Can the licensing community play in the resale and rental markets?

The rise of the resale business, primarily in apparel and footwear, has been striking. The total apparel resale market (including thrift and donation stores) is projected to more than double to $64 billion (from $28 billion) in the next five years, according to a report from online reseller ThredUp. In 2019, 40% of Gen Zers and 30% of millennials bought used apparel, footwear and accessories, up from 26% and 21%, respectively, three years earlier, the report found.

Apparel resale players at this point include the likes of ThredUp, The RealReal, Poshmark, Rent The Runway, among others.

Small, but growing
Meanwhile, there’s a small but growing movement toward rental businesses in categories such as bakeware, toys, and furniture.

In both cases, they’re driven by thrift, but also by an increasing number of consumers for whom ownership is less important than being on-trend or being environmentally responsible. “Gen Z and Millennials are concerned about sustainability, but they also are about where it positions them socially,” says Tom Mirabile, Principal at Springboard Ventures, noting that a rental-only line might be an avenue for licensing. “The secondary[sale] online buying habit shows that you are in the know and understand digital ecommerce.”

Issues for licensing
But the rise of resale presents issues for the licensing business. By definition, rising sales of used goods, or repeated rental of the same products, diminish opportunities to sell new merchandise. IP owners and their licensees only earn revenue on the initial sale. If the rental market develops, Mirabile sees an opportunity for vendors to create channel-specific lines, perhaps under licensed brands.

In the resale business:

• The RealReal, which focuses largely on luxury apparel and accessories from consumers that it resells on consignment both online and through a growing network of retail stores, including a location opened last month in Brooklyn, NY and a 12,000-sq. ft. flagship in Chicago last October. It also is adding a network of 2,000-3,000-sq.-ft. locations that are to serve as “neighborhood” stores, combining a consignment office with display space for 400-500 SKUs, CEO Julie Wainwright told analysts late last year. The consumer interest is there with supply falling about 10% short of demand in the third quarter ended Oct. 31. Perhaps to avoid that kind of crunch going forward, The RealReal plans to add goods sourced directly from manufacturers to the consignment mix during the next 18 months, with that category accounting for 15-20% of the company’s revenue within several years, Wainwright said.
• Online thrift store Poshmark, which largely sells footwear and apparel, had 31.7 active users as of Oct. 31, the majority of whom were Gen Z or millennial women, the company said. It had 6.7 million sellers. The company, which went public in January, said revenue rose 28% during the first three quarters of 2020 to $192 million.
• The resale market for sneakers is expected to hit $6 billion by 2025 against the $100 billion primary market, according to online marketplace StockX. About 60% of Gen Z males reporting have used StockX.

Among current rental businesses:

• Lynn’s Cake and Candy Supply, Fridley, MN, rents specialty cake pans under Spiderman, Strawberry Shortcake, Batman and other brands for $3 per day, also providing baking and decorating instructions.
• UK-based toy rental service Whirli lets families pick the toys they want delivered, play with them for several months and swap them for other items or buy them at a reduced fee. The products come in subscription boxes with monthly fees. Among other items, Whirli carries Tonies Toys’ licensed Peppa Pig and Toy Story audio products.
• UK retailer John Lewis launched a furniture licensing program last year targeting millennials with more than 50 items that can be rented starting at £17 for a desk or chair. Ikea also has joined the furniture rental fray.