The False Promise of Thrift Companies
![white girl holding up shirt in thrift store](https://cdn.prod.website-files.com/6400f5db669916305f63913b/668c121c6a8879040e287760_AD_4nXcguUCUoyoEHh_NQbrp4Lwf248UtbQ_XpFv4FLajmKpo7BzHlo89vEbjKSWcd9QFehDJkMmen9cx5wCtZq0buDLJMxPoqGgDNmwQ46TSSmcluwu01hi3iS5JUv_4Z-7Ez4m9660kfg-EpTLpm03j6JZoUUY.jpeg)
Americans give away 70 pounds of clothes annually, and everybody, especially younger generations, loves thrifting.
The U.S. secondhand apparel market is projected to reach $73 billion by 2028, increasing at an average of 11% annually.
Even in a hot market, companies specializing in secondhand apparel haven’t been able to create a compelling investment case:
- ThredUp, an online thrift store, is down ~25% year-to-date
- Savers Value Village, a brick-and-mortar thrift store chain, is down ~29% year-to-date
- RealReal, an online luxury thrift store, is up ~67% year-to-date but still down ~88% all time.
While each thrift store's business model presents unique challenges, one consistent problem in the industry is balancing quantity with quality. Many items don’t sell, and some don’t even end up on the sales floor.
In response to the quality challenge, RealReal tweaked its commission structure to incentivize consignors to send in more expensive items, and Savers is trying to snag higher-quality items by placing drop-off trailers near locations frequented by wealthier shoppers.
So far, secondhand apparel companies hold more promise than substance and have grown slower than the overall market.