Are Recent Handbag Trends a Blip or a Harbinger of a Generational Shift?

This Weeks Key Takeaways:

• Selling second-hand products has the potential to attract customers in ways that one-off, sustainability-oriented products haven’t
• Brands and retailers looking to increase profits can benefit from launching resale programs that include returns, as they can provide cost savings starting point

It often feels like we read about two different worlds: on the one hand, there are reports, such as @Triple Pundint’s 2022 survey, on NextGen customers' eco-anxiety is leading to significant changes in shopping. On the other hand, many brands cite consumers' lack of sustainability interest as a key barrier to launching more sustainable offerings. 麦肯锡 and NielsenIQ identified how brands communicate the offering as the culprit. Stand-alone ‘eco’ products fall flat.

However, resale does not suffer the same fate. ThredUP’s recent industry report found that more than half of Gen Z are more likely to shop with a brand that offers secondhand alongside new, up 6 points from 2021. The recent survey also found an increase in the percentage of Gen Z’s shopping resale, now at 30%, and 2 in 5 items in Gen Z closets were bought secondhand. Additionally, 64% look for an item secondhand before buying it new.

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Overlay this trend in younger customers finding luxury pieces in more accessible ways with the Atlantic Re:think 's piece, Something Odd Is Happening With Handbags. The article points out that handbags, a staple of high-end luxury, are changing: once the province of a family-owned business that employed skilled artisans in European workshops is now the domain of consolidated companies forced to produce five or six seasons vs. the traditional two. According to the Atlantic, the new trend is that old bags are on the rise, being shown off wear as a point of pride, the new status symbol. This is consistent with younger generations pushing back on the traditional model of what is fashionable. The question for me here is the nature of the recent data: longer-term trend or blip?

Glossy published a summary of the recent sentiment of brand and retail executives: fashion retail is perilous. The looming possibility of further economic decline and reduced consumer spending has retailers seeing flashbacks to the lowest point of the pandemic. Hence brands and retailers are focused on margin with conservative buys going into the following year.

This may be a welcome relief for the resale marketplaces such as Rent the Runway, whose stock took a hit last week, given lowered guidance for the year. RTR, ThredUP, and others have faced additional headwinds from lower-priced inventory in the market over the past 12 months.

Another implication of more margin-focused brands and retailers is a new breed of resale service providers focused on reducing cost centers such as returns.? The Busy Body published an article on how “Reverse Logistics Startups Attract Investors from Venture Firms.”? The article highlighted Loop Returns and a relatively new startup, Two Boxes, and both focused on the returns space.

Until Next Week,

Andy Ruben | Founder & Exec Chair of Trove

Resources:

Week of April 18, 2023

Gen Z isn't letting the economy keep them from living their most luxurious lives. They're just buying stuff secondhand instead

Business Insider

A record number of Gen Z is living at home and fueling a luxury boom. And even increasing economic uncertainty is not deterring their pursuit of the good life — they're just buying secondhand instead. About 30% of Gen Z — those born between 1997 and 2012 — are buying secondhand items to afford higher-end brands, according to an April 5 resale report by ThredUp, an online thrift store and resale platform. ThredUp used data derived from a GlobalData survey of 3,012 American adults in December.

Consumers Vote With Their Wallets as Secondhand Apparel Sales Boom

Triple Pundit

One in every three apparel items purchased in the U.S. last year was secondhand, according to the resale platform ThredUp, which has been tracking apparel resale markets for over a decade. As U.S. consumers continue to gravitate toward more sustainable products, over half shopped secondhand apparel in 2022, ThredUp found in its annual Resale Report. Globally, the secondhand apparel market is set to nearly double ?by 2027, reaching $350 billion — including $70 billion in the U.S. alone. In the U.S. in particular, resale markets grew five times faster than the broader retail clothing sector in 2022, and global secondhand sales are expected to grow three times faster than the global apparel market overall. Brands are looking to benefit from rising consumer interest in secondhand shopping, with a record 88 brands launching resale programs in 2022.?

How to secondhand shop online, according to experts

CNN

There’s no question that combating the climate emergency requires large-scale, systemic change. But individual action is important too. One of the most meaningful changes you can make on a personal level is buying less of everything — especially new things. “Buying used is better than buying new because very simply, it requires much less extraction of resources, much less fuel to ship things all over the world and it keeps things out of the landfill,” says Sandra Goldmark, professor and director of sustainability at Barnard College, senior assistant dean at the Columbia Climate School, and author of “Fixation: How to Have Stuff Without Breaking the Planet.” “Unless I absolutely can’t avoid it, I don’t buy new.”

Something Odd Is Happening With Handbags

The Atlantic

Where do shoppers turn when an industry built on novelty runs out of new ideas? Over the past year or two, though, something largely unprecedented has been happening on people’s shoulders. Old bags are back. A significant—and growing—number of fashion-conscious people appear to be mining the depths of their closets or scouring secondhand marketplaces for designs released in the past decade or so. These women aren’t merely hunting down vintage styles of historical fashion significance, or the timeless classics that a wealthy mom might pass down to her daughter. Instead, many of them are carrying precisely the bags that should be at the nadir of popularity: one-off seasonal releases, designs whose trendiness peaked in the 2010s, and other bags that would otherwise scan as outdated to anyone in the know. One of fashion’s most basic rules is that nothing is less cool than the recent past, yet here are trendy people parading around like it’s 2015.

Fashion Briefing: As the economy worsens, brands and retailers are upping their focus on margins

Glossy

Fashion retail is in a perilous spot. The looming possibility of further economic decline and reduced consumer spending has retailers seeing flashbacks to the lowest point of the pandemic. Revenge spending in 2021 and 2022, plus pandemic savings that gave some consumers excess disposable income, helped. Now, those retailers are staring down what’s expected to be an incredibly difficult rest of 2023.

Reverse Logistics Startups Attract Investors from Venture Firms

Busy Body Tribune

The e-commerce industry is experiencing a surge in reverse logistics startups dedicated to processing online returns for retailers in a profitable way. These startups, such as Loop Returns and Two Boxes, have attracted around $200 million in venture capital investments. According to data from the National Retail Federation, last year alone, American consumers returned $212 billion worth of merchandise purchased online, which highlights the importance of making the returns process smoother and more profitable for retailers.

What brands excel at recommerce?

GreenBiz

A new report from OSF Digital (a digital transformation company) and Trove (a recommerce platform provider) aims to shed light on the trends and leaders in recommerce. We know from this report, as well as the annual ThredUp Resale Report, that recommerce revenue is poised to grow at three to five times the rate of traditional retail through 2030. What is still unclear from that growth is whether this business model will drive down the production of new products. Additionally, this rapid growth means both opportunity and responsibility for those advocating recommerce initiatives.

Weekend Briefing: The challenges facing the fashion rental industry

Glossy

Rent the Runway reported a pessimistic outlook for the rest of the year last week, announcing an expected revenue of $325 million. That was below analysts’ expectation of $345 million, which led to the company’s shares falling by 14% on Thursday, the most they’ve fallen this year. But RTR expects its subscriber count to grow by 25%, though analysts called this prediction “lofty.”

Resale’s big secret? It may need stores

Retail Dive

These days it’s difficult to find a retailer or brand that hasn’t at least experimented with resale. Rather than figure out how to do it themselves, most have turned to third-party platforms that specialize in secondhand e-commerce, leaving the success or failure of their attempt in other hands. As it turns out, selling used goods online is so inefficient that it’s difficult to do so profitably. Despite the robustness of resale’s growth, it’s a niche best left, for the most part, to brick-and-mortar stores, experts say.