In the troubled apparel space, off-price retailers, led by TJ Maxx parent TJX Cos., have been picking up share. Another segment of the market could be poised to challenge for a larger piece of the market: secondhand clothing resellers.
The off-price and resale segments of the industry share some common traits: consumers' desires for name brand products at a discount, and the "entertainment factor of the treasure hunt for unique items," Deborah Weinswig, managing director at Fung Global Retail & Technology, said in a report.
"Online secondhand resellers could pose a competitive threat to off-price retailers such as TJX," she wrote. Properties like ThredUp, which offer mainly mass market brands, and The RealReal, more geared toward luxury designer goods, "focus on higher-quality, gently-used, brand-name products and offer a more curated product assortment."
Meanwhile, resale properties have a distinct advantage in the digital space: Traditional off-price retailers still have zero to little online sales, she said.
Fully 50% of ThredUp shoppers said their secondhand purchases replaced ones they would have made at TJ Maxx or Marshalls, according to ThredUp's annual resale study published earlier this year. At least 75% of resale and off-price shoppers each list “the thrill of the bargain hunt” as their primary motivation, the report said.
Beyond low prices and the entertainment factor, some resale shoppers feel that buying used goods is a way of being more environmentally conscious. The "decluttering" movement may also be contributing to the growth of the market.
While many apparel and other retailers have shut stores or filed for bankruptcy protection—premium denim brand True Religion is the latest example—the Association of Resale Professionals said on its website its segment of the market saw net store count growth of about 7% a year in recent years. While small compared to major retail chains, Crossroads Trading Co., for instance, has expanded to more than 30 stores selling secondhand fashions in the US.