Gen Z is leading the thrift shop boom, and older generations are joining them, thanks to inflation and tariffs. The shift to thrift shopping can create new business opportunities that add more flexibility to people's budgets.
Buyers And Sellers Are Flocking To Thrift Clothing
The strong demand from buyers has attracted thrift clothing sellers who act as middlemen. These people look for deep discounts and resell the clothing on sites like eBay (NASDAQ:EBAY). The popularity of thrift clothing is poised to continue since younger generations are leading the charge.
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Buyers like the idea of getting quality clothing at a discount, and many of them do not treat thrift clothing as a downgrade. It's a way to save money while getting clothing that might be more durable than new clothing.
"The stigma around secondhand clothes really died with the baby boomer generation," William Blair & Company Research Analyst Dylan Carden told CNBC.
The Industry Is Growing
ThredUp's (NASDAQ:TDUP) 13th Resale Report gave investors a glimpse into a growing industry as more people turn to used clothing. The report anticipates the global secondhand apparel market reaching $367 million by 2030. The U.S. secondhand apparel market is expected to reach $74 billion by 2029.
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ThredUp has been a major beneficiary of the growing thrift shopping trend. Its revenue increased by 34% year-over-year in Q3, contributing to the stock rallying by more than 400% year-to-date. The stock had been sluggish for a few years leading up to the big surge, indicating that many investors and shoppers are just starting to pick up on the opportunity.
Inflation and tariffs can help secondhand clothing gain more market share, especially as people look for ways to shop in a sustainable manner. Buying secondhand clothing is less wasteful than buying new apparel. ThredUp currently has 1.57 million active buyers, after experiencing a record 54% year-over-year growth in new buyers. Its most recent quarter was the best quarter for new buyer acquisition in the company's history.
AI Makes Thrifting Even Easier
Artificial intelligence has disrupted many industries, so it's no surprise to see that this technology is making thrift shopping more accessible. AI makes it easier for sellers to list items, and it also helps buyers find clothing that matches their style.
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"AI has the potential to really transform the way that people are shopping online right now," Scalable co-founder and Co-CEO Jasmine Enberg told CNBC.
Shoppers can find personalized thrift options with a single prompt. They will have to spend less time shopping before finding what they need, and less friction can support higher growth rates for the industry.
ThredUp CEO James Reinhart told CNBC that his company receives secondhand clothing in the U.S. and keeps all of its logistics within the country, leaving it unaffected by tariffs.
"We receive more than 100,000 pieces of clothing every day, so it's a business operating at some significant scale," he said.
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