Resale dominates National Retail Federation’s ‘Big Show’ - The Entrepreneurial Way with A.I.

Breaking

Thursday, January 19, 2023

Resale dominates National Retail Federation’s ‘Big Show’

#SmallBusiness

NEW YORK — Coming off a holiday undermined by inflation, with uncertainty around the economy ongoing and consumer behavior still shifting, there were few signs of strength from the retail industry evident during the National Retail Federation’s annual conference this week. December retail sales, at the peak of the holiday season, were reported by the government the day after the Big Show ended, and missed the industry group’s expectations. But one bright spot emerged: resale is presenting an opportunity that is increasingly hard to ignore.

Buying used goods has long been favored by consumers looking for value, and that has become especially important with household budgets squeezed by inflation, several conference speakers said. And many, particularly younger consumers, appreciate what is widely seen as a more sustainable form of consumption, others noted.

“Obviously it's a hot topic. You don't need to look any further than that NRF agenda that you're all holding ... to see there's a number of sessions on this throughout the week,” said Brian Ehrig, a partner at consultancy Kearney who moderated a Tuesday panel on executing resale. “I think it's for two reasons. One, resale is good for the planet. And also hopefully, it's going to be good for business as well.”

There isn’t a consensus around how good, according to Ehrig. “But everybody agrees that it's going to be large,” he said, noting that Morningstar estimates that the market could hit $300 billion by 2031. “And it's growing at three times the rate of the primary market. And if you're in retail today, probably everybody would be very happy to get something that's growing very fast, growing double digits.”


"If you’re in retail today, probably everybody would be very happy to get something that’s growing very fast, growing double digits.”

Brian Ehrig

Partner, Kearney


Globally, the secondhand market is expected to have grown by 24% in 2022, according to a ThredUp survey of 3,500 U.S. adult consumers and 50 fashion retailers conducted by GlobalData last year. That report estimates that the U.S. secondhand market will more than double by 2026, reaching $82 billion. The luxury secondhand market is growing 11 times faster than traditional retail, according to Emily Erkel, who led a Monday panel on higher-end resale. Erkel is co-founder of luxury resale platform LePrix, which works with retailers to source and sell high-end pre-owned goods. 

“We're going to talk about the opportunity here,” said Lee Peterson, executive vice president of thought leadership and marketing at WD Partners, during a Tuesday presentation on resale in brick and mortar. “So right now — and I've heard this a few times this week, there's been other resale presentations — that we’re at around $30-some billion [dollars] a year now in used merchandise across the United States.”

J. Crew on Tuesday announced a two-pronged approach to selling pre-owned apparel. The preppy brand, like its sibling Madewell and a host of others, is working with ThredUp to sell used items online. Liz Hershfield, who leads sustainability at J. Crew Group as well as sourcing at Madewell, said during Ehrig’s panel that J. Crew has also curated an assortment of vintage items to sell in select stores.

Adding secondhand items to a retailer’s offer doesn’t just open a new revenue opportunity, according to speakers at NRF. Several said it also helps drive traffic to stores and e-commerce sites, as well as sales of new items, and that’s true across categories and price points. Molly Taylor, chief merchant for luxury off-price retailer Saks Off 5th, said that is one reason that brands have increasingly embraced such sales.

“Customers are really looking for that access to luxury brands,” she said during the panel led by Erkel. “I think resale is kind of a gateway to luxury.”


“I think resale is kind of a gateway to to luxury.”

Molly Taylor

Chief Merchant, Saks Off 5th


Ikea has also found that people coming in to buy or sell used items purchase new ones, according to Seana Strawn, who leads retail design and home furnishing identity at Ikea U.S., speaking alongside Peterson on Tuesday.

“We actually have seen people lined up outside our resale area to be able to be that first person to be able to shop the product,” she said. “And also the fact is, is that they don't just buy resale, they stay in the store and they buy our non-resale product as well. So it's absolutely a traffic driver, and it's absolutely an increase to basket.”

That doesn’t mean that adding resale is simple. Sourcing is more complicated than in traditional retail, Peterson noted. And there are different selling approaches, including buying inventory, peer-to-peer sales and consignment. M.M.LaFleur chose to work with a third party to facilitate its pre-owned sales, using a peer-to-peer model where customers buy and sell to each other, founder and CEO Sarah LaFleur told an NRF audience on Tuesday. 

With no MSRP rules for guidance and demand fluctuations that sometimes mean items could fetch prices higher than their original tags, pricing is also tricky. Authenticity and transparency around condition, especially in luxury, are key. Still, any retailer that fails to contemplate resale is leaving money on the table, given the enthusiasm for secondhand goods, according to those speaking at NRF.

Some 80% of Saks Off 5th customers want the retailer to offer used items, Taylor said. Just over 71% of consumers already buy, sell or trade items at least monthly, with 38% doing so at least weekly, according to Peterson. 

“Price is a factor, yeah,” he said. “But the treasure hunt is also a factor.”


“Price is a factor, yeah. But the treasure hunt is also a factor.”

Lee Peterson

Executive Vice President of Thought Leadership and Marketing, WD Partners


Despite the complexities, many retailers have a decided advantage over dominant players like Goodwill and Salvation Army, whose stores tend to be poorly merchandised, with crowded, messy racks of goods and inadequate signage, according to Peterson. And at least for now, logistics mean that brick-and-mortar locations are the only profitable way to sell used goods.

“[If you’re not doing resale], you’re definitely behind the customer from what we can tell. We just did this research a few months ago,” Peterson said. “We all really need to start to think about how we're going to get this done. Fail fast, and get it going.”





via https://www.aiupnow.com

Daphne Howland, Khareem Sudlow