The second-hand clothing revolution - how is the secondary market transforming the fashion industry?
There has always been a market for second-hand clothing, whether it's vintage pieces from the past, charity shops found throughout the city, or vintage shops in larger cities that offer an exciting selection. However, in recent years, there has been a paradigm shift in second-hand clothing as retailers have shifted to online trading platforms, creating a kind of metatrend.
The problems with second-hand clothing are well documented. The fashion industry produces 100 billion new garments a year, 70-80% of which end up in landfill or incineration. And the UK is one of the worst offenders - 10,000 garments are sent to landfill every 5 minutes. Ironically, the mountains of clothing shipped to countries like Ghana and Kenya are literally destroying the local textile economy.
What has happened in this industry over the past 10 years is staggering and a testament to the massive changes in consumer behavior. According to Statista.com, the global market for used clothing and resale is worth approximately $177 billion today and is set to double to $351 billion by 2027.
The US market was the first to see the growth of the second-hand clothing market, with Ebay, Preloved and ThredUp growing very rapidly over the past 5-6 years. The US currently accounts for 42% of the global market, 10% of clothing is resold, and sales and growth rates show no signs of slowing down. According to an internal report by ThredUp, the US online resale market is expected to reach $64 billion by 2024. The report also found that the online resale market has grown 21 times faster than traditional retail over the past three years.
The UK has quickly followed the US, with big brands like Depop, Vinted, Thrift+ and GoThrift emerging in the last few years. What’s striking is the growth rate of these companies: the second-hand clothing industry is currently growing 3x faster than the fashion industry in general, and is predicted to overtake the fast fashion segment by 2030.
To put the environmental benefits of switching into context: each used clothing purchase releases 8 kg of carbon dioxide, reducing emissions by 82% compared to new clothing.
The resale phenomenon is driven by a paradigm shift in consumer behaviour and, when combined with the livelihood crisis, the dynamics of the second-hand clothing market are taking on incredible proportions. There are a number of changing factors behind the hyper-growth of this market, including increased environmental awareness , the desire for unique and affordable fashion and the convenience of online shopping platforms . For example, a recent report by On Device Research shows that sustainability is still at the forefront of consumer thinking: 65% of UK consumers generally make more sustainable choices and 55% are willing to pay a little more for sustainable brands. In the case of clothes, second-hand buyers are clearly paying much less for brands in general or buying brands that they would not normally be able to afford - a compelling proposition in terms of affordability and value for money.
It is worth noting that in recent years there has been a significant trend among Generation Z consumers (born between 1997 and 2012), who are turning away from fast fashion and preferring vintage or second-hand clothing.
This shift is driven by Gen Z’s increased awareness of the environmental impact of the fashion industry. In addition, the influence of social media platforms such as TikTok has also played a significant role in popularizing sustainable fashion content, including showcasing tour guides and DIY fashion projects.
All of this content is encouraging Gen Z to approach fashion consumption more consciously. What’s more, the affordability of second-hand clothing aligns with the financial constraints many young people face. A 2022 survey by Earthtopia, one of TikTok’s leading eco-communities, found that 96% of UK Gen Z and millennial consumers believe that the high cost of living is a barrier to sustainable shopping. The Earthtopia survey also highlighted that for 77% of Gen Z, who tend to see affordability as a key benefit, buying second-hand clothing is not just a climate-conscious choice, but rather a norm in their daily lives.
It is clear that we can expect the emergence of some huge companies in this field in the next decade, as resale reaches a scale similar to the largest fast fashion turnover.
The dominant market role of some of these resellers is encouraging even if the share of used clothing is starting to stabilize at 10% of total fashion sales, but at current growth rates, it seems that in terms of market percentage it will be much larger in the long term.
To put this into context, looking at H&M’s 2021-22 revenue alone – the company generated £17.7 billion in revenue. The UK fashion e-commerce segment is expected to generate £37 billion in revenue in 2021, representing a 31% share of the UK’s total e-commerce market. Given the size of the fashion market, it seems only natural that some of the UK’s retailers will cross the multi-billion pound mark in the next decade.
One of the businesses that is seeing huge success in the second-hand clothing business is GoThrift, a portfolio company of OnePlanetCapital. Based in the North West of England, GoThrift has seen incredible growth – growing from four founders to 40 people in just 3 years. Recently released figures highlight the scale of their operation, with over 20,000 unique items uploaded to their website every month. The company has sold over 300,000 items since launch and is on track to generate £4.4m in revenue by 2023, a 175% increase on the previous year.
Source: OnePlanetCapital