Neiman Marcus and H & M have a plan to win young customers: used clothes and bags

In April, Neiman Marcus took a minority stake in Fashionphile, a resale site that hedges pre-owned luxury bags and accessories for up to 80% below original price. In the future, customers will be able to get rid of used clothes and bags at Neiman Marcus stores to send back to Fashionphile.

Neiman Marcus invested in Fashionphile to achieve "long-term and sustainable growth," said Neiman CEO Geoffroy van Raemdonck in a statement. He believes the partnership will help "introduce Neiman Marcus to younger and hopeful buyers."

Large retailers respond to the rapid growth of online resale clothing, such as ThredUp, The RealReal, Poshmark, Fashionphile and others. Resale companies compete directly with high-end retailers, shopping malls, and customer loyalty, and threaten the luxury brand's pricing and exclusivity.

Resale sites have "effectively built small communities", mating sellers who want to load their old clothes for money with buyers who are eager to score Offers, Cowen Analyst Oliver Chen said in a recent report to clients.

Conscious Consumer & # 39;

Millennials and Gen Z shoppers buoying resale clothing industry. More than one in three Gen Z buyers will buy second-hand clothing this year, compared to just 19% of Boomers, according to the GlobalData survey.

Environment and economic conditions are gathering to push younger customers into secondary markets.

Over the past 15 years, clothing production worldwide has doubled, although the average number of times people wear their outfits has fallen, according to the Ellen MacArthur Foundation conservation organization. The global fashion industry is on track to make up a quarter of the world's annual carbon budget by 2050, the group estimates.

But waste in clothing and the textile industry becomes a major concern for younger customers. Almost three-quarters of 18 to 29-year-old buyers say they prefer to buy from sustainable brands, according to GlobalData.

"This was Really a sustainability angle, "Farfetch CEO Jose Neves told analysts earlier this month of the company's relocation to the resale market.

Resale platforms offer buyers a way to recycle their old clothes and buy new styles in environmentally friendly ways.

Hunting for bargains

Resale clothing websites also appeal to younger customers who want to dress

ThredUp says, for example, that it adds 15,000 new items to the site every day, as more sellers have put their old styles online.

Resale fits into the broader pattern of explosive growth in discount retailing, too. Resale players offer prices 30% to 90% below traditional retailers, according to Chen. TJMaxx ( TJX ) Marshalls and other discount chains are growing while warehouses like Macy's ( M ) ] Scissors and Nordstrom ( JWN ) has opened discount arms such as Macy's Backstage and Scissors Off Fifth.

Younger customers, who often carry high student debt, are "more cost-conscious", said Ari Ginsberg, professor of entrepreneurship and management at NYU's Stern School of Business. The combination of top brands at affordable prices on resale and rental sites is "particularly powerful for Millennials and Gen Z," he added.

& # 39; Pre-loved pieces & # 39;

Traditional retailers cannot ignore the growth of the resale industry, so they find ways to play in it.

Neiman Marcus says more than half of the customers are already using the resale market. It will keep these customers as they shop for second-hand goods as they branch to Fashionphile's younger audience.

At selected Neiman Marcus stores, customers will be able to receive a prize for their items from the Fashionpile on-site and receive a refund. Neiman hopes the merchants will then spend extra money on new products in their stores.

Other retailers also try the resale market. H & M said in April that it will test a resale program in Sweden for "pre-loved pieces" from its & Other Stories brand.

"We explore different ideas on how our long-term designs can find their way to new owners, "said Sanna Lindberg, who monitors the brand at H & M.

Online luxury retailer Farfetch began managing Farfetch Second Life in May, a buy-back program that allows customers to shop for their designer handbags. to get credit on future Fartetch purchases.

Expect to See Several dealers make acquisitions, collaborations, and test models to enter the resale industry, analysts assume.

"This is an old story about seeing industrial disturbances," Ginsberg said. "If you do not develop these skills or enter these markets, you may be eradicated soon."