Neiman Marcus, H & M Have a Plan to Win Young Buyers: Used Clothes and Handbags

The fashion industry, experiencing a boom or economic recession, is turning to a surprising source of courtesy: second-hand clothes and handbags.

The resale clothing market in the United States is exploding. According to a GlobalData Retail research report prepared by the ThredUp resale site, the second-hand clothing market has grown 21 times faster than the industry as a whole. The clothing resale sector is expected to nearly double from $ 28 billion today to $ 51 billion by 2023.

Neiman Marcus, H & M and the online luxury Farfetch website have all recently entered the resale business to fit the Americans' passion for heels, handbags and casual dresses. They are looking for younger, environmentally conscious and ambitious luxury buyers, who want to benefit from bargain prices for high end brands.

In April, Neiman Marcus took a minority stake in Fashionphile, a resale site offering luxury luxury accessories and handbags up to 80% lower than their original price. In the future, buyers will be able to drop their used shoes and bags in Neiman Marcus stores and return them to Fashionphile.

Neiman Marcus has invested in Fashionphile to achieve "long-term, sustainable growth," said Geoffroy van Raemdonck, CEO of Neiman, in a statement. He believes the partnership will help "introduce Neiman Marcus to younger and ambitious buyers".

Large retailers are responding to the rapid growth of online resale fashion startups, such as ThredUp, The RealReal, Poshmark, Fashionphile, etc. Resale companies are in direct competition with high-end retailers, department stores and fast fashion stores. They threaten the pricing power and exclusivity of luxury brands.

Resale sites have "effectively built small communities," pairing sellers seeking to unload their old clothes for cash with buyers eager to sign contracts, said Cowen analyst Oliver Chen. in a recent report to customers.

"Conscious consumer"

The millennial generation and Generation Z buyers support the clothing resale industry. According to a study by GlobalData, more than one in three Z generation customers will buy second-hand clothes, compared with just 19% of baby boomers.

Environmental and economic conditions converge to push young buyers to secondary markets.

In the past 15 years, global clothing production has doubled, even as the average number of times people wear their clothes has declined, according to the Ellen MacArthur Foundation Conservation Organization. The group estimates that the global fashion industry is on track to account for one quarter of the global annual carbon budget by 2050.

However, garbage in the clothing and textile industries is becoming a major concern for young buyers. Nearly three-quarters of shoppers aged 18 to 29 say they prefer to buy from sustainability-minded brands, according to GlobalData.

"It was really an aspect of sustainability," analyst Jose Neves, chief executive of Farfetch, told reporters this month of his company's introduction to the resale market.

The resale platforms offer customers a way to recycle their old clothes and buy new styles in an environmentally friendly way.

Hunting for bargains

Clothing sites for resale are also of interest to younger buyers who want to dress according to ephemeral fashion trends and browse different outfits, according to analysts.

ThredUp, for example, says that it adds 15,000 new articles to its site each day, as more and more sellers post their old styles online.

Resale is also part of the broader pattern of explosive growth in discount retailing. Resale players offer prices that are 30% to 90% lower than traditional retailers, according to Chen.

TJMaxx, Marshalls and other discount chains are growing, while department stores such as Macy's, Saks and Nordstrom have opened discount arms such as Macy's Backstage and Saks Off Fifth.

Despite the strengthening of the economy in recent years, Americans of all ages and income levels are looking for bargains. Eighty-nine percent of US consumers say they shop at discounted stores, according to a survey last year conducted by the National Retail Federation, a professional group of the sector. The rate is even higher among Millennials and Generation Z buyers.

Ari Ginsberg, professor of entrepreneurship and management at the NYU Stern School of Business, says younger consumers, often heavily indebted to students, are "more cost-conscious." The combination of leading brands at affordable prices on resale and rental sites is "particularly effective for Millennials and Generation Z," he added.

'Favorite parts'

Traditional retailers can not ignore the growth of the resale sector, so they find ways to play.

Neiman Marcus says that more than half of his customers are already using the resale market. She wants to keep these customers when they buy flea markets while diversifying to reach the younger public of Fashionphile.

In some Neiman Marcus stores, customers will be eligible to receive a prize for their Fashionphile items on site and receive cash back. Neiman hopes that these buyers will then spend this extra money on new products in their stores.

Other retailers are also testing the resale market. H & M announced in April that it would test a resale program in Sweden of "already favorite parts" of the brand & Other Stories.

"We are exploring different ideas about how our sustainable designs can be passed on to new owners," said Sanna Lindberg, who oversees the brand at H & M.

Online luxury retailer Farfetch began flying Farfetch Second Life in May, a buyback program allowing customers to exchange designer handbags for credits for future purchases by Fartetch.

Analysts predict more and more retailers will make acquisitions, form partnerships and test models.

"It's an old story of when we see disruptions in the industry," said Ginsberg. "If you do not develop these capabilities or go to these markets, you may soon be shut down."