Retail giant Target TGT has found another way to profit with its new strategy of selling second hand clothes. The company has partnered with ThredUp, a resale marketplace for used fashion items like Chanel bags, Michael Kors clothing, Gucci accessories and Nike NKE shoes, by leveraging its “resale as a service” (RaaS) online platform. Among mass merchandisers such as Walmart WMT and Target account for African Americans highest share of non-food purchases at 34%, according to Nielsen. Therefore, lower-priced brand name goods may resonate with this demographic of Target shoppers at a time when millions of Americans are coping with high prices due to inflation, as the company looks to tap into the $51 billion resale market.
The Breakdown You Need To Know:
CultureBanx noted this is Target’s second time around the block with ThredUp after previously partnering in 2015. When you consider that the Bureau of Labor Statistics found that Black people spend around 3% of their household expenditures on clothes, it’s no shock that a trendy online thrift store is teaming up again with a major retailer as a way for customers to save some money and stay in style. Not to mention that the resale market is expected to reach $51 billion by 2023, according to research from ThredUp and GlobalData Retail.
ThredUp bills itself as the largest online thrift store and offers more than 750,000 items across 2,000 brands. Customers will have access to 400,000 women’s and kids items from Target’s own brands as well as national and premium brands curated from ThredUp’s own assortment.
Back in March, ThredUp CEO James Reinhart told analysts that its roster of RaaS clients had risen to 28, according to Seeking Alpha. The company’s Raas platform expanded its client list by over 30% in 2021. A report from McKinsey stated that the secondhand market is set to expand 10% to 15% over the next decade.
Second Hand Profits:
Target can help drive up profitability of its e-commerce business even more, which has been very profitable so far. The company’s overall digital sales grew 20.8% last year. It’s possible that secondhand fashion items can help the retail giant drive greater returns. Shares of Target are down more than 5% year to date.
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Thrift stores are no longer viewed as a place where low-income people shop, they attract more middle class consumers in search of vintage and one of a kind items. Target is vying for a way to better service this demographic with its e-commerce platform.
Many younger fashionistas increasingly see used goods as a way to find a bargain and to limit consumption in the interest of sustainability. For Target, this t is a way to explore how to better serve customers, including what products to carry and how to offer value, along with furthering its sustainability goals, the company said to Retail Dive.