The secondhand luxury goods market grew 28% in 2022 to reach $45.21 billion, according to Bain & Company and Fondazione Altagamma. This is 1.3X higher than the growth rate for new luxury goods. For a related growth stat, eBay shared they saw a 24 percent increase in circular fashion businesses joining their site last year, and searches for pre-loved clothing on eBay UK have skyrocketed 1600 percent since last summer. This is likely why eBay recently participated in the $9 million capital raise round for Cudoni, a luxury resale platform based in London.

Kirsty Keoghan, eBay UK’s global fashion GM, shared her views on the two drivers of the growth in the City A.M. “The first is related to consumers’ growing awareness of their environmental footprint, and the second is related to their expectation of high-quality products at a great value, which is more important than ever as we grapple with the cost-of-living crisis.”

This week Canada Goose launched its branded resale program, Generations, powered by Trove’s Recommerce Operating System. More than a decade ago, when I discussed branded resale with retailers, brand execs, and VCs, Canada Goose was a go-to example of a brand that would massively benefit from its heritage and category –so kudos to the team. The resale program has all the elements we’ve expected these days, with a few notable callouts, such as combining a vintage section with periodic drops and an ‘always on’ ability to shop ‘certified’ Canada Goose.

Just Style reported on recent findings by EURIC, the confederation representing European recycling industries at the EU level. The study found a “massive” 3kg of CO2 saved for each reused piece of clothing, equating to a 70X lower footprint for secondhand fashion.

The industry needs to recognize the importance of secondhand as the new business model challenges the existing make-and-sell models. But awareness and change are too important to stay in the background, especially with social influencers. The South China Morning Post reported influencer Masego Morgan was shocked when a fast fashion giant offered her $1,000 for a single social media post to promote its brand. Sustainable fashion influencer Dr Brett Staniland provided close to $5,500 for a post. Both are fighting back against these fast fashion models. I don’t believe this is the core reason for Shein’s recent headwinds, as reported in BoF. Still, it's a headwind nonetheless, and that all adds up for both customers and investors–especially for investors with reputational risks to consider.

So what does all this mean for brands? In an article titled, Inside fashion brands’ new integration of resale and retail, Glossy shared the many reasons brands are launching their resale channels, including customer acquisition, loyalty, and sustainability. The article highlighted a range of commercial success for brands in resale: with brands such as M.M.LaFleur and Peak Design sharing new customer acquisition and loyalty business benefits. In contrast, others appeared to be loss leaders for sustainability reasons. Karin Dillie, VP of partnerships at Recurate, shared, “We predict that it’s not just going to be the Patagonias of the world that are investing heavily in this in the future.”

I love that, so long as these investments are against viable resale programs for the business. As the article points out, there is a wide range today. I'm concerned about brands rationalizing or hiding poor business programs behind sustainability. This is bad for the brand and rarely does much for sustainability. For quality brands, this is about understanding your customer and sound program design.

The South China Morning Post ran a story on rental, ‘Renting clothes? No thanks, it’s too expensive and not as green as buying second-hand. Aside from the overly aggressive headline, there are some cases where rental makes sense. We must start with the customer, potential economics, and environmental math, not simply launching rental or resale as a cookie-cutter program.

Ultimately customers will continue to move toward value, and getting more use out of what we make is a prominent area of growth–both for enjoying better brands for less and less wasteful production models urgently needed for sustainability. But just like fashion, one size doesn’t fit all. Over the long run, the brands that align themselves with innovative resale programs will win.

Why It Matters:

1. Secondhand continues as the fastest-growing channel in retail, so those not offering these options to customers are simply losing market share.
2. The design of resale programs matters to create the correct business value. Without business value, these programs will struggle to scale and reach their potential environmental benefit.