Will thredUP make Macy’s more thrifty?
ThredUP bills itself as the largest online thrift store. Soon it may also call itself the largest online thrift store inside the biggest department store chain in the U.S. On yesterday’s earnings call with analysts, Macy’s, Inc. CEO Jeff Gennette said the company’s namesake department store chain is engaged in a 40-store pilot with thredUP to sell second-hand clothing.
“We know many consumers are passionate about sustainable fashion and shopping resale,” said Mr. Gennette. “This partnership gives us the opportunity to reach a new customer (Millennials and Gen Z) and keep them coming back to shop an ever-changing selection of styles and brands that we don’t typically carry.”
Mr. Gennette said that Macy’s is trying to reach beyond its core and more frequently attract younger consumers who fall into the chain’s “occasional customer” bucket. The pilot with thredUP, as well as the chain’s STORY in-store concept and other tactical initiatives, are part of Macy’s strategy to offer the merchandise and shopping experiences that will do just that.
ThredUP’s annual report released in March showed that the apparel resale market has grown 21 times faster than new clothing sales over the past three years. Annual revenues are projected to reach $51 billion by 2023, up from $24 billion at present, driven by sustainability-minded Millennials and Gen Zers.
Macy’s CEO said the thredUP test, to this point, has shown that it doesn’t pose any significant threat to the new merchandise stores typically sell to the chain’s core customers. The department store provides thredUP with list of merchandise it does not want to sell to avoid conflicts with current suppliers.
To date, Mr. Gennette said that the presence of 500-square-foot thredUP shops have had no discernable impact on Macy’s Backstage discount sales in those locations.
Mr. Gennette told analysts that Macy’s in tinkering with selling thredUP merchandise in various parts of its stores to see where it drives the most sales. He said that the companies would have a full read on the success of the partnership by the end of the fall.
J.C. Penney has also announced plans to conduct a similar 30-store test with thredUp in its stores. The in-store shops in Penney will range between 500- and 1,000-square-feet.
“With the rise of online resale markets, there’s no doubt that demand for great value on quality brands is at an all-time high. There’s an emotional thrill that comes with finding one-of-a-kind secondhand product for much less,” said Michelle Wlazlo, executive vice president and chief merchant for Penney, in a statement. “While there are more secondhand shoppers than ever before, we’ll continue to test and evaluate how this resonates with customers. We’re excited about the prospect of creating a new in-store experience that makes high-end brands attainable, as well as catering to eco-minded consumers who want more sustainable options in their wardrobe.”
- Macy’s, Inc.’s (M) CEO Jeff Gennette on Q2 2019 Results (Earnings Call Transcript) – Seeking Alpha
- ThredUP 2019 Resale Report – thredUP
- JCPenney Partners with thredUP in New Business Model Expansion – J.C. Penney/Globe Newswire
DISCUSSION QUESTIONS: What do you think of Macy’s partnership with thredUP and its place in the chain’s strategy to attract younger customers? Do you find it credible that the sale of thrift clothing will not cut into Macy’s sales of new apparel?