Subscribe to How to Reopen, our weekly newsletter on what it takes to reboot business in the midst of a pandemic.
Americans holed up at home for months during the pandemic-related lockdowns and looking for new clothing at good prices in a hard economic climate have developed habits that are speeding up what had already been fast growth in the resale market, according to a new study released on Tuesday.
The U.S. resale market for clothing—excluding what is sold at thrift stores like Goodwill—will go from $7 billion this year to $36 billion by 2024, the study drafted by research firm GlobalData for leading resale site ThredUp found. Its previous forecast had called for the market to hit $23 billion by 2023.
A mix of factors beyond the low prices—such as environmental concerns and a lack of truly new fashion trends—has also fed what had already been a fast growing area of retail.
“For some time there was a question, Is it a flash? Or is it a fad? But every year it becomes clear this will be part of the next normal,” ThredUp CEO James Reinhart tells Fortune.
While the resale market initially declined sharply at the start of the pandemic—when lockdowns and the abruptness of the economy shutting down frightened consumers, as Fortune reported in March—it is now recovering, particularly at the lower and middle tiers. The RealReal said last week sales were still in decline compared with those a year ago but getting closer to normal levels again. And shoppers’ increased appetite for secondhand clothing is likely to be permanent.
The resale market has gotten a lot of validation in the past year: The RealReal went public last June, Poshmark has continued to grow, and others—such as StockX, Vestiaire Collective, and Depop—have established themselves as important players.
Meanwhile, big established retailers are taking a closer look at this area of clothing retail: ThredUp recently signed a partnership with Walmart to list 750,000 items on that retailer’s massive website, and Neiman Marcus took a stake in online secondhand handbag seller Fashionphile. In addition, ThredUp has opened shops at many Macy’s and J.C. Penney stores and has struck deals to take secondhand clothes from chains like Gap.
“You’re seeing the old guard get involved, and that’s always an indicator of their perception that this is here to stay as part of the consumer experience,” says Reinhart.
The growth of resale is coming at the expense of other retailers, particularly department stores, luxury stores, and clothing chains, and GlobalData expects secondhand apparel sales to eclipse fast-fashion’s by the end of the decade. Across the industry, sales of new clothing are expected to fall 4% through 2024, while resale will nearly quintuple.
The two other ways of buying clothes expected to boom the most, in addition to resale, are clothing rental services like Le Tote and Rent the Runway and subscription services, according to GlobalData.
Thrift stores will also continue to grow, rising from $21 billion in sales this year to $28 billion by 2024, contributing to the overall “shift to thrift,” as ThredUp president Anthony Marino puts it, that is fueling the whole resale market.
Whatever reluctance consumers may feel about wearing clothes worn by someone else, Reinhart says, younger shoppers, who are fueling the surge in resale, have different notions of secondhand clothes compared with their elders.
“People will always want to buy new stuff,” says Reinhart. “What’s really changing [is] the line between it’s brand-new versus it’s new to me.”
More must-read retail coverage from Fortune:
- Stitch Fix’s new growth strategy: Letting non-clients shop directly, too
- Gap calls on landlords to share the pain
- Why Lands’ End is betting on its new Kohl’s partnership to refuel growth
- How Chipotle’s past food crises prepared it for the COVID-19 outbreak
- The soda market is popping with new contenders. Will they stay or fizzle out?
