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Re-Sale Revolution: How Denim is Capitalizing on Re-Commerce

Used. Secondhand. Thrifted. Pre-loved. Whatever you call it, re-sale is becoming big business.

The proof is in the statistics: Not only has the clothing re-commerce market grown 21 times faster than its retail counterpart over the past three years, according to secondhand e-tailer ThredUp, which crunched the numbers with analytics firm GlobalData for its 2019 resale report, but it’s also poised to more than double in value from $24 billion today to $51 billion in 2023.

The trend is driven by millennials and Gen Z—which is to say, 18- to 37-year-olds—who are snapping up secondhand apparel 2.5 times faster than other age groups. One in three Gen Z-ers will buy something pre- owned in 2019, ThredUp found.

It’s in this milieu that denim, which was first designed as workwear, is uniquely positioned for success. “Well-made denim wears well, it holds up well and it gets more interesting with time,” said Andy Ruben, CEO and founder of Yerdle, a California for-benefit company that creates white-label resale programs for brands such as Eileen Fisher, Patagonia and Taylor Stitch.

For the most part, denim resale occurs in third-party secondhand marketplaces like ThredUp, Depop, Poshmark and The RealReal online and consignment boutiques. There are exceptions, of course, such as Sweden’s Nudie Jeans, which, in addition to offering free repairs on its denim for life, boasts a buy-back program that funnels into its Re-use range of cleaned and mended “pre-loved” garments. Eileen Fisher’s Renew, Patagonia’s Worn Wear and Taylor Stitch’s Restitch platforms offer lightly used denim as part of their general assortment. And Levi Strauss, after acquiring 65,000 pieces of archival-quality jeans from a collector, introduced in 2017 its Authorized Vintage collection of pre-worn original styles like the 501, 505 and 517 in its New York and San Francisco stores.

While resale accounts for just a sliver of traditional-retailer bottom lines—Eileen Fisher told the Wall Street Journal in August that used goods make up 1 percent of its sales—this may be changing quickly. Nudie Jeans, for instance, saw demand for its Re-use denim double in 2018. The same year, it repaired 55,173 pairs of jeans, reclaimed 10,557 and resold 2,900. Jeans that don’t make the cut because of minor defects are turned into bucket hats, shorts or patches.

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“The resale business is the perfect way of taking a wider responsibility for our products and verifying that the material resources are reused in the best possible way” said Kevin Gelsi, sustainability coordinator at Nudie Jeans.

Indeed, prolonging the life of a garment, experts said, is the most effective way to reduce its environmental impact, even more so than recycling, which typically requires another significant round of inputs. Britain’s Waste & Resources Action Program estimates that extending the life of a garment by just three months can slash its carbon, waste and water footprints by 5 percent to 10 percent.

But resale can have financial benefits for the brand or retailer, too, by generating more bang for the buck. “Selling a garment twice or even more times, compared to selling it once, is a lot more profitable than the linear one-sale-per-garment model,” Gelsi said.

Boosting brand value is another plus, according to Gwen Cunning- ham, lead of the Circle Textiles program at Circle Economy, an Amsterdam-based nonprofit that helps businesses explore circular modes of consumption.

“Having a resale model is, in itself, a testament to the quality, durability, relevance and timelessness of the brand,” said Cunningham, who co-helms Switching Gear, a project that promotes re-commerce and rental strategies. “And when done well, that is the strong message it can send to the consumer: ‘Our product is beautiful and has value and worth, whether new or used.’”

The pros add up when brands take the reins of their own resale programs.

Buy-back schemes can help broker long-term relationships, since a “consumer who has previously bought a product is incentivized to bring it back once they no longer need or want it for themselves and therefore re-engage with the brand,” she said. Nudie Jeans offers customers who bring in their old jeans 20 percent off a new pair, while Patagonia doles out credit for the goods it accepts in the form of a gift card. For every item it takes back, Eileen Fisher hands over a $5 Renew Rewards card that can be redeemed through the brand’s website or at one of its physical storefronts.

Re-commerce might even draw new customers to products that were “once unattainable to them,” Cunningham said. Case in point: Worn Wear items at Patagonia have their prices slashed by around half. At Eileen Fisher, a used Renew garment costs roughly a quarter of its brand-new counterpart.

In addition to new customers, resale can unlock valuable information on current shoppers. “The brands that we work with own all of that customer data,” said Ruben. “And so there is a tremendous amount of insight beyond the transaction itself, like the understanding of how people are using the product, when they’re coming back or what the cycles are.”

While one concern brands and retailers have voiced is whether the secondary market might eat into existing sales, Ruben said he hasn’t seen that happen with any of Yerdle’s partners. “What the actual data says is that they tend to grow their businesses in whole new ways that don’t put their business at risk,” he said. He compares fears around cannibalization to a similar fuss over e-commerce 15 years ago. Clinging to the status quo, in the latter case, meant not serving customers’ changing needs.

That’s not to say there aren’t challenges. “A specific resale model may suit a certain brand, product or market perfectly and be an ill fit for an- other similar brand,” said Cunningham, who is developing a resale business-model archetypes framework through Switching Gear. “Designing the right model is critical.”

Scalability, too, is an issue, where operational systems and infrastructure are concerned. “There is a need for capacities in collection, cleaning, sorting, repair, laundry, secondhand merchandising and more,” she said. “The vast majority of brands are swimming in uncharted territory and they’ll need to build a new end-of-use or circular supply chain. Doing so will require expertise beyond their current means, as well as strong partnerships and collaborations.”

But denim aligns perfectly with this oncoming customer shift, Ruben said, which means that brands that fail to seize the opportunities in resale are bound to regret it.

“If brands are not involved, they’re losing the customers,” Ruben said.

This piece originally appeared in Jean Therapy, the Denim Sustainability Report. Click to read how today’s industry leaders are managing the progress and problems of sustainability in the denim supply chain.