At the recently-held NRF Retail Converge, Ken Voeller, director, circular commerce, REI and Karen Campbell, strategic planning and new business development director, Arc’teryx, discussed how their expanding resale programs are helping to reach their sustainability goals and customers. Andy Ruben, founder and CEO of Trove, a start-up serving as the retailer’s partner in its resale efforts (and for Lululemon, Patagonia, Levi’s, and others), was the session’s moderator.
Assessing the opportunity, Ruben highlighted a recent study from Cowen that showed 52 percent of consumers plan to spend more on resale in the next five years, with those gains expected to take market share from specialty, fast fashion and department store channels.
The gains are being fueled by the arrival of resale platforms such as Thredup, Poshmark, RealReal, and Vinted. A second growth driver is that more brands are joining REI and Arc’teryx to offer customers resale opportunities.
Ruben also cited a study it conducted which forecasted that secondhand merchandise would make up 17 percent of a consumer’s share of their closet by 2029, up from between 5-to-7 percent currently.
REI’s Resale Push Aligned With Sustainability Roots
Voeller said REI’s entry into resale was driven by its environmental goals. The retailer has committed to reducing its carbon footprint by more than half by 2030. He said, “We believe that moving towards a more circular economy is critical to the health of our planet.”
REI recently began encouraging its vendor partners to become more involved in circular commerce to support its climate efforts. Voeller said, “We’re not going to get there if it’s only an REI-focus circular economy, so I think we really need to focus on how do we move the industry forward from a circular economy perspective.”
From a consumer perspective, REI has long sold used gear through its in-store garage sale events and, more recently, through its online used gear business and its trade-in programs as consumer interest has grown.
“Over the last few years, we’ve seen a perception towards buying used start to shift, particularly among younger customers,” said Voeller. “For us, continuing to invest in our re-commerce program hits the nail on the head concerning how we further our sustainability goals while also continuing to bring relevant offerings to our customers.”
REI counts resale as another avenue to drive more value into its membership platform. REI’s online used gear business grew more than “100 percent through 2020.” In 2021 year-to-date, its in-store used gear business has “come back quite strongly” as store traffic has recovered.
Voeller said, “I think that’s giving us the confidence that our re-commerce offering could become a meaningful part of REI’s gear and apparel product offering over the course of the next five to ten years.”
Arc’teryx Resale Inspired By Commercial Reasons
Campbell remarked that while many brands explore resale for sustainability or marketing reasons, Arc’teryx initially pursued resale for commercial reasons. She became aware of the evolving landscape for resale in the spring of 2018 and received sponsorship to make the business case for Arc’teryx’s entry into the space to senior leadership.
“It was a quick decision,” Campbell said. “The value proposition was compelling. It was not just revenue and profit, but it was customer acquisition, customer loyalty and sustainability.”
Arc’teryx’s reputation for building durable products that last directly aligned with resale. Campbell added, “It wasn’t hard for our executive team to imagine a future where we stood behind the performance of our product not just for the first owner, but also the second or third owner.”
The biggest benefit Arc’teryx receives from its resale program is customer acquisition. Campbell said, “We had a theory when we presented the business case that this would attract a new and younger consumer to the brand. And we’ve seen that bear out in the data now that we’ve been live for two years. It takes a lot to get new customers to try your brand, and this is such an incredible tool for that.”
She also said secondhand carries “a lot of goodwill” to help tell the brand’s story. Campbell said, “It’s a hook that we can use as a brand to help people discover who we are who may not know us.”
Finally, Campbell said resale aligns with the brand’s goal to reduce its greenhouse gas emissions in line with the Paris climate agreement by 2030. At Arc’teryx, sustainability starts with durable design. She said, “We design with a minimalist aesthetic so that it’s a bit timeless. Our product is that component of it will always be sustainable, inherently.”
Resale helps extend the life of a product beyond the first owner. She said, “We’re not just providing a warranty on the product for the first owner but the practical product lifespan, and that’s regardless of the ownership member that you are in the chain.”
Cannibalization Risks
Asked about the risk of cannibalization against new products, Campbell said that Arc’teryx has found that once a new consumer buys used, a good proportion of them buy new within a year or less.
REI has also found that resale is a “compelling acquisition tool” while also supporting retention and frequency, according to Voeller. As a multi-brand and multi-activity retailer, REI has also found re-commerce offers opportunities for its members to try new sports. Voeller said, “Maybe they’ll turn to used to try cycling for the first time or to try snowshoeing for the first time, and we see that it’s hugely valuable to continuing to get more people outside experiencing the outdoors while also continuing to grow our business.”
Asked what’s holding back brands and retailers from pursuing re-commerce, both agreed many have been waiting until the resale opportunity has proven itself. Campbell said, “I think that moment has come, and people realize that it’s here to stay. I’d say 2021, and probably the back half of 2020, that became more evident.”
Asked where they see the resale space in five-plus years, Voeller said, “I believe that we will continue to see consumer perception of buying secondhand continuing to enter the mainstream. From cars to bikes to clothing, every product is going to have a fairly significant secondhand market over the course of the next five years.”
Campbell said, “It’s evolving quickly. We’re seeing a lot of entrants into the space. A lot of facilitators. It’s catching steam, so it’s very hard to project. But the general sense I have is that it will be more. It will be a big part of every brand. That will be a fact. It won’t be something that you can ignore or sit on the sidelines about. Those sales will be taken elsewhere.”
