Nordstrom Bets on Used Clothes, But the Market Is a Bit Threadbare

(Bloomberg Opinion) -- Nordstrom Inc.’s seven-story New York flagship at Broadway and 57th Street is home to a velvet-lined Nike boutique, a facial massage studio, a martini bar in the heart of the shoe floor and lots of expensive new merchandise. That’s how it’s always been at Nordstrom. But last month brought something new with the opening of See You Tomorrow, a luxury apparel resale boutique inside the flagship. Shoppers will find returned and damaged goods sourced from other Nordstrom stores and — because it’s a resale shop — they’re welcome to sell their own high-end apparel for store credit.

Nordstrom isn’t the first department store to try resale. In 2019, Macy’s Inc. and J.C.Penney Co. Inc. preceded Nordstrom into the business, lured by younger shoppers concerned with the environmental footprint of their consumption. But long term, resale’s biggest impact on retailing won’t be the growing sections of department stores devoted to used clothes. The most profound shift will be if manufacturers are compelled to make better quality, more durable clothes that consumers perceive as having value in the secondhand economy.

Consumers have complained about the declining quality and durability of clothing for decades. But the complaints became louder and more serious as (primarily) Asian manufacturers became adept at quickly meeting consumer demand for low-cost versions of the latest trends. To do so, the manufacturers skimp on quality. For example, they’ll reduce thread counts, making garments more flimsy and less likely to survive multiple wears and washes. Those low-quality garments have no market in resale shops or on resale apps. And the stuff that can’t be resold or recycled is growing faster than the stuff that can. Between 2003 and 2017, the amount of apparel sold globally nearly doubled, while the number of times a garment was worn dropped by more than a third. All that unworn and ultimately unwanted apparel piles up: In 2017, 14.3 million tons of textiles were landfilled or incinerated in the U.S. — a 623% increase over 1970.

These facts are increasingly well-known to American consumers, many of whom say they want to buy purpose-driven, sustainable brands. According to ThredUp Inc., a major online fashion resale platform and the primary source for the resale industry’s data, 59% of consumers expect retailers to create clothes ethically and sustainably. It’s impossible to objectively judge how many retailers meet that expectation. More likely than not, it’s a small number and they charge premium prices. So, in the absence of certainty and a willingness to spend, increasing numbers of consumers are opting for a secondhand retail experience. According to ThredUp’s data, the secondhand apparel market — everything from thrift stores to Nordstrom to ThredUp itself — more than doubled between 2012 and 2018, to $24 billion, and should exceed the fast fashion market by 2028. That expansion is being driven across demographics, but especially among those 18-24, 37% of whom said they would buy secondhand in 2019.

However, all of this growth is theoretically constrained by two supply bottlenecks. First, consumers need incentives to sell stuff from their own closets. Second, there needs to be enough decent apparel worth selling to keep the market going. The first problem has largely been solved by online platforms like ThredUp and PoshMark Inc., which enable selling (and buying) through intuitive apps.

Historically, the second question has been solved by the market. For example, the resale value of a new car is such a crucial consideration for buyers that automakers advertise how well their models retain it — and manufacture accordingly. Today, 40% of consumers say, according to the ThredUp report, that they incorporate resale value into their purchasing decisions beyond just cars, to include items like furniture to apparel. That’s a major shift in consumer behavior.

Last year, Ikea announced a rental program that — among other benefits — is giving the cheap flat-pack furniture maker insights into wear and tear. It’s incorporating that information back into its designs, so items can be sold or rented, over and over again. Similarly, clothing rental juggernaut Rent the Runway Inc. shares its data with designers so that they can learn from it. One fashion label executive summarized the findings as: “How many times do our dresses get dry-cleaned and still come back as new?” The answer won’t only affect Rent the Runway. Last month, Nordstrom announced that it would begin selling garments pulled from Rent the Runway circulation at its discount Nordstrom Rack stores. Presumably, they’ll be able to last a few more dry cleans.

Of course, shoppers at Nordstrom’s New York flagship can take resale value for granted. But the mere fact that Nordstrom is offering the option to sell back apparel in the same store from which it was purchased marks a profound shift in how consumers, retailers and manufacturers will perceive shopping and ownership. In coming years, that shift should result in better quality stuff for everyone.

To contact the author of this story: Adam Minter at aminter@bloomberg.net

To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Adam Minter is a Bloomberg Opinion columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade” and the forthcoming "Secondhand: Travels in the New Global Garage Sale."

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