B6| Saturday/Sunday, August 17 - 18, 2019 ** THE WALL STREET JOURNAL. THE WALL STREET JOURNAL. ** Saturday/Sunday, August 17 - 18, 2019 |B
BYJACOBGALLAGHER
My Circular Closet
$1,000 of Designer Duds
In and Out Every Month
BYSUZANNEKAPNER
Old-Line Retailers Make
Room for Used Clothes
Venerable names like Macy’s and J.C. Penney are embracing the
thrifting trend to jump-start sales and lure younger shoppers
ect engineer, who lives in St. Louis.
She started buying used clothes af-
ter she graduated from college. “It
was a good way to get better qual-
ity at a quarter of the cost.”
Shoppers at the high end have
become more bargain conscious,
too, particularly as prices for lux-
ury goods have soared over the
past 15 years, placing many items
out of reach, even for the affluent.
McKinsey estimates that prices of
fine watches and jewelry have
nearly doubled since 2005, while
the price of Louis Vuitton’s Speedy
30 handbag has increased 19% a
year since 2016.
“I can afford to buy new clothes,
but I like buying them used, be-
cause it lets me try different styles
without spending a lot of money,”
said Kuromi Hendrix, 28. Ms. Hen-
drix, who lives in Boston and works
as an IT specialist, recently scored
a Tadashi skirt for $12.99 on
thredUP. The resale site estimates
the original price was around $107.
As more shoppers buy used
products, they are spending less at
traditional chains, from fast-fash-
ion retailers to department stores.
Some established players are
fighting back by launching or ex-
panding their own resale pro-
grams, including Macy’s Inc. and
Levi Strauss & Co.
GlobalData predicts that sales of
secondhand merchandise will ex-
ceed those of fast fashion within a
decade. And at the high end, used
goods will account for 9% of the
global luxury market by 2021, up
from 7% last year, according to
Boston Consulting Group.
The technology that created the
boom in online shopping has
turned the local thrift store into a
mainstream phenomenon by pro-
viding consumers with more confi-
dence that their purchases are au-
thentic and making it easier for
them to browse at times that bet-
ter fit their schedules.
“You can shop for secondhand
goods in a way that you never
could before,” said James Rein-
hart, thredUP’s founder and chief
executive.
When Hannah Stephenson, a 36-
year-old writer, needed to update
her wardrobe for a new job, she
didn’t have time to sift through
piles of clothes at her local Good-
will. Instead, she browsed thredUP’s
website in the evening while she
lounged on her couch.
“I’d rather buy secondhand
than go to a mall, because you
can find more unique items,” said
Ms. Stephenson, who lives in Co-
lumbus, Ohio.
Buying is only part of the equa-
tion. A growing number of shop-
pers also sell their clothes and ac-
cessories on secondhand websites
and in thrift shops, creating a vir-
tuous circle that clears out their
closets so they can buy more.
According to a survey of 12,
luxury consumers by Boston Con-
sulting Group, one-third of respon-
dents said they sold items to
empty their wardrobe and finance
new purchases. At The RealReal,
53% of consignors were also buy-
ers as of March, according to secu-
rities filings.
“This is a trend that is not going
away,” said Sarah Willersdorf, a
Boston Consulting Group partner.EXCHANGE
tively painless by offering leases
on preowned vehicles. The dealers
do all the vetting, taking out the
uncertainty much the way The Re-
alReal and other secondhand mar-
ketplaces authenticate products
they sell.
As these sites soar in popularity,
it remains to be seen whether they
can make money from reselling
fashionable clothes and other items.
The cost of cleaning and vetting
goods is considerable, as is sourc-
ing, industry executives said. Rather
than products flowing from over-
seas factories in large batches, they
are coming from people’s closets,
often one at a time.
And the secondary market isn’t
immune to the pressures facing
stores that sell new goods. Dis-
counting by department stores de-
pressed prices of secondhand
goods sold by The RealReal in its
most recent quarter, according to
Julie Wainwright, The RealReal’s
chief executive.
