The global fashion and apparel industry is at the threshold of a fundamental transformation, and with the COVID-19 pandemic highlighting the interconnectedness of our economies, health and nature, this shift has been accelerated. The fashion & apparel industry is one of the key industries witnessing an uptrend in consumers seeking apparel that can help them reduce the environmental footprint of their consumption habits and move away from the take-make-dispose model.
Over the past few decades, we have increasingly seen the latest fashion trends at extremely low prices and rising levels of clothing production to cater to consumer demand. Economic development coupled with new technologies has further accelerated the pace and scale of clothing production and consumption.
As a result, consumers in 2014 purchased 60% more clothing, but each garment was kept for half as long compared to 2000. It was estimated that in 2017, on average, one garbage truck of textiles is land filled or incinerated every second1. On the one hand, this overproduction and premature disposal of clothing leads to waste and pollution and on the other hand, it puts immense pressure on natural resources. About US$460 billion is lost each year globally because clothes are disposed before the end of their useful life2. It not only results in material and economic loss but amounts to high costs of handling the waste.
Rising Conscious Consumerism
Conscious consumerism is on the rise across countries, industries, age groups, as well as economic backgrounds, due to rising awareness, access to information, and the availability of alternative options in the market. The current model of taking resources, making products, and discarding them after a few uses leads to the business practice of relying primarily on virgin resources to create products that fulfil consumer demand and in turn, make profits. Over the past several years, consumers have adopted individual practices such as switching to less wasteful or ethical brands to keep their negative impacts on the environment and society at their minimum. However, these actions by relatively fewer consumers have far been outpaced by the overproduction and overconsumption of clothing. In terms of sustainable alternatives, there have been instances of greenwashing, which may do more harm than good. Additionally, several options for buying sustainable clothing are usually expensive and out of the reach of the masses. Significant change can only happen when the masses make a shift in their choices. To reduce the environmental footprint, go beyond the elite few and maintain profitability, businesses will have to radically innovate to decouple profits from resource use and fulfil consumer demand.
The Reuse Revolution
According to the Ellen MacArthur Foundation (EMF), clothing reuse is one of the most direct levers to reduce waste and pollution in the fashion and clothing industry. A study by EMF suggests that if a piece of clothing is worn twice the average number of times it is worn, there would be 44 per cent lower greenhouse gas (GHG) emissions throughout its lifecycle3.
Consumers and businesses around the world, including in India, are showing interest in clothing reuse business models such as second-hand clothing/ resale, rental and subscription4. A consumer demand report by WRAP (2020) showed that consumers across India, the US and the UK were surveyed to understand their appetite towards clothing reuse business models and found 61-90% of consumers were interested in trying at least one of these models, with the highest interest seen in India. These business models have the potential to generate profits through reuse instead of one-time sale through traditional retail that relies on a ready supply of virgin resources. Resale is one of the business models that has gained popularity globally and momentum over the past few years and the COVID-19 pandemic has further propelled its growth as consumers are said to have become more conscious about their consumption. It is worth diving deeper and understanding the potential for the second-hand clothing market and the consumer sentiments and behaviour towards such a model in India.
The Business of Second-hand Fashion Retail
According to a resale start-up ThredUP’s report, in 2019, clothing resale grew 25 times faster than conventional retail and is poised to grow five times (US$64 billion in value) between 2020-2024, whereas conventional retail is expected to see a drop of about 4 per cent. No study has been carried out to assess the potential for clothing resale in India particularly, however, the growth of small and medium-sized scaled second-hand fashion retail start-ups are proxy indicators of the market demand.
It will be useful to first understand what we mean by second-hand fashion, the different types of models and how they operate. As the name suggests, second-hand or pre-loved fashion retail means selling a garment that has been previously owned or used by someone else. This does not refer to clothing that has been returned to the original seller because the size does not fit or the product is damaged, nor does it refer to hand-me-downs or charity. Consumers often have clothing that is in good condition, but they don’t use it anymore for various reasons. These garments are underutilised by being kept in closets that could instead be purchased and used by other consumers who can help extend the life of an existing garment and potentially avoid a brand-new clothing purchase if their requirement has been fulfilled by the second-hand clothing.
India has had a large informal market for second- hand clothing for years; it is operated through the sale of second-hand clothing within the country, usually from relatively higher income groups to lower-income groups. The formal sector for second-hand clothing is largely fragmented, decentralised, and in its nascent stages of development, with very little literature available. Due to regulatory restrictions on the import of wearable second-hand clothing, these businesses rely on Indian consumers to procure used clothing for making it available for resale. The second-hand fashion retail models can broadly be categorised as peer-to-peer marketplaces, managed/ augmented marketplaces, and informal resale: While currently being dominated by start-ups and MSMEs, the second-hand retail market is likely to see interest from bigger brands as these business models mature in a market like India. Poshmark is one such retailer to have already entered the second-hand retail space in India. The list is likely to grow as apparel brands realise their own products on third-party second-hand retail platforms could potentially start affecting their conventional retail sales. Proactive companies in the US, such as Patagonia, have already started setting up their own second-hand fashion retail channels through their own platforms on start-ups like Trove, who provide end-to-end support.
