Gap Is It A Joy Or Worry To Set Foot In Secondhand Clothing?

Gap announced in February 20th that it has been working with the largest online consignment and resale platform ThredUp. Consumers can send their old clothes in the designated shops of Gap, Banana Republic, Athleta, Janie and Jack, using ThredUp bags and exclusive labels, in exchange for the shopping scores of these shops under Gap.

This news means that Gap has become the latest retail companies in the second-hand clothing market after becoming a retailer such as Macy s and Nordstrom. It is not hard to speculate that Gap is trying to gain a firm foothold in the retail industry, which has been hit by changes in consumer tastes.

Macy's s, J.C. Penney and J.Crew's high-end Cowboy brand Madewell is the 3 of 5 retailers in recent months to cooperate with ThredUp. They hope to get a slice of the resale consumption trend from the early stage. However, whether these efforts will push store traffic and promote sales is still uncertain. Each retailer has different ways of working with ThredUp.

Today, Macy s has opened 40 ThredUp flash counters in its stores, where customers can buy discount brands such as American Eagle and Victoria s Secret for ThredUp's other brands. J.C. Penney is testing its 30 stores, and Madewell has provided 6 ThredUp flash counters.

Nordstrom took different strategies last month and launched its own resale store called "See You Tomorrow". Users can browse secondhand clothing online or in Nordstrom flagship store, which has just opened in New York. Nordstrom said that they are preparing for "See You Tomorrow" and will be cleaned and refurbished if the returned merchandise sold is damaged.

On the website of Nordstrom, an old Rag & Bone jeans, ranging from 90 US dollars to 99 dollars (depending on size), corresponds to a regular price tag of $195 and a discount of over 50%. Similar to Gap, if a customer donates second-hand clothes at a New York branch, Nordstrom will provide gift cards to customers.

J.C. Penney executive vice president and chief business officer Michelle Wlazlo said in a statement, "we know that consumers like new brands, and they like to look for amazing surprises." "Consumer demand for second-hand goods is very strong. Our partnership with ThredUp can enable buyers to find the best domestic brands for the first time in the store."

Melissa Gonzalez, chief executive officer of The Lionesque Group, a retail consultancy, said: "I think brands and retailers are declaring that they support sustainable development, which has become a bet." "We can't deny that there is a trend going on, and some companies have invested more money than other companies in this trend. For some enterprises, the results are more effective.

Gonzalez said, "it is too early to judge how much money companies can make to make money in this way." "Consumers want to know what a brand wants to do."

All retail companies are peddling consumers' desire to buy second-hand goods, but they do not disclose their income, so it is difficult to judge the financial impact of this business on enterprises.

However, it can be determined that the resale market as a market worth tens of billions of dollars, its growth is explosive.

According to a report released by Cowen & Co. last November, the total value of the resale market in the US is currently about 20 billion dollars, and it is expected to reach 33 billion dollars by 2022.

Wells Fargo analyst Ike Boruchow said the resale market accounted for only 6% of the total apparel and footwear industry in the United States. According to his estimate, by 2022, this ratio will increase to about 10%, thus snatch the market share of traditional clothing companies. Boruchow said, "the willingness of consumers to turn to resale is at a very early stage."

The resurgent trend of booming development is the difficult development of apparel retailers.

From American Apparel to Wet Seal, from Charlotte Russe to Forever 21, the garment industry has gone through several major bankruptcies. Other businesses have suffered economic losses and have chosen to close stores in order to cut costs. The past holiday season was particularly difficult. Kohl's, Macy 's and Walmart all thought it was the winter of the clothing industry.

The pain seems to go on. The US Department of Commerce announced earlier this month that clothing store revenue fell 3.1% in January, the biggest drop since March 2009.

Gap dismissed the chief executive, Art Peck, in November last year. In January this year, a plan to split Old Navy into an independent listed company was cancelled due to a slowdown in sales. After the holiday sales season in 2019, Gap announced that its total sales and net sales in the 2019 fiscal year dropped by two digits and single figures respectively. Over the past 12 months, the company's share price has fallen by about 30%.

Department stores are particularly difficult. According to GlobalData Retail, these multiline retailers accounted for 22% of retail sales in 2008, but by 2028, this proportion is expected to fall to 9%.

The secondary market provides an opportunity for these enterprises to extend the life of the garment itself, and at the same time, it is expected to get additional purchases and solve the problem of overstock. According to Cowen & Co. data, about 15% to 20% of the clothing, footwear and accessories markets in the United States are regarded as overstock, such as unsold clothing and return. About 10% of the market is either destroyed or donated.

The good news is that according to an annual report by ThredUp and GlobalData Retail, 56 million women bought second-hand goods in 2018, an increase of 27% over the same period last year. According to the report, 51% of second hand buyers said they plan to spend more money on second-hand goods in the next 5 years.

In addition, consumers surveyed by 1/3 said that if their favorite retailers sell second-hand clothing at stores or online, they would like to spend more money on them.

Greg Petro, chief executive officer of First Insight, a consultancy, said, "the high margin sales of new products are also being eroded." But he said, "the combination of products and sustainability will definitely promote net sales."

James Reinhart, founder and chief executive officer of ThredUp, said, "people have forgotten the annual sales of Macy 's. I think we learned a lot from them, and they are learning from us."

Founded in 2009, ThredUp is the head platform of the secondary market, which has processed over 100 million garments in the past 10 years. Other similar second-hand dealers include Poshmark and The RealReal. ThredUp recently injected more than $175 million of funds to compete for more partners. Most of the spending has been spent on "providing routes and support for chain stores".

For ThredUp, the most urgent task is to figure out how to ensure that the supply meets the demand - there is enough stock coming from consumers and sold on its website through Gap stores or by mail.