The sale of secondhand goods—or
recommerce—accounts for a tiny
fraction of the $3.8 trillion in U.S.
retail sales, but it is growing fast.
Sales of secondhand goods are ex-
pected to more than double to $
billion by 2023, up from $24 billion
last year, according to GlobalData
PLC, which prepared the research
for thredUP.
Fifty-six million women bought
secondhand products in 2018, up
from 44 million who did so in 2017,
according to the report. Shoppers
ages 18 to 37 are driving the shift. A
third of Generation-Z and more than
a quarter of millennials will make
secondhand purchases this year, the
report predicts.
It isn’t just women who are get-
ting into the act. Most of the resale
sites also buy and sell used men’s
clothing in addition to the plethora
of men’s suit- and tuxedo-rental
services that have popped up.
Rent The Runway and other
rental business are benefiting from
similar changes in consumer behav-
ior, including a desire for newness
on the part of young selfie-posing
shoppers who don’t want to be seen
in the same outfit twice. Consumers
on average buy 60% more clothing
today than they did 15 years ago,
but keep the items only half as long,
according to McKinsey & Co.
That has resulted in more waste.
Nearly 60% of the more than 100
billion garments produced annually
end up in incinerators or landfills
within years of being made, McKin-
sey estimates. The production of 1
kilogram of fabric generates an av-
erage of 23 kilograms of green-
house gases, the consulting firm
says, making the fashion industry a
big polluter.
“I used to buy the $15 fast-fash-
ion shirt that fell apart after I
washed it a few times, until I real-
ized how wasteful that was,” said
Jessica Fletcher, a 25-year-old proj-Continued from page BSecondhand
Shopping Is
Big Business
M
y closet might as
well have a revolv-
ing door.
Last month, out
wentapairofAcne
Studios trousers,
sold for $150 online and shipped
to a new home in New Jersey, and
in went a pair of Gucci loafers,
purchased for $350 from a man
in Germany. And that was just in
one week.
Both transactions took place on
Grailed, a five-year-old internet
marketplace for buying and selling
men’s clothing. I’ve been using
Grailed since its early days, and it
has radically changed how I think
of my wardrobe. At any given
time, I have between one and five
clothing items listed for sale on
the website—right now, it’s a but-
ton-up shirt from the Japanese la-
bel Kapital and a sweater from
London outfitter Sunspel. When an
item sells, I use the profit to buy
something new. Few items in my
closet are safe from this circular
cycle: Today, I cherish a Prada
sweater, but come winter, that
sweater can become $400 to buy a
new-to-me Dries Van Noten jacket.
For young and youngish adult
men like myself (I’m 27), the circu-
lar-closet phenomenon was cata-
lyzed by New York-based Grailed,
which was founded by Arun Gupta,a tech entrepreneur with a taste
for high fashion.
Whereas eBay and other internet
marketplaces offer everything from
cars to coffee makers to signed Cal
Ripken Jr. baseball cards, Grailed is
a platform for men’s clothing and
accessories. It’s now the go-to com-
munity for men to resell clothing.
Poshmark and Depop, two eight-
year-old online platforms, have
found similar success with primar-
ily Gen-Zers across gender lines.
(Grailed launched a female counter-
part, Heroine, in September 2017,
although it’s less popular. A Grailed
representative wouldn’t share data
but said Heroine is “in a brand-
and community-building phase at
the moment.”)
I began shopping on Grailed for
the same reason my mother
shopped at Filene’s Basement: the
deals. Although I am part of a
growing pool of young adult men
that spend an astonishing amount
of time thinking about clothing
(the other night I lost a good two
hours comparing different versions
of nearly identical black Jil Sander
sweaters online) most of the de-
signer goods I covet remain out of
reach at full retail. When I met Mr.
