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Resale of Clothes: Brands' Strategy to Capture New Customers
🇦🇷 Argentina /Culture & Society

Resale of Clothes: Brands' Strategy to Capture New Customers

From La Nación · (9m ago) Spanish Positive tone

Translated from Spanish, summarized and contextualized by DistantNews.

TLDR

  • Major fashion brands are increasingly adopting clothing resale as a business strategy to attract new customers and boost sales.
  • This circular fashion model allows consumers to bring in used items for credit towards new purchases, with 50% of these resale buyers being new to the brand.
  • The strategy helps brands engage customers in a cycle of consumption, offering value without constant discounting, and is being implemented by startups like Pacto Collective using AI.

In a significant shift within the fashion industry, major brands are embracing the resale of pre-owned clothing as a key business strategy. This move is not just about sustainability; it's a calculated effort to revitalize the market, foster customer loyalty, and attract segments previously priced out of premium brands. Faced with declining consumer spending and intense competition from ultra-fast fashion players, circular fashion has emerged as a valuable avenue.

The model typically involves customers returning their used garments to a brand's store. These items are then refurbished and resold through the brand's own circular e-commerce platform, often at around 55% of the price of a new item. In return, customers receive store credit, which incentivizes further purchases. Crucially, data suggests that about half of the customers purchasing these pre-owned items are new to the brand, effectively opening an accessible entry point without diluting the brand's core image.

Es mucho más potente que un descuento tradicional. Le das crédito a cambio de algo tangible, recibís una prenda que podés revender, y el cliente vuelve y gasta más. Al final del día es como dar un 30% de descuento, que hoy las marcas dan por casi cualquier cosa, pero con valor detrás

— Nick TepermanNick Teperman, co-founder of Pacto Collective, explained the effectiveness of the resale credit model compared to traditional discounts.

This strategy goes beyond merely attracting new clientele; it aims to increase the spending of existing customers. When a customer exchanges used clothing for credit, they tend to spend significantly more, often three times the value of the credit received. Startups like Pacto Collective are facilitating this by using artificial intelligence to manage the resale process, integrating historical brand catalogs to accurately identify and price pre-owned items. This innovative approach allows brands to offer tangible value and discounts indirectly, avoiding the common practice of constant markdowns that can devalue a brand's offerings.

Es mucho más potente que un descuento tradicional. Le das crédito a cambio de algo tangible, recibís una prenda que podés revender, y el cliente vuelve y gasta más. Al final del día es como dar un 30% de descuento, que hoy las marcas dan por casi cualquier cosa, pero con valor detrás

— Nick TepermanTeperman further elaborated on how the model provides tangible value and encourages repeat business.
DistantNews Editorial

Originally published by La Nación in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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