- Millennials are ditching fast-fashion retailers and flocking to thrift stores.
- The resale market in the US has outperformed the overall retail market in the past five years and is now worth $20 billion, according to research firm IBISWorld.
- Brands are responding by bringing back archive collections and embracing vintage styles.
Secondhand shopping is booming, and it shows that customers are growing tired of fast-fashion retail.
In the past five years, the $20 billion resale market in the US has outperformed the overall retail market, according to research firm IBISWorld.
The trend for secondhand shopping gained momentum in the post-recession period, when shoppers were looking to be more frugal with their spending, according to IBISWorld research.
But its popularity today isn’t only motivated by a desire to be more cost-conscious. Millennials are becoming increasingly aware of the negative environmental impact of cheap fast fashion, and they’re growing tired of the low-quality, throwaway styles being churned out by certain retailers.
H&M's slowing sales growth in 2017 is a good indicator of this.
The company is being hit from several sides. It's been undercut by online stores such as ASOS, Boohoo, and Missguided, which have reduced supply-chain times to as little as one week and are able to roll out new styles extremely quickly. It's also losing out to rival fast-fashion stores such as Zara, which offer better quality clothing at a higher price point.
In H&M Group's most recent quarterly results, reported in January, total group sales decreased by 4% overall in 2017 and sales were up by 3%, which was below expectations. CEO Karl-Johan Persson said that the "disappointing performance" stemmed from weak sales in its H&M stores, while online sales and newer brands, such as & Other Stories and Cos, performed well.
Cos, which markets itself as offering higher-priced and better-quality clothing, has exceeded expectations. According to Persson, Cos will reach a turnover of around $1.2 billion in 2017, and its profitability is in line with H&M, despite having 95% fewer stores.
"The value of Cos today already far exceeds the amount we invested in it and this is just the beginning of the journey," Persson wrote in the company's six-month report, released in May 2017.
"There is a market for a customer that wants design and quality for an affordable price," Cos' managing director, Marie Honda, said during the company's Capital Markets Day in February. "These are timeless products that last longer - beyond that season."
Teen retailer Forever 21 is also being impacted by a general trend away from fast fashion.
Since it's a private company, Forever 21 doesn't release its sales numbers. But in 2016, there were signs that trouble could be brewing when the New York Post reported that Forever 21 was struggling to pay the bills and lenders were withholding credit. It also closed two of its biggest stores in California.
Thrift-store shopping takes off
Meanwhile, thrift-store shopping is booming, and new concepts are cropping up.
Online thrift store thredUp, which sells a range of secondhand clothing from stores such as J.Crew and designers like Chloe, launched in 2009 and has since opened two brick-and-mortar stores.
The company told Business Insider that it now sells nearly 30,000 items every day, and a million were sold in 2017 alone. Though thredUp wouldn't disclose sales growth numbers, Forbes estimated in 2017 that its revenues were on track to eclipse $100 million.
A craving for vintage fashion has created a resurgence of '90s clothing in stores, with some brands such as Calvin Klein, Gap, and Ralph Lauren reviving their archive collections.
Noticing that consumers were willing to spend hundreds of dollars on a pair of old Levi's jeans in a vintage store, the denim company decided to create a new collection called Levi's Authorized Vintage, which consists of 50,000 Levi's jeans from the 1960s, '70s, and '80s. The jeans were priced at $300 a pair.
"We were sitting on an aged icon," James 'JC' Curleigh, president of Levi's, told The Wall Street Journal in 2017.
But millennials aren't only shopping for vintage styles in thrift stores - they're also donating to them.
Earlier this month, Business Insider reported that thrift-store chain Goodwill had seen an uptick in donationsfrom millennials who were looking to offload unwanted products.
Blogger Betsy Appleton, who is an ambassador for Goodwill in Tennessee, said she had noticed an influx of donations because of the movement towards trendy, cheap clothing that goes out of style quickly.
"People are more willing to donate as it's not expensive. People were more invested before," she told Business Insider.
Appleton frequently sees fast-fashion clothing appearing in Goodwill six to 12 months after it launches in stores, which she says makes her less inclined to shop at stores that sell overly trendy clothes. In some cases, fast-fashion retailers are donating directly to these stores to get rid of unwanted stock.
"When I go to a mall I feel defeated," she said. "So many of these products are going to end up in a landfill, in the trash, or at Goodwill."
Fast-fashion clothing has created a big issue with waste. According to the US Environmental Protection Agency, 26 billion pounds of textiles end up in a landfill each year. The fashion business is the second-most polluting industry after oil. According to The World Economic Forum, it takes 2,700 liters of water to produce a T-shirt.
"Millennials are becoming more conscious about sustainable living and preserving the environment," Erin Hendrickson, a minimalist expert who runs the blog Minimalist RD, told Business Insider.
Then there's the thrill of the bargain hunt. This shopping mentality has helped off-price stores such as TJ Maxx to explode in popularity in recent years as customers flock there for one-off pieces.
Appleton describes shopping at Goodwill as being a similar adventure.
"I go in with a different mindset; I'm not going if for something specific," she told Business Insider. "The adventure and the hunt is an adrenaline rush."