We are in a tough economic environment. Increased costs of new items make resale more attractive by comparison. Yet third-party marketplaces such as ThredUP and The Real Real (TRR) have reduced their growth projections. Let us look at the variety of factors at play:
Less discretionary income, hence less shopping dollars in play
Retailers are heavy on inventory across the board
Deeper discounts on new merchandise
A KFYR News piece from last week highlighted increased traffic to thrift stores. Mercari shared, 62% of parents bought secondhand items for their children in the past year of which a quarter of those purchases were motivated by inflation. Similarly, WWD wrote that StockX experienced a record sales day on Black Friday this year with the marketplace seeing one trade every second. StockX stated it had roughly 10 million visitors to its website and app this weekend and customers from nearly 150 countries. That’s staggering growth.
At the same time, Retail Wire published in third-quarter announcements, major off-pricers, TJ Maxx and Ross Stores, raised their full-year outlooks while expressing confidence in their ability to reposition their mix for an increasingly promotional environment. This confidence and guidance provide a clear data point that retailers are heavy on inventory.
So we would expect this would be a boon for apparel resale marketplaces. However, ThredUP and TRR both reduced their outlook for the year. Why? The relative price benefits of secondhand are being overshadowed by the deep discounting given inventory positions this Holiday. While this is a near-term challenge for 3rd party marketplaces, it is an opportunity for brands to leverage secondhand as an incredibly relevant offer in the market today.
Brands are increasingly taking advantage of secondhand opportunities. Rolex announced the launch of an official certified pre-owned program. The program is rolling out in a select set of markets and is highly dependent on official Rolex retailers. These retailers will assure the ROLEX movement of each timepiece and then deem the items Rolex Pre-Certified. Only the official Rolex network is able to provide these guarantees. The dependence on the Rolex network is both a strength and has limits. On the plus side involving jewelers and setting high standards is right for the brand and program launch. However, the dependence will limit the scale and adoption of the standard and I would expect the program to evolve over time.
We’ve had lots of talk about economics but let's dive into sustainability. Rachel Greenley, an M.F.A. student took a seasonal warehouse job for an online superstore and described her experience in an NYT editorial. Her job is to determine — in less than two minutes — whether a garment should be resold. The editorial goes on to highlight the incompatibility between brand sustainability efforts and the growth of fast fashion. “We support a system of throwaway clothes that didn’t deserve their trip around the world or the number of hands that touched them.” A 2018 Environmental Protection Agency report estimates 66% of discarded clothes end up in landfills each year, and another 19% are incinerated.
A related NYT piece highlighted the opening of a Renewcell factory and half-dozen start-ups around the world aimed at commercial textile recycling. While the scale of this new facility is laudable, they are only able to accept pure cotton textile waste, and the majority of clothes are made from synthetic blends. McKinsey estimated it would cost €6 - €7 billion to handle less than a fifth of the textile waste generated in Europe alone. And this neglects the customer change necessary to collect these items.
While textile recycling is an essential part of a more sustainable future, it’s not a solution for our growth of production. We can’t recycle our way out of this. Credible sustainability programs must address new production growth. Growth from selling well-made items multiple times is an obvious retrofit.
Key Takeaways
Great time for brands to enter the secondary market with a branded resale program as these options are highly relevant in this economy
Brand sustainability plans need to go beyond recycling to ultimately decouple growth from increases in net new production
Until Next Week,
Andy Ruben | Founder & Exec Chair of Trove
Resources:
What does the promotional climate mean for off-pricers and resale?
Retail Wire
In third-quarter announcements, major off-pricers, TJX and Ross Stores, raised their full-year outlooks while expressing confidence in their ability to reposition their mix for an increasingly promotional environment. Apparel resale marketplace thredUP, however, reduced its outlook due to the heightened price competition from traditional retailers.
INSIDE RE-SEE, THE ULTRA-LUXURY SECONDHAND RETAILER THAT WANTS TO BE THE HERMÈS OF RESALE
Fashionista
With a new partnership with Alaïa and a much-talked-about old-Céline archive sale during Paris Fashion Week, Re-See is one of the industry's best-kept secondhand shopping secrets. "Luxury is a brick-by-brick approach," Bernardin of Re-See says. "And the most important thing is to have a point of view. We want to be the Chanel or Hermès of resale, and that takes time."
Secondhand shopping: parents cut back on spending on kids because of inflation
KFYR News
When money is tight and parents sit down to work out a budget, usually the last thing to get cut is money spent on the kids. However, children’s secondhand stores are seeing a notable increase in business, and many say budgets that are stretched too thin because of inflation are the reason why. Children’s clothing thrift stores are seeing lots of growth in new customers. According to the resale platform Mercari, 62% of parents bought secondhand items for their children in the past year. 25% of those purchases were motivated by inflation.

NIKE IS TOPS: Sneakerheads went all in on Cyber Weekend, according to a new report from StockX
WWD
This year, StockX experienced a record sales day on Black Friday with the marketplace seeing one trade every second. StockX stated it had roughly 10 million visitors to its website and app this weekend and customers from nearly 150 countries.

Will We Ever Be Able to Recycle Our Clothes Like an Aluminum Can?
New York Times
A new textile recycling plant opened by the company Renewcell in the small coastal city of Sundsvall, Sweden, is so big that employees use bikes to get from one end of the production line to the other. Up until now, most clothes marketed as made from recycled materials only contained a small percentage of recycled cotton or were made from water bottles, fishing nets and old carpets. (Technology exists to recycle polyester into polyester but is prohibitively expensive and rarely used.)

ROLEX LAUNCHES THE ROLEX CERTIFIED PRE-OWNED PROGRAMME
Newsroom
Because they are built to last, Rolex watches often live several lives. And because they may be worn on new wrists, the Rolex Certified Pre- Owned programme now enables retailers in the brand’s official distribution network to sell second-hand models that are certified as authentic and which come with a new two-year international guarantee.

Vestiaire Collective, Paco Rabanne collaboration celebrates circular fashion
Luxury Daily
French fashion brand Paco Rabanne and repurposed fashion retailer Vestiaire Collective on a new collection called Paco Rabanne x Vestiaire Collective: Long Live 1969.

Shein Confusion: The Fast-Fashion Giant’s New Resale Site Doesn’t Make Buying Easy
The Information
Is Shein Exchange, the e-commerce behemoth’s foray into resold clothes, a growth engine—or just greenwashing? All I wanted from Shein Exchange was a plain black skirt. It was a simple enough desire, I thought, as I swiped around the fast-fashion giant’s newly launched resale platform. Scrolling through the offerings, I was bombarded with used neon crop tops, bedazzled pants and denim skirts—but my basic wardrobe staple was nowhere to be found.

This Is the Reality of America’s Fast-Fashion Addiction
The New York Times
I’m a seasonal worker in a warehouse of an online superstore. Five days a week, I make $18.75 an hour standing at a station with yellow bins brimming with returned clothing. My job is to determine — in less than two minutes — whether a garment should be resold. Indeed, 66 percent of discarded clothes end up in landfills each year, and another 19 percent are incinerated, according to a 2018 Environmental Protection Agency report. Brands point to sustainability efforts, but fast fashion is simply incompatible with sustainability. We operate under an economic belief that growth is unlimited. Our natural resources are not.