Not Your Sister’s Closet
Spring is here and special occasions are in session – from graduations, to weddings, to weekend outings with friends. It is the time to invest in new spring styles, which leave a dent in your wallet, or worse, the planet. We are all comfortable borrowing a clothing item from a friend, or even a sibling, but would you wear or share clothes from a stranger? As consumers are becoming more conscious of the environmental impact of their clothing spending, new apps, pre-existing retailers, and consumers are tapping into sharing and secondhand retail strategies to engage in more sustainable apparel purchases, while increasing efficiency of less frequently worn items, and lowering prices for consumers.
In an analysis of popular consumer goods, researchers found that the average women’s apparel product was idle (i.e. time sitting in the closet) about 97.9% of the time, with only 2.5 years of useful life, due to rapidly changing trends and nature of the products. This rise of “fast fashion” in the past 30 years has caused the average useful life of garments to decline even faster, as consumers chase popular trends, or chase a more unique look. According to the Ellen MacArthur Foundation, the average number of times a new clothing item is worn is expected to fall from about 200 times in 2004 to 130 by 2026, as shown in the graph below.
One cause for rising emissions: The average number of times a new piece of apparel is worn is declining over time
Sources: Ellen MacArthur Foundation, Statista
Many consumers are facing a conflict: How do they stay up to date on rapidly changing trends while making environmentally-conscious decisions?
Luckily are numerous emerging channels for purchasing and reselling used clothing to increase the economic efficiency of products, while reducing environmental impact, and satisfying consumer demand for “trendy” styles. The secondhand apparel market is expected to double in the next 5 years, growing 11x faster than the retail clothing sector overall. Consumers are also more willing to buy secondhand, with 86% responding that they have or would be willing to buy secondhand in 2020, compared to 70% in 2019. The proportion of secondhand clothing market share is expected to increase by 9 points in the next decade, more than any other sector, according to a report by ThredUp.
Source: ThredUP
How exactly will secondhand apparel be taking over and why are people getting so excited about it? I would like to highlight three trends in this market: secondhand online marketplaces, clothing rental, and retail buyback programs that are providing solutions for intersecting apparel consumer demands for greater sustainability, value, and style.
1) Secondhand Online Marketplaces
While Ebay and Craigslist have traditionally been the leading online resale marketplaces, new players such as Poshmark, Mercari, ThredUp, Depop, and The RealReal, have created a more specialized shopping experience for consumers looking to get their next thrifted hidden gem on an online marketplace. Depop and Poshmark especially emphasize their platform as a community where users come together to buy, sell, and share fashion. These marketplaces primarily exist on a mobile platform, and users create a profile that shows all of the items they are selling in a grid format with metrics such as followers and total items at the top. This layout is synonymous with popular social media platforms, especially Instagram. The mobile aspect of these apps allow consumers to scroll through new items in their free time, similar to how they may go to a thrift store and discover unique items in-person.
A recent market research report found that 80% of Depop users in Gen Z (18-24) began shopping on the platform from social media, and 60% were referred from friends, showing how these apps are leveraging young people’s tendency to browse and seek inspiration on social media to bring people to their platforms. It is also becoming the norm for lifestyle influencers to link their Poshmark or Depop on their TikTok or Instagram bio, so users who already follow them for inspiration could purchase the exact items that they have been inspired by in their social media posts. Even famous models like Emily Ratajkowski and Tess Holiday have hopped on the trend, leveraging their fan bases to repurpose old items. Some users have even used Depop to grow their following, such as Chiara Ferragni, an Italian fashion blogger and designer, who currently has 557k followers and has sold 1489 products on the platform. Users like Chiara are able to use the social media aspect of the platform to build a personal brand, and now she is able to charge a high price point for her unique secondhand items.
These platforms are tapping into the greater interconnectedness of social media and fashion inspiration to offer a community for not only style inspiration, but as a solution to clothing waste caused by fast fashion. This will hopefully reduce the amount of “idle” time an item has in a closet, and even elongate years of useful life as a piece finds its new home.
2) Clothing Rental
While the resale marketplace looks at common goods that individuals don’t want any more, other companies such as Rent the Runway and Nuuly have taken items that are naturally worn only once on a special occasion, have lower risk of being ruined and have drastically reduced their idle time by allowing them to be shared.
Rent the Runway is the original clothing rental company, and the one that first comes to mind when I think of this industry. From my point of view, this platform targets upper middle class, middle-aged women, looking to rent or buy designer clothing and accessories for special occasions. Since wedding season is right around the corner, this focus is exhibited on their landing page, with almost all of their featured product offerings are spring dresses. They even offer product collections for occasions such as weddings, prom, gala, vacations, and date nights further satisfying their target consumer’s need to rent something nice for one-time wear. I personally rented a dress through RTR for a winter formal and had a very positive experience with it, however, since they are meant for special occasions, it may be harder for people to justify paying for a subscription and making Rent the Runway a part of their purchasing routine, as compared to other clothing rental options for more casual wear.