Gupta in 2015, a year after Grailed
launched, he told me the site of-
fers “fire for all.” To translate
that: Grailed offers high-end, high-fashion clothes (“fire”) that every-
one (or at least everyone willing to
think of clothing as an investment)
can afford.
Last year, I bought Lanvin trou-
sers for $155 only to sell them for
$85 a few months later. Not a sig-
nificant return, but enough to
ever-so-slightly blunt the sting of
a triple-digit purchase. In any
given month, I spend roughly be-
tween $750 and $1,000 on clothes
and shoes and take in around $
to $1,200 on sales of preworn
pieces from my closet.
Many other men around my age
keep their closet on rotation. Josh
Greenblatt, 27, a writer in Toronto,
began using Grailed in August 2015
as a way to unload old clothes and
buy new ones. In time, it changed
how he viewed shopping.
“I almost look at clothes like an
investment,” he said. Now, if he is
choosing between buying some-
thing from Swedish brand Our
Legacy or French label Lemaire,
he’ll pick the Our Legacy item be-
cause the brand sells better on
Grailed. “It kind of informs what I
buy,” Mr. Greenblatt said.
Mr. Greenblatt is hoping he’ll
have an especially great return
with an Acne Studios jacket he
bought recently: He purchased it
at 60% off and as long as he keeps
it in good condition he thinks heshirt from the California label Amiri.
The $290 price was significantly
less than he paid for it.
For Mr. Malley, it was worth it to
unload the discounted Amiri shirt
because “closet real estate is sa-
cred.” This is especially true for
apartment-bound city-dwellers: I
chose to list that white Kapital shirt
after discovering I already had three
nearly identical tops crammed in my
compact Brooklyn closet.
Grailed is “an easy way to put
clothes back into circulation,” said
Samsun Lawson, 27, a print designer
in London and a Grailed user for
several years. This is an era of dis-
posable fashion. The Environmental
Protection Agency estimates that
clothing waste has risen to 16 mil-
lion tons in 2015 from 1.7 million
tons in 1960, a problem that in-
creases with each passing year. Buy-
ing clothes that are two, five or
even 10 years old is an eco-friendly
approach to shopping, one that ap-
peals to Mr. Lawson and his sustain-
ability-minded peers.
Yet Grailed isn’t without head-
aches. Although the platform offers
some protection for buyers and sell-
ers, such as a refund process and
round-the-clock moderation, users
are notorious for not following
through on their offers and the
back-and-forth can be draining. On
average when selling, I have to ride
out at a handful of “flakers” before
locating a user who will actually fol-
low through on their offer. This can
be an exhausting process and with
all the back-and-forth messaging,
selling can feel like texting with a
petulant teenager.
Once you sell, shipping is your re-
sponsibility. If you sell three to five
items in a week, Grailed becomes a
part-time job. Though if you invest
in the right things, that side hustle
can pay surprisingly well.Sales of authorized vintage garments at Levi Strauss have tripled since the line was introduced in 2017.
Above, a customer shops at a Levi’s store in Manhattan.Inside The RealReal’s Brisbane, Calif., warehouse technicians inspect a
Cartier watch ( 1 ) and assess the value of high-end jewelry behind closed
doors ( 6 ) while other employees sort ( 5 ), inspect ( 3 ) and rack ( 2 )new
merchandise received from customers. Before items like a Hermès Birkin
handbag ( 4 ) can be posted for sale online, captions need to be written
and photographs need to be taken ( 7 ). The RealReal expects to sell
nearly $1 billion of goods this year.1 234567can probably sell it for as much as
he paid for it when he tires of it.
The brands that sell well on
Grailed are likely what you’d find
at a high-end department store
like Barneys New York, not a sub-
urban mall. Generic Gap T-shirts,
inescapable North Face puffers,
basic Bonobos chinos or affordable
essentials in that vein have little
to no resale factor.
