According to a recent report from Bloomberg Intelligence, the rental and resale market in the fashion industry has the potential to experience a fivefold growth by 2025. This growth rate is expected to surpass that of new clothing sales. The report also suggests that circular business models, driven by consumer awareness of sustainability and inflationary pressures, could make up 23% of the global fashion market by 2030.
This trend has significant implications for brands. Those without resale capabilities may find that a considerable portion of their sales occur through consumer-to-consumer (C2C) secondhand sites, affecting both higher-end and lower-priced brands. Zara is a prime example of a brand recognizing this shift. After being one of the most listed brands on the Depop platform in 2021, Zara launched its own resale platform. The brand’s parent company, Inditex, understands the potential of the resale market and aims to control it under its own umbrella.
Bloomberg Intelligence’s report, titled “Global Apparel: The Rise of Rental, Resale, and Repair,” explores how clothing and footwear companies are developing business models to address sustainability concerns in the fashion industry. The report underscores the importance of addressing waste at every stage of the product life cycle, citing examples such as clothing dumped in Chile’s Atacama desert and the influx of garments in Accra, Ghana. Rental and resale offer higher-end retailers the opportunity to tap into new revenue streams and gain customers, while fast fashion may face challenges.
The projected fivefold growth in the rental and resale market is based on estimates from GlobalData and the proliferation of initiatives by brands. Rental and resale specialists like ThredUp, Poshmark, and The RealReal have seen success, and other players such as Reflaunt, Hurr, and Dotte are also making an impact. Grace Osborne, senior associate analyst at Bloomberg Intelligence, cautions that companies without their own resale capabilities risk losing sales to C2C platforms like Poshmark, Depop, Vinted, and TheRealReal.
Luxury brands, in particular, have a unique opportunity in the resale market due to their association with quality and longevity. Companies like Kering have recognized this and have invested in resale platforms to attract younger, environmentally-conscious consumers. Digital IDs play a crucial role in luxury resale as they ensure authenticity and help combat counterfeiting. For example, Chloé, owned by Richemont, has introduced product IDs that enable “instant resale” with green credentials.
The report also emphasizes the significance of regulatory pressure in driving the adoption of resale and rental models. The EU Strategy for Sustainable and Circular Textiles proposes that by 2030, textiles entering the EU must be durable, repairable, and recyclable. This further underscores the need for brands to incorporate resale and rental into their business models.
In conclusion, the rental and resale market, especially in the higher-end fashion sector, is poised for significant growth. Brands that embrace these models and establish their resale platforms have the potential to access new revenue streams and attract customers who may have otherwise been priced out. Regulatory pressures and consumer sustainability awareness further support the need for brands to adapt to this evolving market. The potential for a fivefold increase in the rental and resale market by 2025 presents a substantial opportunity for brands willing to embrace circular business models and cater to the changing demands of fashion-conscious consumers.
