The Rise of Resale
The Secondary market (Resale, Secondhand, & Consignment) is booming.
BCG estimates that luxury resale will grow at an average rate of 12% per year through 2021 to a whopping $36b market size. That is quite a bit larger annual growth rate than that of the primary luxury market (3%) for that same period. thredUp’s recent Resale Report suggests that Secondhand shopping will surpass fast fashion by 1.5% in less than 10 years. Digital retailing is certainly aiding its growth, making resale and consignment of luxury goods more accessible and scalable. Online platforms will represent approximately 25% of secondhand luxury-market sale growth, which is a larger piece of the retail business compared to the luxury and traditional retail markets.
Big box is in the Game
The growth and growth opportunity is so obvious that big box retailers and brands have entered the field. Neiman Marcus, for example, invested in Fashionfile, an online secondhand handbag store in the Spring of 2019. At the same time, Foot Locker bet heavily on the secondary sneaker market, injecting a $100m investment in the peer-to-peer sneaker marketplace, Goat Group. Similarly, American Eagle partnered with sneaker reseller and consigner Urban Necessities last year and piloted a brick and mortar space to that end in the heart of SoHo, Manhattan.
Where is the market going?
While resale currently makes up only a small portion of the market, about 6% of the US customer’s closet for example, it is expected to more than double over the next 10 years and triple by 2033 in the US. Comparably, China’s luxury resale landscape, historically lagging behind that of the US and Japan, is showing significant growth. In fact, the Chinese Secondhand Luxury Industry in 2018 amounted to $1.7b in size and its yearly growth has set in steadily around 20% for the past 4 years, a “rate expected to continue, or even accelerate” this year, as of one month ago.
The sneaker resale market is likely a good indicator of where things are going. StockX, just last summer, was valued at $1b, after a few rounds from major VC’s, including Google Ventures and DST Global. At these growth rates and given the size of the capital injections, one can project not just continued growth but ancillary and related small business growth. Consigners and resellers on Stock X and Stadium Goods, for example, are already branching out into secondary luxury goods (other product category)sales. These secondary marketplaces also indicate major growth opportunity for the technology innovation that supports their core functionality. StockX, for example, operates like a pricing exchange and the software required to maintain it is crucial to its value proposition. This space is so fresh that completely new software products are being built this very day. XY, for example, recently released the only Consignment Manager built into a Point of Sale, a key product for any major retailer that hopes to bring the resale marketplace into its retail stores.
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About the author: Jordan Lane Gilmore is an entrepreneur and business development executive at XY focusing on retail systems thinking, luxury fashion & sustainable brand investing, start-up leadership culture and more.
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