The clear changes in consumers habits, their relationship with ownership and buying behaviour has challenged fashion’s business models. The circular economy perspective is gaining followers in the market beyond a simple trend. Are we ready to close the loop?
The second-hand market is expected to hit $64B in 2024, overtaking the tradition thrift and donation segment, according to Thredup’s Annual Resale Report in partnership with GlobalData. Forbes Magazine predicted that by 2025, resale of fashion goods, such as sneakers and other collectibles, could reach $6B in sales.
With these numbers at hand, there is no doubt the resale market is tremendously blooming thanks to Internet and digital ventures through all fashion segments. It is not only a shift inside the consumer’s process of product acquisition equation, it is a rediscovery of the value of things made to last, at least longer, and completely opposed to fashion’s rapid obsolescence.
Resale, vintage fashion, or the second-hand market are not new concepts, however, its hybrid approach with technology certainly is. In the last decade several platforms and online consignments have grown a selective or massive clientele willing to buy, trade, or sell their clothing.
In this context, with the ease of e-commerce, peer-to-peer exchanges, or even auction services, the consumer has found a valuable offer of clothing and accessories to buy compared to the full-price market. Additionally, when consuming second-hand, the customers are cultivating a responsible commitment to sustainability and curbing wasteful consumption.
Circular Economy in Fashion and Its Approach to Sustainable Development
According to researcher, Kirsi Niinimäki, leader of the Fashion/Textiles Futures research group in Finland’s Aalto University, a circular economy approach in the fashion industry “aims to develop a more sustainable and closed-loop system where the goal is to extend the use- time of garments and maintain the value of the products and materials as long as possible”.
In the circular economy it is necessary to take a system perspective on fashion’s valuable supply chain, including all members as designers, producers, manufacturers, business entrepreneurs and of course, the customer.
Optimisation of use, or utilisation of manufactured goods is at the core of the circular economy’s perspective, as opposed to the traditional focus on the optimisation of the production of the objects up to the point of sale as new items; a straightforward goal in sustainable development.
The new models of production and consumption regarding circularity involve concepts such as sharing, leasing, reusing, repairing, refurbishing and recycling existing materials or products as long as possible. With this approach, the life cycle of products is extended and in fact, we are encouraging to reduce waste to a minimum.
Creating value through keeping materials to be used another time or cycle, either through exchange or reuse. For example, in March 2020 the European Commission presented the new circular economy action plan under the “European Green Deal”, including proposals on more sustainable product design, reducing waste, and empowering consumers to demand new industrial commitments in resource intensive sectors, such as electronics, plastics, construction, and of course, textiles and fashion.
In February 2021, the Parliament demanded additional measures to “achieve a carbon-neutral, environmentally sustainable, toxic-free, and fully circular economy by 2050, including tighter recycling rules and binding targets for materials use and consumption by 2030”.
The future success of circularity means adopting a new, more strategic mindset inside of the company, in all of its activity, including their way of producing and reducing environmental impact. To change the linear model, strategists and fashion executives have to focus on the lifecycle and regeneration of products in aim to closing the material loop.
Fashion’s Landscape of Resale Market: From Luxury to Mass Market Players Changing the Rules
Thanks to technology, new ventures are developing and creating value for the broad range of average fashion users. The collaborative consumption has gained relevance as a top disruptor in the fashion industry and lifestyle sector. Collaborative Consumption, as a business structure, is characterized by trading, renting, gifting, sharing, bartering, lending and swapping goods or services using digital mediums such as apps or platforms.
The San Francisco giant, The Real Real and Paris-based, Vestiaire Collective are a luxury destination for vintage clothing and second-hand luxury items and premium brands.
The Real Real, created by founder and CEO Julie Wainwright a decade ago, is one of the leading players of the resale market, with innovative initiatives and building a community of shoppers and consignors. With a clear strategy including retail locations and strong partnerships with luxury brands such as sustainable pioneer, Stella McCartney, Burberry with the #ReBurberry action and lately, The Real Real X Gucci, with a growing performance in resale value and searches inside the platform.
“Together we’re shining a global spotlight on resale that we hope will encourage all consumers to support the circular economy and join us in reducing fashion’s carbon footprint” stated Wainwright in a press release about the collaboration.
