Fast-Fashion New Enemy: Secondhand Clothes

Fast-fashion, a retail sector that combines design, trends, cost, price reduction and logistics capacity, has been one of the most affected sectors by the COVID-19 pandemic. Leading brands in this sector like GAP, Zara, Uniqlo, H&M, TopShop, Primark and C&A have been forced to close their stores worldwide as a result of the mandatory measures imposed by most governments in the world, which has led to the accumulation of stocks and limited the income of these companies to practically zero. Online platforms and last mile logistics investment for the most part have calmed (albeit not enough) the 1Q20 downturns. However, fast-fashion, according to several analysts, is facing a definitive model change in which second-hand clothing companies are emerging as the sector’s biggest enemies. Céline Choain, a fashion specialist at Kea & Partners, told AFP that "in 2021, production volumes will be reduced, while seasonal collections for this type of brands will decline.”

In this context, according to Choain, brands will have to look for cost flexibility in an industry where most costs are fixed: suppliers, salaries, store rentals and logistics, among others. To this situation, we must also add the decline in purchasing power of citizens in most countries where there have been mandatory confinements and the emergence of significant second-hand clothing markets that could reach US$65 billion in 2025 compared to the US$24 billion they represent today, according to a report published by GlobalData Retail in collaboration with ThredUp, one of the main companies in the sector. “Resale is here to stay; the next question is who wins and who loses,” ThredUp CEO James Reinhart told CNBC. “Younger people are getting smarter than ever about how wasteful fast-fashion is. For years, I was trying to convince retailers to care about this,” continued Reinhart, whose company has reached agreements with major retailers such as GAP, Walmart, Madewell and Macy’s. All of them want to participate in a growing market.

According to GlobalData Retail and ThredUp, in 2009 secondhand clothing accounted for 3 percent of a US citizen’s closet space and this figure is expected to reach 17 percent by 2029. In addition, the report makes it clear that this year the only sectors of the fashion industry that will grow will be second-hand clothing sales, the fashion section of Amazon and retailers involved in the low-cost sector.

Marie Petrovicka, Vice President of Depop, a London-based second-hand buying and selling application, said that subscriptions to the app have increased 163 percent since April 1st, while items sold since that date have increased 300 percent over the previous year. “It is clear that the pandemic has put the spotlight on the realities of the current fashion ecosystem,” Petrovicka told Fashion United. Something similar happened with Vestiaire Collective, a French company that buys and sells second-hand luxury products, whose orders increased by 54 percent in February compared to the same month last year.

Last February, Gap announced a partnership with ThredUp that allows customers to receive discounts and gift cards for every piece of second-hand clothing they send to the company. “As the resale revolution continues to gain momentum, participating in re-commerce is not only good for our planet but good for business,” said Mark Breitbard, President of Gap Specialty Brands. At about the same time, H&M reported that its March sales had fallen 46 percent from the same period last year, while Fast Retailing, owner of Uniqlo, said it estimated an 8 percent loss in sales by the end of 2020.