Millennials and members of Gen-
eration-Z are particularly open to
using Grailed for closet cycling. Of
its 3.7 million users, 35% are be-
tween 18 and 24 years old and 44%
are from 25 to 34. These are young
men with a ro-
bust interest in
fashion like
Tim Leffew, 22,
a college stu-
dent in Colum-
bus, Ohio.
Through
Grailed, Mr.
Leffew has
bought vintage
Yves Saint Lau-
rent tracksuits
and tailored
trousers from
moody Belgian
brand Ann De-
meulemeester.
He was able to
purchase these upscale items be-
cause he sold the more juvenile Su-
preme streetwear he wore in high
school. “Every single time I’ve ever
sold anything on Grailed, I’ve used
it immediately to honestly [pur-
chase] another thing.”
Grailed provides both easy access
to designer goods (Columbus isn’t
exactly Paris when it comes to fash-
ion boutiques) and affordability. Re-
cently, through Grailed, Corey Mal-
ley, 28, a marketing consultant in
Los Angeles, sold a button-down$
What Jacob
paid for
Lanvin
trousers$
What he sold
the same
trousers for
afew
months laterThe online marketplace Grailed has changed how Jacob Gallagher thinks
of his wardrobe—what to sell from it and what to buy with the proceeds.MICHAEL BUCHER/THE WALL STREET JOURNAL JOSE ALVARADO JR. FOR THE WALL STREET JOURNAL; VEST: PATAGONIA
CHRISTIE HEMM KLOK FOR THE WALL STREET JOURNAL((7)S
ome of the country’s biggest retail
names are following online startups into
the cult of thrifting, casting aside long-
held fears that selling secondhand
goods would cannibalize the market for
new goods.
Macy’s Inc. and J.C. Penney Co. this past week
unveiled partnerships with resale marketplace
thredUp Inc. to sell used clothes and accessories
in some of their stores. Outdoor brand Patagonia
plans to open a temporary store in Boulder, Colo.,
this fall dedicated to selling preowned goods, its
first such location.
Thrifting is gaining traction as shoppers have
grown more bargain conscious and concerned
about the environmental impact of fashion, par-
ticularly the throwaway clothing model popular-
ized by fast-fashion chains.
“We looked deeply at Generation Z consumers,
and recommerce came up over and over again,”
Macy’s Chief Executive Jeff Gennette said in an
interview, referring to the burgeoning resale
market. “It’s not a downside that something has
been preowned.”
Thorsten Weber, chief
merchandising officer of
Stage Stores Inc., which has
thredUp shops in about 45
of its department stores,
said traditional retailers are
just beginning to wake up to
the impact of resale. “Just
like off price became a dis-
rupter, resale will be a dis-
rupter,” he said. “It will be a
force in the industry.”
Other chains, including
Bloomingdale’s, which is
owned by Macy’s, Urban
Outfitters Inc. and Ann Tay-
lor, are taking a slightly dif-
ferent approach by launch-
ing services that let
shoppers rent clothes in-
stead of buying them. Cus-
tomers can even rent home
décor at West Elm, which
has partnered with Rent The
Runway for the program.
“Customers are looking at
dead inventory in their clos-
ets,” Mr. Gennette said.
“They may wear an item
once or twice, but why do
they have to own it?” And if
they can save a garment
from going into a landfill, so
much the better, he added.
For traditional retailers,
many of whom are strug-
gling with sluggish sales as
shoppers buy more online,
resale and rental is a way to
bring younger customers in
the door.
Phil Graves, Patagonia’s
director of corporate devel-
opment, said shoppers who
buy used clothes from the
outdoor brand are typically a
decade younger than those
who purchase new gear from
the chain.
Patagonia began selling
used goods in 2017 under
its Worn Wear label, al-
though it has provided re-
pairs of existing gear since
the 1970s. Shoppers can
send back used items by mail or drop them off at
one of the retailer’s 34 U.S. stores. In return,
they get a credit of up to $100 that they can use
on future purchases.