Rent the Runway website allows consumers to shop based on occasion, which emphasizes their positioning as a special occasion apparel rental service
I recently discovered Nuuly, sub-brand of URBN, the parent company of Urban Outfitters, Free People, and Anthropologie, which are all trendy brands targeted at Gen Z and Millennials that have a slightly higher price tag than more fast fashion brands like H&M, Zara, or Forever 21. Nuuly has both a thrifting resale marketplace and a rental section. While they also have a wide variety of dresses, their rental section of the website focuses much more on the sustainability benefits of sharing clothes through rental, rather than finding items for special occasions. They operate on a monthly subscription model, where consumers pay $88 for 6 pieces a month. They update their product offerings every week to stay up on the latest trends and keep people coming back.
Nuuly highlights sustainability as a major benefit of their clothing rental service based on their landing page
In my opinion, the true value that Nuuly is offering to consumers is the ability to take risks and try new items that might be out of someone’s comfort zone otherwise. It also reduces the risk of buying an item online, as you know it will not be yours forever, and will always come shipped with 5 other items.
I am curious about how this rental model is profitable, as they are charging $88 a month for 6 items that each retail at $100-$200 otherwise, without taking shipping or cleaning costs into consideration. Nuuly might be more of a “try before you buy” model, where they are hoping people rent the clothes and like them enough that they want to keep them and don’t go through the hassle of returning. In this case, the ultimate goal of renting clothes loses its sustainability focus and is an opportunity to get shoppers to take more risks with their online apparel purchases. Extending clothing rental to more trendy items will also lead to quicker inventory turnover compared to a designer dress from Rent the Runway, that I imagine could be considered in style for much longer before going out of style.
There is a lot of opportunity for growth in the clothing rental space as consumers are becoming more open to secondhand options and would be happy to try, but companies must be careful about their product offerings that have more longevity in order for them to be worn more often to generate a more environmentally-friendly outcome.
3) Buyback Programs From Traditional Retailers
Traditional retailers are entering the resale space by increasing the lifetime use of their products and reducing potential waste by buying back and reselling their own used goods. Lululemon has a Like New program that invites customers in California and Texas to send in their used gear in exchange for a store credit. REI’s Good and Used program allows Co-Op members to bring their gear back to the store in exchange for a gift card, Madewell is hoping to reduce the environmental impact of denim production by offering a selection of preloved jeans on Madewell Forever.
A common theme among these retailers is that they offer (supposedly) high quality goods at a higher price point that have very strong brand equity. This should extend the years of useful life of the product, and allow it to be in demand years after it was purchased, as opposed to fast fashion brands, which tend to be cheap, low quality, and more likely to break quickly. I am not surprised to find that these brands are some of the most popular products on resale platforms and in physical thrift stores. I have personally purchased Lululemon pants on Poshmark and still wear a Patagonia fleece I bought 7 years ago, so I have appreciated the impact of the longevity of these brands, making them ideal for resale. It makes sense that these retailers are trying to intercept this third-party resale and bring people back to their channels, while reaching a more price sensitive segment that may be willing to pay a lower price for a second-hand, high quality item.
Although all three of these channels for sharing and buying secondhand offer more ethical purchasing options, I worry that their environmental impact will be limited, due to shipping waste and the decreased risk of making a purchase, knowing it can be sold second hand. If consumers know they can eventually get some of their money back for an item by selling it on Depop, or selling back to the retailer for a store credit, they may be inclined to purchase more new clothing items. Additionally, the types of products that can be sold second hand are limited to unique “vintage” pieces, high quality or designer items with solid brand equity, and products for special occasions that can be rented. My intuition is that people will still turn to fast fashion to buy basics, and will only look for unique or premium goods on these platforms. In the end, no one wants to go through the hassle of buying someone’s used white tank top or t-shirt on a secondhand website.
Research on consumer preferences for second hand purchases has confirmed these intuitions. As of February 2020, the most appealing factor for U.S. users to buy clothing second hand was lower prices (50%), followed by sustainability (17%) and high-end/exclusive brand names (11%). People's primary intention of buying secondhand is to save money, with sustainability and obtaining luxury goods as secondary benefits.
Overall, there are lots of innovative online marketplaces popping up in the environmentally-friendly fashion space. These solutions create less clothing waste for lower prices allowing third party digital platforms and brands themselves to better engage with environmentally conscious, trendsetting, and price-sensitive consumers, especially as GenZers and Millennials build more disposable income. It’s important to weigh the risks and benefits of sharing and buying second hand in order to optimize efficiency of goods produced while helping the environment.
