High-end rental and resale market could grow 5x by 2025

The high-end rental and resale market could grow five times by 2025, “significantly outpacing” the anticipated growth rate for new apparel.

What’s more, circular business models have the potential to grow to 23% of the global fashion market by 2030, driven by “rising consumer-sustainability awareness”, along with inflation squeezing consumer spending power, according to a new report from Bloomberg Intelligence called ‘Global Apparel the Rise of Rental, Resale and Repair’, which has utilised GlobalData estimates.

Zara was one of the most-listed brands on Depop in 2021, contributing to the resale platform's £50.1 million in revenue, and the report says companies without their own or partner resale abilities may risk losing sales to consumer-to-consumer (C2C) second hand sites.

Rental and resale provide an opportunity for higher-end retailers developing their own second-hand capabilities to capture new revenue streams, as well as new customers, “while fast fashion might be priced out”.

Grace Osborne, Senior Associate Analyst, ESG at Bloomberg Intelligence, said: “Companies without their own or partner resale abilities may risk losing sales to consumer-to-consumer second hand sites such as Poshmark, Depop, Vinted and The RealReal.

“Zara was one of the most-listed brands on Depop in 2021, contributing to the resale platform's £50.1 million in revenue. Zara started its own platform, ‘Pre-owned’, to capture this revenue stream. H&M saw an 85% increase in revenue from its resale partnership with Sellpy, targeting €90 million in resales in 2023.

“Circular business models have the potential to grow to 23% of the global fashion market by 2030, driven by rising consumer-sustainability awareness, and inflationary pressure squeezing spending power. Retailers developing their own resale platforms stand to gain a revenue stream while those trailing risk canabilisation of sales to C2C platforms.”

According to Bloomberg Intelligence, resale is an opportunity for high-end brands to acquire customers “who'd been priced out”, generating new revenue. A prime example is Kering taking a 5% stake in resale platform Vestiaire Collective as part of a strategy to capture younger, green-conscious consumers.

Digital IDs will be key in luxury resale, and Richemont-owned Chloé launched product IDs allowing “instant resale” with authenticity and green credentials, critical to overcoming counterfeiting risks.

Osborne, added: “Luxury is synonymous with longevity and quality, key for resale value. Fast fashion is not. Vestiaire banned fast fashion from the platform, hitting 5% of listings, to drive margin and challenge retailers that overproduce. Decoupling revenue and production growth should be a key resale objective, with financial growth coming from less use of resources as targeted by Ralph Lauren.”

The report explores how apparel and footwear companies are developing operating models to address concerns of high emissions and other environmental issues associated with apparel.

In the US, Eileen Fisher offers customers a $5 coupon for recycled clothing, which it then repurposes and resells. Meanwhile, Allbirds launched a resale program, called ‘ReRun’, as part of an initiative targeting a reduced carbon footprint.

With 39,000 metric tons of clothing dumped in Chile's Atacama desert and 15 million garments pouring into Accra weekly, regulatory pressure is mounting to tackle waste at all stages of the product life cycle.

Tech can help reduce the 45 billion garments made each year that are never sold (30% of production) and either enter landfills, are dumped on developing nations or incinerated.