Secondhand fashion market now worth over $30 billion globally
As luxury goods become ever more elusive, a new Boston Consulting Group (BCG) report has revealed that a thriving secondhand fashion market is waiting in the wings – an opportunity for consumers and luxury brands alike.
BCG surveyed 7,000 consumers across six countries, specifically individuals who are active on Vestiaire Collective – an online fashion resale platform. The aim was to explore a market that is rapidly gaining momentum, positioned on the bright side of the dramatic changes in consumer behavior resulting from Covid-19.
A subdued economy this year has been devastating for the global luxury goods market, as all manner of discretionary spending came to a grinding halt. The good news is that the appetite for luxury has not disappeared – putting secondhand fashion in the spotlight.
“Although the number of fashion purchases and the size of closets have decreased during the pandemic, the share of preowned items in shoppers’ wardrobes will likely continue to rise in the coming years,” explained Sarah Willersdorf, partner & managing director at BCG in New York. The ‘closet share’ of secondhand fashion currently levels at 21%, which could jump up to 27% by 2023, according to BCG.
The market has already gained some ground across the world – currently valued anywhere between $30 billion and $40 billion. Against this backdrop, considering the fact that resale only represents 2% of the global fashion market at the moment, the only direction seems to be upwards.
According to researchers, the next half-decade could see the resale market rise at a compound annual growth rate (CAGR) of 15% to 20% – a far cry from the 1% CAGR over the last five years. For some strategically placed online resale players, the researchers calculated a potential CAGR of 100% over the next half a decade alone. Driving this growth will be a consistent rise in the number of consumers turning to resale, a figure that jumped by 10 million in just one year between 2018 and 2019.
Two things jump out from these numbers: One is the sheer size of potential growth; the second is that the resale market was already posting more than healthy numbers, even before the pandemic. This signals other factors at play – most notably the structural changes in consumer behavior towards sustainability.
“Although affordability, selection availability, and item uniqueness are key drivers of the secondhand market, consumers’ mounting environmental concerns also contribute to its growth. Today, 70% of preowned buyers “like the sustainable aspect” of secondhand consumption, compared with 62% in 2018,” explained Felix Krueger, partner & associate director for BCG in Cologne.
“Shoppers hope to own fewer, though better items, to reduce overconsumption, and to take better care of what’s in their closets; the presence of a thriving preowned market encourages all three goals,” he added. The takeaway is that the resale market boom is not just a kneejerk reaction to the pandemic, but a long-term fixture.
Good news for brands
No doubt, this puts luxury brands in a conundrum: Their products become popular but they lose out on purchases. That being said, this growing popularity does appear to reap benefits. Indeed, the report notes that 50% of consumers who bought a preowned product ended up trying a new brand. “Clearly, preowned consumption is a key driver of customer acquisition,” noted the report.
According to BCG, there are ways for brands to assert their dominance in the resale market as well. Brands could leverage their scale to establish their own secondhand sales channels, or develop their own resale platforms. Other options include buy-back programmes or partnerships with existing resale platforms.
The researchers note that more than 60% of their survey respondents indicated that they would prefer fashion brands that had partnerships with players in the resale market. If they play their cards right, brands could ride the wave of resale fashion that is quite unequivocally on the rise.
