Feb 28 2020
In 1995, when eBay and Craigslist emerged, hundreds of consumers started selling secondhand clothing online, expanding access to goods previously only found in vintage and thrift shops. At first, secondhand clothing was only a niche online market, and early entrants took advantage of this opportunity. Between 2009 and 2011, resale companies such as ThredUP, Depop, Poshmark and The RealReal were established and began expanding their clientele. Currently, the resale industry is estimated to reach $36.0 billion in 2021 and, a While overall demand for new and used clothing is on the rise, most consumers are shopping online. As a result, IBISWorld estimates that both the Women’s and Men’s Clothing Stores industry revenue (IBISWorld reports 44812 and 44811), which measure revenue from brick-and-mortar locations, will decrease an estimated 3.2% and 2.0%, respectively, in 2020.
Consumers are increasingly accepting of the resale of luxury items, and companies specializing in this field have raised millions of dollars with investors. For instance, The RealReal, a leader in authenticated luxury consignment, has recently gone public. According to BCG, the global sales of secondhand luxury goods has increased an annualized 12.0%, compared with an average of 3.0% for the core luxury market. As consumers become more environmentally conscious and demand ethical products, the resale market will continue to increase. By 2028, it is estimated that secondhand will be larger than fast fashion as consumers shift away from disposable clothing toward higher-quality clothes, preferring to spend more on sustainable products.
Millennials and baby boomers are the largest market for the resale industry, accounting for 33.0% and 31.0% of the market, respectively, followed by Gen X and Gen Z. However, Gen Z and millennials have been driving the growth of the secondhand market, adopting the trend more than twice as fast as other generations. In fact, 72.0% of Gen Z would reportedly spend more money on a product if it is ethical and sustainable. Vintage clothing has become a fashion trend and appeals to younger generations that are concerned with the environmental impact of the fashion industry. These resale giants cater to younger generations since they give extreme importance to their digital platforms. IBISWorld estimates that e-commerce sales will increase 19.8% and 18.0% in 2020 and 2021, respectively, furthering demand for the online resale market. Additionally, internet traffic volumes are anticipated to increase 26.4% in 2020 alone, representing an opportunity for new entrants that want to sell secondhand clothing online.
Moving forward, executives will likely find new ways to diminish textile waste through upcycling. Brands will need to become part of the circular economy and partner with resale sites to remain relevant and cater to environmentally-conscious consumers. IBISWorld estimates that consumer spending and demand for clothing will continue to increase over the next few years. However, consumer spending habits and preferences will continue to evolve. Younger generations that prefer to shop online for sustainable products will continue to drive overall growth and provide new opportunities for the fashion industry.
Edits by Sean Egan
Infographic by Veronica Albarella