Why fashion brands are using pre-loved clothing as a competitive advantage
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Consumers love pre-loved clothing.
Buying second hand fashion has become a common behaviour with 52% of consumers reportedly shopping second hand apparel in 2023. According to ThredUp’s annual Resale Report (in partnership with GlobalData), 10% of the global apparel market is expected to be made up of second hand fashion by 2025. The global second hand apparel market also grew 18% in 2023.
Historically, pre-loved clothing was the wares of charity shops, vintage stores and jumble sales. Finding a specific item was like looking for a needle in a haystack with trawling the racks in-store the only option.
The rise of e-commerce marketplaces like eBay widened the market for pre-loved clothing, including making it easier to search for certain items or categories of clothing. More recently, second-hand clothing platforms have exploded with the likes of Vinted, Depop, Poshmark, and Vestiaire Collective.
In fact, eBay’s 2024 Recommerce Report found that 86% of shoppers surveyed have bought or sold a pre-loved item in the last 12 months. Now it seems that more and more retailers are adding pre-loved clothes to their own physical stores, moving second hand fashion from dedicated spaces to being part of the normal retail mix.
What’s interesting is that many of the more prominent brands that are currently exploring pre-loved clothing in their stores are fast fashion businesses. Given that their business models are based on producing lots of new styles quickly and responding to trends, making space for older, second hand items is a significant shift.
Caption: Photo by Clem Onojeghuo on Unsplash
Big Name Pre-Loved Concepts
H&M recently launched its H&M Pre-Loved concept in France and Belgium. This follows a pilot in Barcelona last year and similar rollouts in the UK and US. Limited to a single store in each city currently – as well as online through Sellpy – H&M Pre-Loved features a curated range of pre-owned clothing. The items on offer change weekly and span the range of H&M Group brands alongside other external brands.
Last month, fast fashion giant Primark launched its first in-store swap shops. In partnership with Verte, the circular clothes swapping company, the first of the ‘Swap Shops’ was timed around London Fashion Week. This was followed by similar pop-ups in Manchester and Birmingham.
During the events, customers could bring up to five unwanted clothing items and accessories to the participating Primark stores and swap them for digital tokens in Verte’s app. These tokens could then be exchanged for other items. Any leftover clothes were kept for another swap event, donated to a local charity or added to the clothing drop-off points Primark has in its stores. Notably, customers didn’t have to bring in pre-loved Primark items, with all types of brands accepted.
The Verte Swap Shops weren’t Primark’s first pre-loved initiative. Since 2022, the retailer has operated Wornwell vintage clothing shop-in-shops in select locations. But the circular aspect is new for the brand. And it seems to be a calculated move.
Pre-Loved as a Competitive Advantage
In ThredUp and GlobalData’s report, 90% of retail executives said that their customers are already participating in resale. 87% of brands that offer resale said that the number one benefit was that it advanced their sustainability goals.
It seems then that the interest of fast fashion brands in pre-loved clothing is being driven by consumer and regulatory demand rather than huge revenue returns. That said, 67% of brands that offer resale said that it will generate a meaningful revenue stream within five years.
As more attention continues to be paid to the environmental impact of different businesses – particularly fast fashion companies – many brands are adopting a strategy of being seen to be doing more than their competitors. This means that even if their business practices come under scrutiny, they can point down the line at the company that is doing less.
For example, businesses like fast fashion e-tailer Shein – which was the highest valued fashion retailer in the world in 2022 – have gobbled up a lot of market share in recent years. But with Shein’s business practices and sustainability record under close scrutiny as it tries to take its company public, its nearest competitors are looking to try and distinguish themselves through sustainability initiatives.
By adding pre-loved clothing to their stores (among other things), these brands are hoping to convince customers and relevant authorities that they’re ‘better’ than others in their industry.
It’s likely one reason why H&M started branching out into sustainability before Primark because it needed a competitive advantage and USP. Primark is now following suit as it tries to compete against Shein. Interestingly, we’re starting to see the same thing playing out between Shein and its younger competitor Temu, another China-founded e-commerce platform.
In August this year, Shein filed a lawsuit against Temu, accusing it of selling counterfeited items, stolen designs and sub-standard products. In turn, last year Shein was accused of stealing designs from independent fashion designers. H&M has also previously filed a lawsuit against Shein for copyright infringement.
While it’s unknown yet how the legal wranglings will play out, it is clear that Shein is feeling the pressure to differentiate itself. And once again it seems that pre-loved clothing is part of the strategy.
Caption - Image credit: Shein
Quality Matters in Pre-Loved Fashion
Unlike H&M and Primark, Shein doesn’t have a huge chain of physical retail stores to leverage for circular fashion models, but this hasn’t stopped the brand from exploring resale.
In June, Shein announced that it was launching its Shein Exchange peer-to-peer resale platform in France, with the UK and Germany to follow. Built into the Shein app, Shein Exchange can use the customer’s past purchase information to pre-populate listings. However, the performance of Shein Exchange in the US – where it was introduced in 2022 – suggests the company’s resale strategy may have an issue.
Shein has stated that 4.2 million new users signed up to join Shein Exchange in the US in 2023. That sounds like a big number, especially in resale. But Shein also reported that over 115,000 pre-owned items were listed for sale by over 95,000 unique sellers. Those numbers are a lot smaller, especially as a percentage of all registered users.
Shein hasn’t reported how many customers have purchased something through Shein Exchange, but given the number of pre-loved items available, it’s fairly safe to assume that those millions of users aren’t all making purchases.
Yet, in a 2023 survey of Shein’s own customers, 68% said they had donated old clothes and 61% said they had taken part in second hand shopping online in the past year. This suggests that they may be buying pre-loved fashion but not from Shein.
This could be down to the reasons behind Shein’s business success – cheap, trend-led products. Items that are tied to trends can quickly become undesirable. Likewise, when products are cheap to start with, it can be harder to convince consumers not to just buy new rather than save a very small amount buying second hand.
Tellingly, in ThredUp’s report 60% of Gen Z and Millennial consumers said that resale value is an important factor in purchasing apparel.
Quality is also an issue for fast fashion resale. Items are not necessarily designed to be durable enough to be reworn multiple times and stay in a good enough condition to be resold.
This may be why H&M is selling pre-loved clothes from other brands alongside its own and why Primark didn’t insist that customers brought only Primark branded clothing to its swap shops. A resale model is all about the long-term value of an item, not just the initial mark-up.
It might also be why Primark recently announced that it was partnering with the Circular Textiles Foundation (CTF) to offer an advanced circular design training programme to its design and product teams, as well as select suppliers. It follows an initial Circular Design Training programme, developed with Circle Economy and the Sustainable Fashion Academy, that over 500 Primark team members completed last year.
By putting circular design front and centre in their product development strategy, fast fashi