FASHION – Department Stores Make Room For Used Fashion

FASHION – Department Stores Make Room For Used Fashion

NEW YOR,US – Out with the new ad in with the old.

As department stores watch their customers flock to second-hand stores, some are trying to bring them back by partnering with online resale sites.

Last week, J.C. Penny and Macy’s announced a pilot program to set aside sections inside a few dozen of their stores for used merchandise sold by ThredUP. James Reinhart, co-founder and CEO of ThredUP, say his company has a similar deal with retailer Stage Stores, which opened 12 resale shops last year for a total of 45.

Neiman Marcus was the first big department store chain to get into the resale business. in April, it boughttt a minority stake in Fashionphile, an online seller of pre-owned designer accessories. And this fall, it will launch shops inside some of its own stores where customers can sell – but not buy – pre-worn designer items to Fashionphile. Presumably these customers will take the money from their sales and spend it an Neiman Marcus –  or at least that’s what the department store is happening for.

The moves make the most dramatic evidence of how resale is becoming so mainstream that traditional sellers can no longer ignore it. They come as a new generation of shoppers aren’t interested in paying full price and also would rather see their clothes worn again by someone else than end up in a landfill.

“You have to go where the customer is going”, Reinhart said of the partnership with Macy’s and Penney. “Trying to live in the past is a recipe for disasters”

Analysts applaud the strategy as a way to drive customers into stores, but they also see it a desperate attempt that could undermine business.

“It’s good that that they are looking at modern ways of shopping”, said Neil Saunders, managing director of GlobaldATA Retail. “But this is not the solution to their deep-seated problems. There’s a dearth of innovation. They’re always playing catch up. This won’t be unhelpful, but it won’t be transformative”/

Saunders says resale shops could cannibalize other parts of Penney’s and Macy’s business. at the same time, he and others believe it could further strain the relationship between traditional retailers and their suppliers, who have been financing more of the retailers’ marketing expenses as sales father while also increasingly bearing the costs of price markdown.

But John Reily, vice president and global commerce strategy lead at Publicis Sapient, believes brands may not mind the new competition from resellers since they need department stores to bring in as much customer traffic as possible.

Although the resale  business still accounts for a fraction of the overall retail pie, it’s growing exponentially and is also influencing shoppers’ habits.

Sales of second-hand merchandise are predicted to expand to $51 billion by 2023 from $24 billion last year, according to GlobalData PLC, which created a report for TrendUp. And according to a survey by Boston Consulting Group, one-third of shoppers queried said they sold items to clean out their wardrobe and finance new purchases.

Shoppers for years have been buying and selling used cloths at thrift shops and one eBay, especially so during the Great Recession. But many of the physical shops were dingy, and it took weeks or even months for consigners to get payment for their goods.

Then a new generation of online second-hand shops like ThredUP as well as names like Poshmark and luxury site The RealReal.com cropped up and flourshed because they made the shopping experience easier with new technology and services.

The RealReal, which was founded in 2011 and made a successful debut on the Nasdaq Stock Market in late June, offers a “white glove” service where consignors male an appointment with one of its luxury managers and receives a complimentary consultation at home. Poshmark, also founded in 2011, expanded early in June into home décor with items including bedding and bath. And luxury handbag maker Mark Cross recently announced it would launch a resale site.

But while these businesses have made their mark online, they also see the need to have a physical presence. The RealReal operates three stores – two in New York and one in Los Angeles – while ThredUp operates three stores in the San Francisco area.