Amid the fashion industry’s fast-paced and often fleeting fads, one trend has appeared that looks more likely to stick — and runs counter to the industry’s reliance on fast fashion. As consumers and brands increasingly prioritise sustainability, the resale market is giving traditional retail a run for its money. 

But while the recent rise in second-hand consumption signals an important move towards a more circular economy, industry experts stress that traceability technology will be crucial in maintaining consumers’ trust in sustainable practices. 

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Shift to thrift

A recent report by US-based thredUP, the world’s largest fashion resale platform, projects the resale market in the US, currently valued at $36bn, to grow 11 times faster than the broader retail sector by 2025, reaching $77bn over the next four years. 

The thredUP report suggests that the Covid-19 pandemic has been a major catalyst for this growth. In 2020, of the 52.6 million sellers surveyed on US resale platforms, 36.2 million were first-time sellers. Moreover, the report reveals that there were 33 million first-time consumers of second-hand apparel, 76% of whom planned to increase their spending on thrift in the next five years.

James Reinhart, CEO and co-founder of thredUP, notes a shift in consumer values in the past year and a half. “Purchasing decisions are driven by value, sustainability and quality more than before the pandemic,” he tells fDi.

In response to the observed demand, in July 2021 thredUP announced the $28.5m acquisition of Bulgaria-based Remix Global AD, one of Europe’s leading resale platforms. 

“ThredUP’s 2021 Resale Report shined a light on the level of enthusiasm we’re seeing for resale. US consumers are seeking it, and retailers are embracing it,” says Mr Reinhart. “By entering Europe, we’re furthering our mission of inspiring a new generation of consumers to think second-hand first.”

Following the thrift boom witnessed in the first year of the pandemic [2020], other major resale players are also eyeing expansion. In May, Lithuania-based Vinted, Europe’s largest online customer-to-customer (C2C) second-hand fashion marketplace, raised $303m in funding, backed by EQT Growth, to support its European operations and to make deeper inroads into the US resale market. 

Then in June, US online marketplace Etsy announced the acquisition of UK resale platform Depop in a deal worth $1.6bn. With about 90% of Depop users belonging to Generation Z (those below the age of 26), Etsy revealed that reaching a younger consumer base was a key motive for the purchase. 

“We are simply thrilled to be adding Depop — what we believe to be the resale home for Gen Z consumers — to the Etsy family,” said Etsy CEO Josh Silverman, following the deal.

At present, the younger generations are the keenest on resale: thredUP’s report reveals that more than 40% of Generation Z and Millennial consumers (those born in the early 1980s to 2000s) have purchased second-hand apparel, shoes or accessories in the past 12 months. This compares to 32% of Generation X and 16% of Baby Boomer consumers. 

Retail goes resale

As Gen Z is busy forging the resale revolution, uploading their wardrobes onto C2C sites such as Depop and Vinted, the face of retail is adapting to meet new ethical demands.  

“What I have found incredibly important this year, and emerging out of Covid-19, was a sense of scrutiny,” says Orsola de Castro, founder of fashion activism movement Fashion Revolution, and author of the book Loved Clothes Last. “Finally, customers are beginning to scrutinise [brands’] habits. And I think that this is a global success,” she tells fDi

A 2020 survey by Boston Consulting Group and Vestiaire Collective found that 62% of shoppers would prefer to buy from brands that collaborate with second-hand providers, and companies are responding to this sentiment. Looking to serve an increasingly sustainability-conscious consumer base, a growing number of major retailers have seized opportunities in resale this year.

In October 2020, US denim brand Levi Strauss launched Levi’s SecondHand, a buy-back programme that enables US customers to purchase pre-worn clothing and exchange their used products for store credit. Meanwhile, in September Swedish retailer H&M — which in the past has been scrutinised for issues regarding supply chain opacity and greenwashing — launched its proprietary resale platform, H&M Rewear. The digital C2C marketplace, the company says, “will give a second life to their favourite styles and lead the way to a more sustainable future”.

Ms de Castro says: “We’ve been mollycoddling [these brands] and saying to them, ‘at the end of the day, you can do more business if you become sustainable’. [But] that ship has sailed [when] sustainability and ethics were an opportunity. They are now a moral obligation.”

According to the McKinsey Fashion Report 2020, “circular business models, including fashion rentals, re-commerce, repair and refurbishment could enable the industry to cut around 143 million tonnes of GHG [greenhouse gas] emissions in 2030”. 

Protecting provenance

Although resale and circular models could play a significant role in reducing fashion’s carbon footprint, industry observers highlight the importance of digital traceability for maintaining both the sustainability of circular models and consumer trust.

“Due to the pandemic, online sales have increased significantly, offering counterfeiters a rare occasion to flood the market with replicas,” Rossella Munafó, head of sales and marketing at Italian authentication platform Certilogo, tells fDi. “C2C sales are hardly detectable by brands, [making it] basically impossible to prevent or stop illicit transactions among individuals.”

Founded in 2006, Certilogo uses technology for brand authentication. Its platform enables consumers to scan a QR code on the tag of a garment and instantly check if it is genuine or fake. “In our opinion, authentication has become a hygiene factor in a market that favours resale, circularity and sustainability,” says Ms Munafó. 

Data gathered by Certilogo’s platform reveals that counterfeit sales reached an all-time high in April 2021, with 27% of the company’s authentications reporting a fake item — an 8% increase on the average of 19% over the previous three years. 

Counterfeiting at such scale not only has the potential to compromise consumer trust, but to undermine companies’ sustainability commitments, says Ms Munafó. “The provenance of raw materials is unknown, the materials used can cause harm to human health [and] the production often involves the exploitation of human labour, including [child] labour.”

In June, the World Economic Forum teamed up with London-headquartered software company EVRYTHNG to develop an industry-wide, cost-effective digital authentication platform. To support the circular economy, the aim is to give every item a digital identity, enabling it to be tracked along the supply chain via a scanning mechanism that could be used by anyone, whether consumer or business.

“A digital identity is like a passport that’s travelling with the product item,” says EVRYTHNG co-founder and chief executive Niall Murphy. “You want to list a pair of Levi’s jeans on a marketplace, the marketplace receives the product, then they can use the digital identity [as a] gateway to ask Levi’s whether it is a genuine pair of [their] jeans because they can verify that digital identity.” 

Beyond quelling the fear they may be buying a fake, “when it comes to resale, what the second, third or fourth customer still needs [to understand] is the materials in those clothes and how to care for them,” says Ms de Castro, stressing the importance of extending the life of every garment to minimise waste. 

Knowing an item’s provenance has practical and psychological benefits for resale consumers. “It tells you the story and it helps you to somehow give value to that piece. But obviously, with today’s quantities, this does rely on technology,” she adds.

As brands adapt to the ethical demands of their consumer base by launching resale services and other circular models, the measures they take to ensure the lasting integrity of those models may be the best proof of their commitment — or whether they are just following yet another trend.

This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.