Hot Topic Resale…Not So Hot
Hot Topic Resale…Not So Hot
7 MINS READ
Key Takeaways
Take a page from Kering’s playbook and avoid the use of broad, generic sustainability-related statements. They are less and less relevant and will soon be if not already, a liability.
The pure number of branded resale programs is misleading as compared to the quality and long-term viability of such programs. These programs will need to provide customer and business value over the long term.
In an updated annual report, Boston Consulting Group (BCG) and Vestiaire Collective reported the secondhand market to be worth 3% to 5% of apparel, footwear, and accessories. The report predicted that resale is expected to make up nearly ⅓ of closets in 10 years. A keynote was that 30% of non-sellers have something to sell but do not have the time to list their items. It is clear we will continue to see new innovations in making it easier for customers to trade in items.
GOAT acquired Grailed last week, just a week after the POSH deal. However, I view these deals as different. The POSH deal was opportunistic given the discounts in public markets, while the Grailed deal represents consolidation and intensified competition in a more specialized streetwear resale market. Grailed will provide GOAT with more apparel as it competes with Flight Club, Stadium Goods, and Stockx. I don’t expect these players to significantly expand beyond streetwear, although they may try. I would expect more consolidation and eventually acquisitions when valuations come down.
PYMNTS reported on Nike’s updated terms of sale to allow the cancellation of online orders made using bots. It’s a smart move on Nike’s part but mainly to manage the initial sale of products and pricing. Long term, brands like Nike will need to find ways to monetize the full value of their products as more money will be made over the life of the products.
Thredup updated its list of branded recommerce players which has grown from 31 at the end of 2021 to an expected 140 by the end of 2022. While the numbers are big, what really matters is the quality and viability of the programs. Simply counting how many brands have programs masks the depth of how the programs add value for customers and are good business for the brand. Even counting the items on the sites as a ranking is misleading as brands such as Patagonia, lululemon, and REI stack items so you only see 1 image representing dozens of items. This allows for a better customer shopping experience but dramatically under-represents the size and scale of brand programs. Hot Topic’s launch of Replay is a perfect example.
Hot Topic launched Replay with ThredUP with several hundred items listed for price points as low as $2.99, which does not include $5.99 shipping. While it’s theoretically possible to envision a future where we get more use out of a $15 Hot Topic Tee across multiple owners, I doubt this will be the business model. As part of RaaS, Hot Topic customers can trade in items via a Thredup Kit, although very few if any are eligible for credit. So you aren’t really trading in Hot Topic products, rather you are getting a Hot Topic gift card when you trade in other brands’ products.
Brands like Hot Topic have risks as sustainability oversight evolves. French luxury group, Kering has issued new guidelines for making sustainability claims. Kering asked their brands including Gucci, Saint Laurent, BALENCIAGA, and Alexander McQueen to avoid the use of broad, generic sustainability-related statements such as “eco-friendly”, “environmentally-friendly” or “green” should be avoided. This is a welcome and proactive stance to get ahead of what will increasingly be a thorny issue for brands.
Until Next Week,
Andy Ruben | Trove, Founder and Exec Chair
Resources:
Resale to make up 27% of second-hand buyers’ closets by 2023
A study conducted by BCG and Vestiaire Collective revealed that resale products make up one-quarter of secondhand shoppers’ closets. At this rate, resale products are projected to make up 27% of second-hand buyer’s closets by 2023. Sustainability was found to be one of the biggest motivators when it came to second-hand shopping, with affordability as a close driver.
Depop posts $93 million loss as fashion resale stalls
Despite last year’s $400,000 profit, Depop announced $93.4 million operating loss for 2021. Its revenue for 2021 was slightly up from 2020, sitting at $50.1 million.
Hot Topic Joins Ranks of 100+ Retailers with Branded Resale Programs
Findings ThredUP’s report showed that 107 brands have resale shops, 73 of which launched in 2022. The top five brands based on resale listings in order are Athleta, Tea Collection, Lululemon Athletica, Tommy Hilfiger, and Madewell. Lastly, ThredUp leads in managing resale shops, followed by Trove, and then Archive.
ThredUP Signs Hot Topic To Resale Service; Reveals Biggest Brands on Thrift
ThredUp adds retailer Hot Topic to their rapidly growing clientele, launching Hot Topic Replay. Hot Topic Replay allows customers to shop secondhand through the site and those based in the U.S. can resell their apparel for Hot Topic credit.
Sneaker Resale Site Goat Set to Acquire Streetwear Site Grailed
Goat Group invested in Grailed last year, leading a $60 million funding round, and is now set to acquire the brand. Executives have said it’s a natural progression for Goat Group as they continue to seek expansion opportunities in Singapore, Tokyo, Shenzhen, and China.
With Grailed, acquisition, Goat attempts peer-to-peer resale
Goat Group is set to acquire the sneaker platform Grailed. Goat is the sneaker and streetwear resale platform. Flight Club and the addition of Grailed will help Goat grow and compete with its biggest rival StockX. Goat will be the first resale company to have two different resale business models, one as a consignment reseller while the other is peer-to-peer.
Nike Tries to Stamp out Sneaker Resellers
Nike and StockX are going to court after Nike bought four pairs of counterfeit versions of their shoes from StockX. These shoes were purchased through StockX’s ‘Verified Authentic’ and came with verified tags. Nike has accused StockX of using Nike’s trademarks and goodwill via NFT channels and tarnishing its brand.
Kering issues guidance on making green claims
In an effort to avoid claims of greenwashing, owners of luxury brands such as Gucci, Saint Laurent, Balenciaga, and Alexander McQueen, Kering, released guidelines on statements surrounding sustainability. This is the first time a major fashion house has issued an official policy on greenwashing as it could potentially damage reputations.
ReCommerce: Fintech boosting circular economy
According to the Ellen MacArthur Foundation, the circular economy could become a 900 billion euro opportunity. The EU and the UK have announced initiatives to support the creation of a circular economy, announcing proposals for strengthening regulation on goods sold within the EU, making them more sustainable and easier to repair earlier this year. Fintech’s focus on customers, digital presence, and innovation agility could make them well-positioned to support the growing sector.
The North Face releases circular-design clothing
The North Face has debuted 20 circular design styles designed to be easier to disassemble and recycle into new garments of similar quality. The brand also said it will re-launch its take-back program under the name Renewed later this month, where shoppers will be able to drop off their circular design products and other items in Renewed Take-Back bins at The North Face stores. XPLR Pass members can receive $10 credits in exchange for the gear they return. The company said it launched the collection in stores, within its wholesale partners, and online.
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