This fall Patagonia will launch Recrafted, a line
made from old clothing and other gear that
couldn’t be resold in their current state. The
items are refashioned into new garments, includ-
ing jackets, bags and vests.
Resale is still a small business for most tradi-
tional retailers, but it is growing fast. At Eileen
Fisher Inc., which pioneered resale a decade ago,
it accounts for about 1% of sales. Sales of Levi
Strauss & Co.’s authorized vintage garments have
tripled since the line was introduced in 2017, but
are still a tiny fraction of overall sales, said Jona-than Cheung, Levi’s senior vice president for de-
sign innovation.
Many traditional chains, particularly luxury
brands, continue to sit on the sidelines, worried
that a booming secondary market will depress de-
mand for new goods.
“If you’ve sold new cars your whole life and
all of a sudden you’re going to start selling used
cars, the immediate fear is, what if all the cus-
tomers just buy used cars?” said Andy Ruben,
the CEO of Yerdle Recommerce, which operates
resale programs for brands. “The reality is that
people who want used items are going to find
them anyway.”
That is what has been happening with Michael
Kors handbags, said John Idol, chief executive of
parent company Capri Holdings Ltd.
“There’s no question that resell in North
America impacted the Michael Kors accessories
business,” Mr. Idol recently told analysts. “There
is a substantial amount of product that is resold
on numerous websites. We don’t sell to those
companies directly. But you can find our product
on there.”
Nevertheless, Mr. Idol said
Michael Kors isn’t rushing to
launch a resale business of
its own. “We’ll be very slow”
in evaluating these new op-
portunities, he said.
One issue keeping tradi-
tional retailers at bay is
sourcing. Old-school chains
are set up to sell thousands
of the same item, not thou-
sands of one-of-a-kind
pieces that need to be vet-
ted and cleaned.
“It’s not that easy to find
the goods,” Levi’s Mr. Che-
ung said.
Mr. Cheung said employees
scour thrift shops, yard sales,
websites and vintage dealers
for jeans from the 1980s and
1990s that Levi resells in its
eight flagship stores.
“There has been a change
in the perception of vintage
goods,” Mr. Cheung said.
“When I was growing up,
they signified that you
couldn’t afford new clothes.
Now, it’s a status symbol. It
says you’ve made an intelli-
gent and sustainable choice.”
As a fast-fashion retailer
and pioneer of the throw-
away-clothing trend, H&M
isn’t usually top of mind
when it comes to sustain-
ability. But the Swedish
chain has been working to
change that. In 2013, Hennes
& Mauritz AB launched a
program that lets shoppers
drop off used clothes at
H&M’s nearly 4,500 stores
world-wide.
The items, which can be
from any brand, are collected
by a recycling company.
Roughly 60% are resold
through local thrift shops and
markets; the rest are turned
into other products or fibers
for new garments.
Eileen Fisher was one of
the first traditional brands
to dive into resale in 2009 when it launched a
program for employees. It eventually opened it to
the public, and resale took off in 2013, when the
company posted signs in its stores that read,
“We’d like our clothes back, thanks very much,”
said Cynthia Power, director of Renew, the
brand’s resale and recycle program.
Today, the company sells used clothes in a
handful of its 67 Eileen Fisher stores, as well as in
two free-standing Renew stores and on its web-
site. Used clothes typically cost about a quarter of
the price of new items, Ms. Power said.
Ms. Power said selling used clothes hasn’t hurt
sales of new clothes. “It gives customers another
reason to come to the store,” she said. “It’s an
add-on purchase.”DepartmentstoreAnnual sales, in billionsUsedmerchandise$02550751001251501752002008 ’10 ’12 ’14 ’16 ’Thrift Shift
SalesatU.S.departmentstoresare
down,whilestoresalesofused
merchandisehavegrown.Source: Commerce DepartmentPatagonia began selling
used goods in 2017 under its
Worn Wear label.