Three types of key stakeholder roles emerge as this model grows:
- TRANSITIONING TRADITIONALS: Incumbent retail apparel brands testing and scaling new models for selling reused clothes
- REUSE NATIVES: Start-ups focused on the idea of making profits through reuse
- REUSE SERVICE PROVIDERS: Companies that will enable the delivery of reuse business models by providing specific services such as repair, laundry, reverse logistics, etc.
These stakeholders need to constantly understand the needs of their consumers and work collaboratively to bring about a fundamental shift in the way profit is made.
Opportunity for Second-hand Retail in India
Indians are increasingly spending on clothes; in just eight years between 2010 and 2018, their spending increased by 181%5. India is on track to become the sixth-largest apparel market this year6. The opportunities in a large, growing and young market like India are endless, where consumers are gradually moving from need-based purchasing to aspiration-based purchasing as their incomes rise. India has the opportunity to cater to its growing consumer demand using fewer resources by leapfrogging to models such as second- hand clothing retail.
Due to a lack of data and literature, the size of the second-hand fashion retail market in India is unknown; however, the growth and interest in second-hand retail across small and big towns and cities have been encouraging. As the market for such business models matures, new changes may be seen to better cater to consumer needs and balance the environmental impact they have the potential to deliver. Understanding consumer attitudes, behaviour and demand can help design and promote relevant second- hand business models. However, most literature on consumer behaviour towards second-hand clothing is from countries in the west, which are significantly different from India, demographically, culturally, as well as economically.
Stigma associated with using second-hand clothing exists in India, but it is gradually being overcome as the youth is more open to the idea of trying the model.
We at World Resources Institute India carried out a first-of-its- kind study, ‘Secondhand Shopping: Understanding Consumer Behaviour toward Pre-owned Clothing in India’ to get a preliminary understanding of consumer behaviour for exploring the clothing resale model in India. Our survey suggests that buyers of second-hand clothing are more likely to be young (under 35 years) and female. We learned that respondents were motivated to purchase second- hand clothing because of two main reasons: low price and lower environmental impact.
For second-hand fashion retail models to create a positive environmental impact by fulfilling consumer demand by using far fewer resources, they will have to be effective in confronting consumption by at least partially displacing conventional purchases. If consumers are buying second-hand clothing in addition to clothing they generally purchase, they are using more resources than before and, in turn, doing more harm. Our study found that purchasing second-hand clothing may result in an increase in the overall clothing purchases made by consumers; for instance, students on a budget are happy to be able to purchase more clothes with the same money due to the lower cost of second-hand clothing. However, environmentally conscious respondents ensured that their overall purchases did not increase by buying second- hand. Start-ups and brands adopting such models needed to understand this aspect of consumer behaviour among Indian shoppers in order to create the desired impact: displacement of conventional retail purchases by second-hand clothing.
Unlike the conventional model where businesses rely on raw material suppliers to run their business, the second-hand clothing model requires used clothing from an average consumer like us for them to be able to sell it further. Selling of clothing for the second-hand retail model is not a popular concept in India, yet 69% of shoppers of second-hand clothing in the US sell second- hand clothing ,whereas, in our small sample, only 18% of shoppers in our survey have sold their clothing at least once. The participation of sellers is as important as that of buyers for the second-hand retail model to function, especially since second-hand clothing imports are prohibited in India.
Top Two Barriers to Purchasing Second-hand Clothing
In addition to understanding their motivation to buy second-hand clothing, we also tried to understand the barriers towards purchasing second-hand. Hygiene and the condition of clothes were reported as the top two barriers for respondents to purchase second-hand clothes. Purchasing second-hand clothing can be a first-time experience for most consumers, and they are bound to experience some uncertainty about the condition and quality of the product they would receive. The online medium of purchase does not allow the consumer to touch and feel the product before making the purchase decision. Therefore, transparently communicating about the condition of clothing and measures taken to ensure hygiene can help build trust among consumers and overcome the barriers. It is important to note that stigma associated with using second-hand clothing exists in India, but it is gradually being overcome as the youth is more open to the idea of trying the model. And while certain apprehensions may stand in the way of consumers purchasing second-hand clothing, they can begin by being a part of this ecosystem by selling their own clothing they don’t use anymore.
While our research can provide a preliminary understanding, start-ups and retail brands interested in exploring the second-hand clothing retail model should undertake further research to develop a better understanding of the consumer motives underlying the purchase of second-hand clothing across their target consumer segments and its potential impact on environmental indicators. Stakeholders in India are well-placed to tap into the second-hand clothing retail models, given the growing interest, especially among the youth. While innovation continues in the business community on the retail-faced business models, several changes are required to fully realise the benefits of this opportunity. It would be imperative to bring about upstream changes beginning with designing clothing with durability, reparability, and recyclability in mind. This can help consumers move away from discarding apparel after a few uses and create conditions for apparel to have more than one life. Proactive actions from businesses coupled with policies favouring sustainable models can help move the needle towards a more sustainable and circular fashion system.
