What Brands Should Consider When Building A Resale Program
What Brands Should Consider When Building A Resale Program
8 MINS READ
Key Takeaways
Fashion brands who are serious about climate goals will need to innovate profitable circular models. If your resale program doesn’t make money buying and reselling pre-owned items, question if it’s really just a marketing program and won’t address your innovation agenda.
Premium and luxury brands get ready for a very different retail landscape where more of your products are repurchased and resold in channels and stores you would disapprove of, bypassing you entirely. In order to control your brand, you will need ways to track and control your items beyond the first sale, owning the resale channel for your items.
The only place to start this week is the Charnard’s decision to give 100% of Patagonia to a trust and holding company charged with manifesting Patagonia’s mission: to save our home planet. There are few leaders that live their values with the willingness to discard and invent new structures for the times–Patagonia‘s IronClad Guarantee, 1% for the planet, the Footprint Chronicles, Benefit Corporation, “Don’t Buy This Jacket” and of course Worn Wear. Consistent with the past 50 years, Yvon and Patagonia are still willing to do so, with this recent move. Leadership can be elusive but we certainly know it when we see it. Thank you, Yvon, Milinda, Ryan, and the Patagonia team for continuing to lead.
As NYFW wrapped up last week and climate week kicked off this week, Fortune points out the disagreeable truth that climate goals and big fashion business models simply do not align. Although brands and retailers are taking steps to be more sustainable, there is still a disconnect on how many goods a company can make to reach environmental goals.
We are not going to address this within our current linear model. And it’s one of the reasons so many fashion brands are launching resale programs. But with all these new programs how can one distinguish between business innovation and marketing? One way is to look at the business model behind the effort. Innovative business models are set up to be profit centers for the business, they address core activities such as buying and selling pre-owned items. Marketing programs have an ROI that drives traffic but are not set up to become core for the business. Saks Off 5th, which expanded its resale efforts this week with LXR and Reflaunt is aiming to make money by buying and selling pre-loved items. This is business model innovation given the ability to scale a profit center. Whereas UK fashion provider, Joules, who also announced a resale program is essentially awarding gift cards to get you back in the store, more akin to smart marketing. Marketing efforts can evolve into business innovation, but approaching resale as a business innovation certainly improves the odds of capturing the customer shift underway.
Saks Off 5th initially partnered with LXR back in 2020 selling pre-owned handbags in-store. Their program has now expanded with Rent the Runway and Reflaunt to offer roughly 1,000 items online. Many of the resold items are not typically sold via the Off 5th banner including Hermes, Fendi, Prada, and Tom Ford. This makes sense for a discount retailer who can now buy back and resell higher-end pieces to their value-oriented customer base. This is a business that has the potential to continue to grow, not a marketing program.
We will see more of these programs across value-oriented retailers such as Walmart, Target, JCP, and Macy’s as they find new ways to attract and maintain value-oriented customers. As a not-so-small footnote, brands should beware that these programs have significant brand risk in the new supply, discounting, and merchandising of branded items outside the brand’s purview. As compared to traditional wholesale relationships where brands share in revenue, these programs both buy from and sell to customers, bypassing the brands altogether.
James Reinhart wrote a fantastic article in Fast Company comparing fast fashion to big tobacco. James’ points included the social pressures of the newest look and price point with cigarettes in the media and affordability at the time. It’s possible there will be class action lawsuits or the government will regulate fast fashion but even if this does occur it won’t be soon. For now, this article serves more as a billboard highlighting the need for new business models as fashion considers the sustainability implications of the industry.
WWD covered lululemon’s annual sustainability reporting which highlighted the challenges of our current commerce model from a CO2 perspective. Lulu shared an 82% absolute reduction, ahead of plan on direct emissions (scope 1 and 2) while indirect emissions (scope 3) increased 4%. Given lululemons growth, 4% would still be commendable by some and it also highlights the innovation needed from new business models such as lululemon’s Like New.
