Most retail industry captains are reporting sleepless nights lately, tormented by nightmares like tariff chaos, the AI stampede, and cranky investors — all while trying to just keep up with inflation. But there is one industry segment that has been on a roll for the past four years, clocking a blistering compound annual revenue growth rate of 15%, in spite of not making a profit … yet.
Some of the players in this segment are legendary brand names.
Others are more recent — hip, private equity startups with names you may have heard. Margins are tight, but business is booming.
Meet the thrift and resale juggernaut that has been slowly eating into the consumer wallet share, especially in shoes and apparel. Meet the new face of sustainability and a puzzle for traditional retailers to solve.
At one end, there are timeless nonprofits like Goodwill Industries or Salvation Army, stores that have been around since the early 1900s. They help support foundations that provide social services, places with harsh fluorescent lighting that older generations remember visiting only in desperate times.
Today, thrifting is a widespread hobby among the Gen Z crowd, and often a first stop for a majority of Gen Z shoppers hoping for a surprise find, or a killer bargain.
At the other end are private equity-funded companies like e-commerce merchant ThredUp, which launched a hot IPO five years ago and earned a brief unicorn-like market cap of more than $1 billion. Poshmark, also aiming upscale by featuring brand name secondhand goods, made its IPO splash around the same time, topping out at $3 billion.
All thrift stores and online resale, which is ThredUp’s business, taken together as a category got its big boost after the initial Covid shutdown in 2020. Inflation spiked, consumers became more aware of waste, and the loosely-knit industry responded by becoming more sophisticated and entrepreneurial.
Since that time, a thrift store seems to have popped up on every corner. Their parking lots often thrum with suburban SUVs. Thrift stores have merchandisers now.
Simultaneously, enthusiasm for the stocks of public companies ebbed as they ran into the inevitable snags of a new kind of enterprise. Two years after going public, an internet conglomerate took Poshmark private for $1.2 billion, a value haircut of 60% from the IPO.
Five years after going public, ThredUp’s $1-plus billion debut currently has a market cap of about $625 million, a 50% discount from its IPO. But revenue has steadily risen and the company seems on track to post its first profit in 2027.
The most startling statistic may be this one reported in 2024 by Capital One Research: About a third of clothing and apparel items purchased in the U.S. over the previous year were secondhand.
The bank also reported 25,000 resale, consignment, and not-for-profit resale shops in the U.S. alone.
ThredUp is forecasting revenue for the whole segment this year will reach $60 billion, which, in an apparel market that last year generated about $360 billion in U.S. revenue, is one of every six dollars.
The traditional retail industry is paying attention. Many of marquee names — e.g., Lululemon, Athleta, Carhartt — have adopted “preloved,” buyback, resale, or trade-in options to compete and curry customer loyalty.
But until the leading retailers and brands figure out how to compete at scale, those coveted Gen Z shoppers who set out to see what’s new on the store shelves will probably continue to stop at a thrift shop on the way to see what’s unique, cheap, and old.
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