Secondhand has gone upscale.
The names tell the story. The Vault Luxury Resale. The RealReal. Poshmark. Once the domain of nonprofits and local mom-and-pop stores, consignment and resale has become a big business, with new ventures adding a high-end twist to a timeworn model.
Resale, in which retailers purchase items directly from consumers and sell them outright, frequently replaces the traditional consignment model. No matter the method — consignment or resale — items are often not new. Still almost everyone in the business would be hard pressed even to utter the word “used,” instead opting for pre-owned, pre-loved, gently worn and secondhand.
“The attitude about resale has changed significantly over the last five years. The new consumer mindset sees the value in purchasing high-quality, well-made items that can last a lifetime, and our model creates access to these items,” says Rati Levesque, chief merchant for The RealReal, which sells luxury goods online (and in two recently opened brick and mortar stores) on consignment. ThredUp, one of the first online companies to focus on second-hand apparel for women and children, estimates 70 percent of their shoppers, which they often call “thrifters,” have never purchased secondhand before.
Used items from premium labels such as Gucci, Hermes, Louis Vuitton and Chanel have always been in demand, often only obtained through a very small group of discrete local shops. In 1991, Sue McCarthy opened a consignment shop in St. Louis, eventually realizing that purchasing items outright was better suited to her upscale clientele. Today, she heads a multimillion-dollar enterprise, trading the original 400-square-foot storefront for a 7,000-square-foot boutique. Her roster of clients extends worldwide with approximately 15,000 individuals who send items to her. Additionally, along with her daughter who is the company curator and verifies authenticity, she frequently travels to view and purchase items from some of the largest closets in New York, Paris, London and other cities, something she calls “shopping the closet.” Clients include some of the world’s wealthiest women and celebrities, and more than a few stylists have her on speed dial. Also, customers travel to St. Louis to shop in her store. For some, like one group of female lawyers, it’s become an annual event.
The RealReal began at Julie Wainwright’s kitchen table and is now a major player in online luxury consignment. Following other online merchants, they recently opened stores in Los Angeles and New York and plan to add more brick and mortar locations in 2019.
Photos courtesy of The RealReal.
When it comes to selling secondhand items online, eBay was a game changer and 1st Dibbs broke new ground for luxury sales online. In the industry, ThredUp, which started with a pilot for peer-to-peer online sharing of men’s shirts, established the resale niche online. Now the company claims to be the world’s largest online marketplace to buy and sell women’s and kids’ secondhand clothes.
James Reinhart, co-founder and CEO of ThredUp says, “There is a powerful transformation of the modern closet happening and I’m proud that resale is a key driver of this transformation.” ThredUp estimates current resale market for apparel at $20 billion and projects the market to grow to $41 billion by 2022. Investors have taken notice. ThredUp, The RealReal, Poshmark and others have captured venture capital. Waiting in the wings as further resale disruptors, according to ThredUp, are depop, Rebagg, Tradesy and Grailed. Additionally, startups such as The Luxury Closet are tapping into a nascent resale market in Dubai.
ThredUp estimates approximately 13 percent of their most active thrifters are millionaires. Several years ago, McCarthy tried an online store but decided a focus on social media would make the best use of their online staff. They have a massive following on Instagram and Facebook, running special sales and events weekly. “We cast a wide net over every product,” McCarthy says. “Once we put an item up it sells almost instantly.”
The industry claims resale benefits the environment and most major players support a charity. But McCarthy believes her process allows wealthy clients to amp up their support of nonprofits. “We’re able to monetize it better for charities,” McCarthy says. Instead of receiving a check or cash for their items, many of their wealthy clients opt to donate the money to charity. “If they give the $2,000 purse to charity, the charity is going to sell it for $200. If they give it to us, we’re going to pay them a thousand dollars. We make the check out to their favorite charity,” she explains. But many opt to take the resale funds and use them to purchase the latest and greatest, underscoring the secret to resale. “The lady who wants the latest Chanel or Gucci bag is going to be the same lady that wants the next latest one. And that gives her a good incentive to sell the previous bags,” McCarthy explains.
Sue McCarthy pioneered the luxury resale model with The Vault Luxury. Stylists and fashionistas have her on speed dial. And she is called on to shop the most indulgent closets in New York, London and Paris.
Photos courtesy of The Vault Luxury Resale.