Brendan McDermid | Reuters
Gap is the latest retailer to dip its toes into the secondhand apparel market, following the lead of Macy’s, Nordstrom and others, in a bid to stay relevant in an industry shaken by changing consumer tastes.
The company announced Thursday it has partnered with resale platform ThredUp, which bills itself as the largest online consignment and thrift store. In select Gap, Banana Republic, Athleta and Janie and Jack stores, shoppers will now be able to drop off their used clothes, in exchange for credits to use at Gap’s portfolio of stores.
Macy’s, J.C. Penney and J.Crew’s Madewell brand are three of the five retailers that have partnered with ThredUp in recent months, hoping to get a piece of what analysts say is a consumer trend still in its infancy. The verdict is still out, however, on whether these efforts will drive people to stores and boost sales. The way in which each retailer partners with ThredUp can also vary.
New life for excess inventory
Getting into resale presents an opportunity for companies to extend the life of a dress or pair of pants, while hopefully earning an extra purchase, and tackling the problem of excess inventory, Cowen said.
About 15% to 20% of the total U.S. apparel, footwear and accessories market is considered excess inventory, such as unsold clothing and returns, Cowen said. And about 10% of the market gets either destroyed or donated, according to the firm.
To be sure, a department store chain selling a used pair of jeans could also mean not selling a pair of jeans at full price. And that could be a ding to profitability.
“There’s some risk of cannibalizing higher-margin sales on new goods,” said Greg Petro, CEO of consulting group First Insight.
But “the combination of curated product offerings and sustainability will certainly drive net-positive sales,” he said.