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Resale Report Paints a Bullish Future for Secondhand

Resale’s growth has been a top story in apparel in recent years, but 2022 was the year branded resale officially got put on the map.

Eighty-eight brands launched dedicated resale programs in 2022, a 244 percent increase from 2021, bringing the total in the space from 36 to 124, according to ThredUp’s 11th annual Resale Report.

These retailers seem to catching up with consumers on their resale kick, with 86 percent of retail executives saying their customers are already participating in the secondhand business model—up 8 points from 2021. Another 58 percent say offering resale options to customers is becoming table stakes, a 6-point jump from the year prior.

By and large, they are also on board from a cost standpoint, with 82 percent of retailers that offer resale expecting it to generate a positive ROI.

“If you’re a decision maker who is thinking about the future of a brand or the future of retail, one of the questions that you’re increasingly being asked to answer is, ‘What is our resale strategy?’” said Anthony Marino, president of ThredUp. “It’s clear that putting our head in the sand, or being a laggard here, is increasingly not an option, because our customers are voting with their pocketbooks on where they’re spending their money. We’re either going to participate in the sustainability economy, or we’re going to sit it out. Increasingly, as the stats show, brands and retailers don’t want to sit it out, they want to generate profit from retail.”

Secondhand shopping continues to take hold globally, with the global secondhand apparel market set to nearly double by 2027, reaching $351 billion. In the U.S. alone, the secondhand market is expected to reach $70 billion by 2027, up from $39 billion in 2022.

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Online resale is the fastest-growing sector of the U.S. secondhand market, expected to grow 21 percent annually on average over the next five years, reaching $38 billion by 2027. Thrift and donations, as well as offline resale, comprise the other areas of the market that the ThredUp report tracks. In total, resale is expected to grow 9X faster than the broader retail clothing sector within that time frame.

Marino told Sourcing Journal that a lack of friction is what separates online resale today from many other retail sales channels.

“It’s the area where there’s the most innovation happening, to try to make the used shopping experience even better than shopping new,” said Marino. “Whether that’s shopping tools, merchandising, pricing, personalization, buying secondhand online removes a lot of the friction traditionally associated with sorting through racks in a store.”

To compile the report, the new H&M collaborator teamed with its recurring partner GlobalData, which conducted a December 2022 survey of 3,012 U.S. adults over 18, asking specific questions about their behaviors and preferences for secondhand. GlobalData also surveyed the top 50 U.S. fashion retailers and brands in January 2023 to gather their opinions on resale.

In an age when consumers continually face economic uncertainty and persistent inflation, value is a pivotal influencer of purchasing decisions—further accelerating resale’s growth.

While 52 percent of consumers shopped secondhand apparel in 2022, nearly one in three apparel items bought in the last 12 months was secondhand, and two in five items in Gen Z’s closet are secondhand.

Thirty-seven percent of consumers spent a higher proportion of their apparel budget on secondhand last year. Of those, 63 percent increased their spend in response to inflation.

“Pick your global crisis of the day—the spotlight seems to shine on resale,” Marino said. “I think the reason why is because when the future is uncertain, and when customers are very focused on their spending and on their pocketbooks and on their household budget, they start to look for smart alternatives.”

U.S. consumers bought 1.4 billion secondhand apparel items in 2022 that they normally would have bought new, up 40 percent from 2021. And what’s more, younger shoppers are making a fuller commitment to pre-worn clothing. Eighty-two percent of Gen Z has considered the resale value of apparel before buying it, and 64 percent of Gen Z look for an item secondhand before buying it new.

“They are deliberately checking used clothing sites for the items they need, and if they can’t find them, then they’ll buy new,” said Marino. “We want to make sure going forward that they don’t have to come to a retail site and find a dull set of search results. We want them to find depth of selection, great pricing, attractive shipping times, great photography and great item attributing—all of the pieces that they’ve come to demand in an online shopping experience.”

Resale still has room to cut carbon emissions

Of course, no mention of resale’s popularity can be made without talking about its environmental ramifications.

According to data from third-party life cycle assessment specialists Green Story Inc. cited within the report, buying and wearing secondhand clothing instead of new reduces carbon emissions by an average of 25 percent.

More than one-third of retailers say if resale proved to be successful, they would cut production of new merchandise. At the current displacement growth rate, if retailers produced one fewer item for every item consumers’ purchased secondhand instead of new, the industry could curb production by nearly 8 percent by 2027.

Consumers are bullish on their abilities to help brands curb the problem. According to the report, 63 percent of Gen Z and Millennials believe they can reduce their individual footprint.

Aligning with this recent finding and the report’s general release, ThredUp has launched a Fashion Footprint Calculator, which is an interactive tool built to empower and educate consumers on the environmental impact of their fashion habits and how simple steps can make a big difference in the fight against fashion waste.

Using the calculator, shoppers can answer 10 questions about how they buy, wear and care for their clothes. Each question includes tips and stats to teach the consumer how each fashion habit contributes to their carbon footprint.

At the end, ThredUp will reveal the total carbon that the consumer’s closet generates annually, along with how they compare to the average consumer.

ThredUp partnered with Green Story Inc. to measure the footprint of garments under both linear and secondhand use systems in terms of carbon dioxide (CO2) emitted, energy and water consumed for each wear.