The Canadian resale apparel market has become one of the fastest-growing segments of the retail industry with growth expected to continue in the future.
Randy Harris, president and owner of Trendex North America, a marketing research and consulting firm, said the key thing to understand is that the resale apparel market is also a very fast-growing segment of the overall Canadian apparel market.
“However, historically it never showed up on people’s radar because most of the sales were either done at ma and pa type consignment stores or in places like the Salvation Army or Value Village,” said Harris. “So it was often the case of out of sight, out of mind.
“The consumer knew it was there. They were going there but retailers, big chains for example, really had no idea of how important the segment has become. The interesting thing is that the growth of the resale apparel market is accelerating rather rapidly at this point and could be arguably the fastest growing segment of the Canadian apparel market.”
A recent Trendex report said the Canadian growth is being driven by four underlying forces:
1. Environmental concerns: The fast-fashion cycle has led to increasing concerns about the amount of clothes filling up landfills. The consumer has become concerned about the ecological sustainability of a model in which garments are worn often for less than a half dozen times then discarded;
2. Search for value: Increasingly, both traditional luxury apparel purchasers, along with aspirational luxury apparel purchasers have turned to websites, including the Real Real, to acquire luxury resale items. Many of these luxury apparel/accessories items are impossible to distinguish between new and a resale items (e.g. Louis Vuitton purse). Often resale items are priced at half their original price, and their quality is guaranteed by the seller;
3. Generation Z purchasing: Millennials and baby boomers are the largest purchasing segments of the resale apparel market, however, Generation Z is the fastest growing segment. Research published by Thread UP found that members of Generation Z are purchasing second-hand fashions 2.5 times faster than any other age segment; and
4. Technology changes: The advent of the internet has facilitated buyers and sellers interacting in unprecedented ways. E-commerce based fashion resellers, including Montreal’s LXRandCo and Calgary’s Upside have emerged that facilitate the re-sale of apparel on both national and international levels.
“The interesting thing is that consumers are taking a stand against materialism if you will and they’re shopping with more values and social consciousness,” said Harris. “The younger consumer is very comfortable in going into these kinds of stores. They’re very knowledgeable. They know what the brands are, and they know what they’re looking for.
“The other thing driving the growth of the market besides a social consciousness is that a number of large players have entered the market and what those large players are doing is leveraging technology to bring to the buyer and seller together. That is a huge change in the marketplace.”
Historically, the small ma and pa shop consignment store couldn’t really do that nor were places like Value Village set up to do that. Now buyers and sellers can come together to buy used resale apparel and not have to be in the same city. They can do it anywhere in the country.
“Matching buyer and seller has gotten a lot easier. In the long-term if you extrapolate this it means that increasingly these chains that can leverage technology are going to affect the individual consignment stores and so what we’re going to see is a movement in the market to larger and larger players who can afford to advertise, who can do all kinds of digital promotions,” said Harris.
“It’s inevitable that the structure of the market will change over the next five years.”
But Harris said that doesn’t mean that the consignment shops are going to go out of business because the overall pie is getting bigger. Indeed, their market share will go down but because the pie is growing so fast their sales might stay about the same.
The Canadian apparel resale market includes both resale stores and thrift/donation retailers.
The Trendex report said that in Canada, information published by Kijiji revealed that during 2017, 85 per cent of Canadians participated in the second-hand economy valued at $28.5 billion. During 2017, 2.3 billion resale items exchanged hands up 24 per cent from 2016. Clothing/shoes/accessories was the top resale category, as it accounted for almost one-third of all products sold. Baby clothing and accessories (7.7 per cent) was the third most important category. Interestingly, while clothing/shoes/fashion accessories was the top resale category for both disposal and acquisition, at least twice as many apparel items were disposed of than acquired, said the report.
Trendex said that for 2018 the largest Canadian channels for resale apparel were: 1) Resale brick and mortar chains; 2) Local thrift/second-hand shops; and 3) Consignment shops.
“Over the next five years, the fastest growing apparel resale channel should be the one that is internet based. However, resale brick and mortar chains will, for some time, continue to be the dominant channel for resale apparel,” said the Trendex report.
“Assuming the Canadian resale market is between 1/11 and 1/13 the size of the U.S. market, the Canadian resale apparel market would have been between C$2.4 and C$2.8 billion in 2018,” added the report.
Harris said major retailers will be targeting the resale apparel market in the future by either setting up resale areas within their stores or resale divisions.
“At some point, the major retailers as we know it are going to say ‘I need to get into this business. I can’t ignore it. It’s growing too fast’ and that will be interesting to see how they do that.”