Whether it is a handbag from the 1970s or a leather motorcycle jacket circa 1999, what’s old is new again, and online retailer thredUP sees the circular economy movement as a thriving opportunity. The consignment retailer and secondhand shop recently kicked off RAAS, or Resale-As-A-Service, a project to attract traditional department stores to get on board with more sustainable fashion.
“The closet of the future … is going to look very different than the closet of today,” said James Reinhart, CEO and co-founder of thredUP. “If you think back 10 years ago when we started, you had none of these direct-to-consumer brands. There was no such thing as rental. There were no subscription companies. In just these 10 years, we’ve had a radical shift in how people shop and buy apparel. And I think that shift is going to continue.”
The retailer collects around 100,000 pieces of secondhand items daily and says resale is growing 21 times as fast as the larger retail market; it could be a $51 billion market by 2023. Shoppers propelling the growing circular economy are Millennials and Gen Zers — the 18- to 37-year-old population — who are purchasing about 2.5 times more than any other age group.
Big box stores, like JCPenney and Macy’s, have seen their sales yo-yo in recent years and have signed on with thredUP. In doing so, the retailers have three options: store pop-up, online collaboration or a loyalty program.
Some experts believe department stores will lean toward pop-ups, because they tend to attract more shoppers. As reported by Forbes, pop-ups offered by thredUP will be between 500 and 1,000 square feet and “feature new items on a weekly basis, offering brands that aren’t already in a typical Macy’s or JCPenney. There will be 100 pop-ups by Labor Day.”
According to Reinhart, the loyalty program has been the top option, where shoppers can purchase items from thredUP’s retail partners and also receive a “clean out kit.” Buyers use this kit to send in pre-loved clothing items to thredUP — thredUP retains the markup on resold items, consumers get credits and bonuses with the retailer and the retailer sees improved customer retention. It’s a win-win-win.
thredUP has reportedly received more than $300 million in total funding for the project. It’s possible that thredUP’s RAAS initiative may help grow the circular economy and give struggling department stores a brighter future.
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