‘Second-hand clothes’ is a term often associated with low cost or reduced value items, unless they have been carefully marketed as ‘vintage’. For many adults, it brings back childhood memories of being forced into an older sibling’s off-trend hand-me-downs, forever viewed with resentment. However the second-hand clothing market is currently booming, and somewhat surprisingly it’s the luxury resale and rental sectors driving a huge perception change when it comes to ‘second-hand’. What has emerged in recent years is a multi-billion pound circular economy, which could be a key component in consumers reducing the negative environmental impact of their wardrobe choices.
The second-hand or resale clothing market has been growing exponentially as consumers actively move towards more sustainable practices: in 2019 alone, the industry expanded 21 times faster than conventional apparel retail. The US market is set to be worth $80 billion by 2029, driven predominantly by the fact that consumers want options and multiple outfit choices, while also moving away from the world of fast fashion and its negative associations. According to a recent report, if we all wore a second-hand outfit to a wedding next year (rather than buying a dress and never wearing it again), it would save 1.6bn lbs of CO2 emissions, the equivalent of taking 52m cars off the road for a day.
Covid has accelerated the circular fashion trajectory: two of the major players within the luxury resale space, Vestiaire Collective and ThredUp, have both reported significant upticks in sales since March 2020. Vestiaire Collective experienced a 144% year on year increase in order volume during the first three months of the pandemic, while ThredUp saw a 50% jump in the number of sellers on the platform.
It shouldn’t come as a surprise that these companies are doing well during periods of global financial pressure. In fact, Vestiaire Collective was actually founded during the last recession, when Co-Founder Fanny Moizant noticed fashion bloggers selling past-season items online for money. The organisation quickly established itself as the fashion lover’s ‘go-to’ site for pre-owned Chloe bags or Chanel jackets. Essentially, resale and circular economy models have helped to make luxury recession-proof.
Where Moizant and her co-founder Sophie Hersan have been particularly astute is to underline the environmental upside to buying within the resale market, and its place within the circular economy. Hersan has previously shared figures such as the fact that reselling an item prolongs its life by 2.2 years on average (thus keeping it from landfill), while resale can reduce an item’s carbon, waste and water footprint by 73%. For handbags, the reduced environmental footprint of buying a second-hand luxury bag can be as much as 91%.
For millennial and Generation Z shoppers (which, incidentally are predicted to account for half of all global luxury goods sales by 2025), 75% have said that they would alter their buying habits due to concern for the environment. With an audience eager for climate positive options, resale and rental companies have been perfectly placed to change public perceptions from ‘used goods’ or ‘second-hand’ – introducing more positive phrases such as ‘preloved’, ‘heirloom’ and ‘unlimited destination’, which immediately connotes endless possibilities and entirely re-frames the market.
The business model is paying off. Kering (owner of Gucci, Saint Laurent, Alexander McQueen and Balenciaga) took a 5% stake in Vestiaire Collective last month as part of a $216m funding round – catapulting the business to Unicorn status in the process.
This was not Kering’s first foray into the resale and rental culture – the company is also an investor in GOAT, the sneaker resale site, while Gucci announced a game-changing partnership with resale platform The RealReal at the end of 2020.
There have been multiple IPO valuations upwards of $1 billion within the space, The RealReal included (its 2019 IPO saw an initial market cap of $2.39bn after the first day of trading). Another competitor, Poshmark, received an initial valuation of more than $3bn when it went public in January, while ThredUp’s March 2021 IPO saw it pegged at $1.3bn. In short, there’s big money in thrifting.
It’s no wonder that other major Fashion Houses and investors are taking note. In a December 2020 interview with Vogue Business, LVMH’s Antoine Arnault said of the second-hand market that “we’re looking at it carefully”, so perhaps it’s just a matter of time before LVMH takes the plunge and invests in one of these resale or rental success stories.
The question is: which company is next in line for a major IPO or serious investment announcement? Of the many companies within the resale, rental and general fashion circular economy sectors, how does one set itself apart from its competitors to ensure a larger market share?
If we consider the strategy adopted by Vestiaire Collective to dominate the market, the company positioned Fanny Moizant as a visionary and thought leader within the fashion industry – and it worked. Moizant was everywhere, and her name (and that of Vestiaire) quickly became synonymous with a brand which was ‘in-the-know’ – essentially the go-to site for anyone who cares about fashion and the environment.
Several within the field are already on their way to becoming household names – the 2020 and 2021 Forbes 30 Under 30 lists featured no less than four fashion rental or resale founders, with Victoria Prew of Hurr, Eshita Kabra of ByRotation, Isabella West of Hirestreet and James Harford-Tyrer of Cudoni all included.
The founders and senior leadership team need to be in the press and regularly profiled. They need to be vocal about the circular economy and its environmental advantages, acting as an advocate for change in the fashion industry as a whole. They need to have the stats to back up their arguments through regular in-house trend reports or whitepapers, and they need to make sure that their voice is heard, particularly when championing progress.
Second-hand clothing isn’t a new concept, but its new importance, value and appeal certainly is (to consumers, investors and the planet alike). Its place within the future of the fashion industry cannot be ignored – both from an environmental and investment perspective. Conscious consumption and promotion of the circular economy is key if we wish to reach Net Zero targets by 2050 – for once, buying a used pair of Manolo Blahniks might just save the world.
