important consideration for budget-conscious shoppers during a time of record unemployment.
It's an environmentally responsible purchase people are proud to make. Unlike fast fashion, helping landfill-bound clothing find a second life in one's wardrobe is a movement gaining popularity in the minds of consumers. A recent annual survey showed 43% of shoppers would be looking to spend more on sustainable brands over the next five years, up more than double from 18% a year ago. Sustainability is a growing trend, especially among Gen Z shoppers, and resale platforms hold a clear advantage in the category.
How will it change the way I shop?
You may find resale at Big Retail: ThredUp and Walmart recently announced a partnership to stock 750,000 items of resale clothing in their online stores. Adoption from the world's largest retail chain is about as strong an endorsement of a business model one can get, suggesting even established retailers see the potential in a surging trend. But you likely won't find them on clothing racks near you, at least for the time being: like Walmart, it's likely most retail partnerships will stick to an online-only model that mirrors what's worked for resale-only companies.
It'll likely start blowing up your IG feed, too. Buzzy resale startups have been attracting serious VC attention: second-hand fashion company Vestlaire Collective recently received $64 million in funding. And handbag resale startup ReBag raised an additional $15 million in Series D funding this spring, buoyed by data showing April sales even stronger than their most recent Black Friday. Expect new funding to broaden the advertising reach of these newcomers vying for your closet space.
So will new clothes go out of style?
It's unlikely. With high-fashion a $98 billion industry whose creativity helps fuel a general American obsession with newness, expect the latest styles to always be a fixture in some capacity. And the definition of "new" in the world of retail clothing can be complex: "off-price outlets" like TJ Maxx and Marshalls are their own separate category (and actually make up the majority of clothing retail purchases). So those who take it to the Maxx still aren't technically shopping resale.
What will change is the composition of your closet: nearly 1-in-5 items in the average person's closet could be resale purchases by 2029. Not bad for an industry that made up only 3% of our wardrobes in 2009. Over that same span, traditional department store clothing is projected to shrink to just 7% of our closet space, down from 22% today.