Other brands were in the news for sustainability press releases including Puma’s new recycled shoe, others implementing ‘more sustainable’ logistics and packing materials, and Macy’s circularity program. While these make good marketing, many of these efforts, such as the process of producing a shoe from recycled content, are not addressing the systemic problem of growing fashion CO2 footprint–an exception may be Macy’s move to digital samples which can scale and does address core operations. Saks Off 5th and lululemon’s Like New program are examples of business innovation that can ultimately scale where business growth isn’t directly tied to growing CO2 emissions.
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Saks Off 5th on Resale: A Golden Opportunity
Saks Off 5th is ready to join resale. Throughout the last several months, Saks Off 5th has been partnering with companies like LXR & Co. and Rent The Runway to start building a network of pre-loved sources. Most recently, Saks Off Fifth launched with Reflaunt introducing menswear, men’s accessories, footwear, and sunglasses into its roster of pre-loved merchandise.
What is Driving Luxury Resale’s Push into Physical Retail?
Consumer goods brands benefit from brick-and-mortar stores as physical retail drives higher spending, lower return rate, and acts as a better vehicle for new customer acquisitions. It’s time for resale to get with the “old” way of shopping- in-store. The RealReal, Rebag, and Privè Porter plan to expand their physical store locations to achieve profitability and create the ultimate luxury experience for shoppers.
Big fashion can’t align its climate goals with its business model
As the crossroads of NYFW and Climate Week meet, so does the disagreeable truth that climate goals and big fashion business models simply do not align. Although brands and retailers are taking steps to be more sustainable, there is still a disconnect on how many goods a company can make to reach environmental goals.
Lululemon’s Latest Impact Report Puts Pressure on Decarbonization
Lululemon has already captured the hearts of billions, $1.9 billion in quarterly revenues to be exact. The brand has made amazing strides towards becoming more sustainable, the brand still saw a 4% increase in Scope3 emissions from last year. Lululemon is now putting all of its efforts into focusing on transitioning to renewable, efficient energy.
Earth is now our only shareholder.
Patagonia is in the business of saving our home planet, by “going purpose.” Ditching the traditional route of going public, Patagonia is choosing to take its wealth and invest in the planet. 100% of the company’s voting stock will transfer to Patagonia Purpose Trust and 100% of the nonvoting stock has been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature.
Macy’s rolls out circular services
For the last 18 months, Macy’s has started integrating new solutions to help conquer its sustainability improvement goals. Its efforts focus on offering ethically produced products and brands to its customer base, while simultaneously reducing its environmental mental impact through logistics.
Salesforce Enters the Carbon-Credit Business
Salesforce is entering the carbon-credit business with force as it gears up to launch it’s new Net Zero Marketplace for carbon credits. The marketplace will tackle transparency and quality issues in the ever-changing field. It will launch October 9th with almost 90 projects which will support programs such as soil health and renewable energy.
Why fast fashion is the next Big Tobacco
Gen Z is known as being the most eco-friendly generation yet, even though they feed into the addiction that is fast fashion more than any other consumer group. As fast fashion continues to go unchallenged, more and more it starts to sing the same tune as Big Tobacco, especially when targeting Gen Z.
Fashion brands are launching partnerships with sustainable logistics providers
In an effort to support authenticity around new initiatives, retailers like Rebecca Minkoff, EB Denim and Rent the Runway are taping more sustainable shipping and packaging solutions, like Route and Olive. The Route takes the heavy lifting out of the post-purchase experience by offsetting shipping emissions through integrated AI tracking parcels from retailer to customer. Olive enables brands and retailers to remove single-use packaging from their e-commerce orders.
Puma debuts shoes, tights made from recycled materials
Puma recently re-launched its Re:Collection line featuring products made from 20%-100% recycled materials. Earlier this year, Puma released a biodegradable suede shoe tested by 500 participants in Germany last year.
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