Resale Shops Pick Up While Traditional Retail Drops Off
The last two years have been difficult for many traditional retailers. In 2017, there have been nine retail bankruptcies – with behemoths like Macy’s and J.C. Penney announcing widespread store closures and stocks hitting multi-year lows. While many retail companies struggle, there is one market segment that continues to thrive: resale.
The resale market is forecasted to grow at an annual rate of nearly three percent into 2021. In a climate of declining sales for big traditional retailers, resale is poised for significant growth in market share. As of 2016, resale generates revenues of roughly $17 billion as an industry – with commodities ranging from clothing and furniture to sports equipment and musical instruments.
The fairly stable economic state suggests that consumers aren’t spending less on retail – they’re spending differently. Here are some of the socioeconomic factors experts are citing as the driving forces behind resale’s growing popularity:
Savvy, Value-Conscious Consumers
More than half of millennials say they consider the resale value of an item before they purchase, according to a study by Fung Global Retail and Technology. Since Millennials are well on their way to outspending Baby Boomers in 2017, this is an essential demographic to reach for any growing market.
Unlike other industries, resale shopping attracts consumers from all economic levels. Everyone can see the appeal of saving money on consumer goods and investing it in other areas – whether it be on vacations, concerts, restaurants or savings. Spending on luxury retail goods has declined by 20 percent since 2000, but the travel and hospitality industries are booming. This is especially true for Millennials and younger generations, who are increasingly placing more value on experiences than material items. They still want these goods, but they are much more willing to splurge on a vacation or night out with friends than on a new outfit so resale shopping and the value provided is a great option.
Growing Environmental Concerns
A recent survey found that the average American will toss out 81 pounds of clothing a year. That amounts to 26 billion pounds of textiles and clothes ending up in landfills. Even as younger generations value experiences more than new stuff, the amount of waste per person remains high.
Yet, the majority of consumers are also becoming more environmentally conscious. Two-thirds of global respondents say they value products and services that come from companies committed to positive social and environmental impact. More and more consumers are reconciling their desire to shop with their environmental concerns by turning to resale. In fact, Winmark’s brands have recycled over 1 billion items back into the community.
Purchasing gently-used items helps extend an item’s lifespan and prevents it from prematurely going to a landfill. Purchasing used products also decreases the collective demand for new products, which means that fewer will be made. The production and transportation of new clothes are extremely taxing for the environment – from the production of synthetic materials to the resultant air pollution and toxic byproducts. Selling gently-used clothes and other items to resale stores also significantly reduces waste and can help people earn money while decluttering their homes.
Whatever the reasons behind resale’s impressive current and projected growth, it has quickly become the new disruptor in the apparel industry. It is now the perfect time to break into this rapidly-growing segment, especially as consumers become more value-minded and environmentally conscious with their spending habits.
For more information about franchising opportunities with Winmark Corporation’s resale brands, check out our website.