The latest on the startup is “ReCollection”, a recycling luxury ready-to-wear and handbags line. The platform is upcycling luxe fibers and fabrics and turning them into high fashion in partnerships with top brands like Balenciaga, Dries van Noten, Stella McCartney, A-COLD-WALL, Jacquemus, Zero + Maria Cornejo, and Ulla Johnson.
Vestiaire Collective launched a “Brand Approved” page on their app and website in partnership with Alexander McQueen, to showcase an archival sale and resale items to embrace circularity. They also featured hard-to-find sale items from its sellers’ network in collaboration with Selfridges, proving luxury’s secondary market interest is strong and rising.
Last March, Vestiaire Collective announced a new €178m financing round backed by Kering Group and Tiger Global Management to accelerate its growth in the second-hand market and drive change for a more sustainable fashion industry. Kering’s business strategy is supporting innovative business models, embracing new market trends and exploring new services to fashion and luxury customers.
Vestiaire Collective’s sustainability roadmap includes empowering and growing its community of “fashion activists” through the “Fashion Activist” badge and “Follow the Leaf” program. Also, reducing environmental footprint, to be carbon neutral by 2026 and obtaining B Corp certified business status.
“This latest round of investment confirms the incredible trajectory of Vestiaire Collective, founded during the 2008 crisis, the model has clearly demonstrated its ability to continue to thrive during challenging conditions. The resale sector as a whole is experiencing rapid growth, especially amongst Millennial and Gen Z consumers, which will come to shape the retail landscape of the future”. Maximilian Bittner, Vestiaire Collective’s CEO
In a different target and value positioning we find ThredUp and Depop, as resale platforms with a global reach, engaging with younger consumers through a marketplace format.
James Reinhart, founder of ThredUp, focuses on “inspiring a new generation of consumers to think secondhand first”. His revolution landed a public IPO this March, giving the company a valuation of $1.8 billion dollars with 1.24 million active buyers inside the platform.
Besides creating a brand intelligence division through insights, reports and statistics, Thredup has been exploring, as well as its competitors, strategic partnerships to push forward the second-hand movement. The platform teamed up with New York Designer Christian Siriano to bring circularity to the forefront of the fashion week. Sirano sourced thrifted pieces from the Thredup and presented it as part of his FW 21 fashion show.
Examples of brand initiatives include the “ReFashion Collection”, an initiative made in partnership with Zero Waste Daniel brand, and the partnership between Olivia Wilde and Conscious Commerce where they released an used clothing collection to fight disposable fashion culture to name a few.
“Clothes are not trash. It’s time to put an end to planet-harming throwaway fashion habits. We hope this collection will inspire consumers to thrift more, toss less and get creative about how they breathe life into old clothes through DIY”. Erin Wallace, VP of Integrated Marketing, thredUP
Depop, with 90% of active users under the age of 26 and more than 26 million registered users over 147 countries, started in 2011 as a social network and has now transformed into an “all welcome” place to “like, buy, and sell” user favorite pieces or looks.
The platform is leading the streetwear and inclusion through collaborations with Vans, The Black Fashion Council, and last year with fashion designer Richard Quinn, where they launched a new and affordable collection of pieces designed and produced in his London studio to target his Gen-Z cult followers. In another chapter, the “Re/Sourced collection” was a celebration between the platform and Ralph Lauren celebrating his vintage Polo line.
Fast Company included Depop in their annual list of the World’s Most Innovative Companies for 2021. Its latest collaboration is a creative challenge inside their community using the iconic Adidas’ Stan Smith as an experimental canvas.
“We can reach and inspire more people to think about different, better fashion options that are kinder to the planet”. Peter Semple, Chief Brand Officer at Depop
Additionally, three Depop designers have been paired up with partners from the adidas family to rework and restyle classic secondhand adidas apparel.
Other resale and second-hand social selling platforms as Poshmark, Vinted, or the famous StockX inside the sneaker’s collector market, are redefining the sharing and value of pre-owned objects.
The new ventures based in circularity and responsible business mindset are key elements in the lifestyle and fashion industries trying to repair and fix past mistakes; aiming to build a better future, and contribute as key drivers to a rebirth of the fashion system.