Will Sustainable Second-Hand Clothing Remain Retail Viable?

It’s no secret that second-hand clothing offers affordable prices without compromising on quality. While these items may not be brand new, they’re far from worn out. Most second-hand shops carefully curate their offerings, ensuring you’ll find gems amidst the racks.

Beyond budget benefits, second-hand shopping also aligns with environmental concerns. The fast-fashion industry churns out clothing at an alarming rate, contributing to pollution and waste. By opting for pre-owned pieces, you’re sidestepping this cycle of overconsumption, reducing your carbon footprint in the process.

Moreover, delving into the world of second-hand clothing opens doors to unique finds. Vintage treasures, once forgotten, are making a comeback. Shoppers can embrace their individuality by donning distinctive pieces that stand out from the mass-produced mainstream fashion.

As good as this formula seems, things could be better in many ways. For starters, there have been reports of companies scamming the system of recycled clothes.

In the last decade, there has been a surge in pre-owned clothing sales, with celebrities endorsing swaps and sales and online platforms booming. But behind this cool facade lies a stark economic truth: Most companies are barely making ends meet.

Retailers like UNIQLO have integrated sustainability with fast fashion to start helping our planet while still making a profit. There are also many fashion apps that offer convenient marketplaces for second-hand products as well as high-end e-commerce sites focused on promoting the resale of used clothes.

In Europe, statistics reveal a growing trend: 67% of U.K. millennials shop second-hand, while Gen Zers’ closets boast two in five pre-owned items. ThredUp’s 2023 Resale Report predicts a near doubling of the global fashion resale market value by 2027, reaching $350 billion. In the U.S., ThredUp expects the market to reach $70 billion by the same year. Yet, profitability remains elusive.

Even giants like ThredUp and The RealReal struggle to turn profits, with stock prices plummeting below IPOs. Poshmark’s acquisition for a fraction of its IPO valuation and Vinted’s pre-tax loss of €47.1 million in 2022 illustrate this struggle.

This economic challenge isn’t limited to big players. From U.K. thrift shops to New York consignment stores and Ghanaian markets, the story is the same: high labor costs and declining clothing quality eat into profits.

The root cause? A glut of cheaply produced clothing flooding the market. According to a study from 2023, a Swedish charity incinerates 70% of donated clothes due to low quality. Meanwhile, Ghana, as the “world’s largest importer of used clothing,” ends up getting rid of about 40% of the average bale of donated clothing as waste.

Processing second-hand clothes is labor-intensive and expensive, leading companies like ThredUp to charge for their “Clean Out Kit” service. Rising costs could push second-hand prices higher than new products, challenging consumer expectations of thrift shopping.

Moreover, the industry’s eco-friendly image often masks its reliance on new clothing sales. For instance, according to eBay sellers’ statistics, “80% of products sold on eBay are new.” Economist Thomas Bauwens argues that in a growth-based economy, companies that implement sustainable practices like “take-back, repair, resale and recycling” struggle to compete. He says they are “quickly outpriced and driven out of the market by cheaper, non-circular competitors.”

Experts propose solutions like government funding for sorting and recycling infrastructure to reduce labor costs and regulations mandating technology adoption to enhance efficiency.

Reducing clothing oversupply is crucial. Liz Ricketts, co-founder and executive director of The Or Foundation, calls for a 40% reduction in new clothing production to make second-hand and recycled products competitive. “I don’t see a world where second-hand and upcycled and recycled products are going to be competitive if we don’t reduce the production of new clothes,” she says.

Whether the second-hand clothing market is a bubble or a goldmine, one thing is clear: The current model is unsustainable. As Rachel Kibbe, CEO of American Circular Textiles, puts it, “We need infrastructure, we need labor, we need capital. Because how else are we going to solve this thing called the climate crisis?”