The False Promise of Thrift Companies

Good morning, Nerders. It’s Tuesday, July 9th. In today’s newsletter, we cover:

• The secondhand apparel market is huge and growing — yet most companies in the space are struggling

• Inside Out 2 saves 2024 box office numbers

• Adults are driving significant growth in the toy industry

TODAY’S STORY

Americans give away 70 pounds of clothes annually, and everybody, especially younger generations, loves thrifting.

The U.S. secondhand apparel market is projected to reach $73 billion by 2028, increasing at an average of 11% annually.

Even in a hot market, companies specializing in secondhand apparel haven’t been able to create a compelling investment case:

• ThredUp, an online thrift store, is down ~25% year-to-date

• Savers Value Village, a brick-and-mortar thrift store chain, is down ~29% year-to-date

• RealReal, an online luxury thrift store, is up ~67% year-to-date but still down ~88% all time.

While each thrift store's business model presents unique challenges, one consistent problem in the industry is balancing quantity with quality. Many items don’t sell, and some don’t even end up on the sales floor.

In response to the quality challenge, RealReal tweaked its commission structure to incentivize consignors to send in more expensive items, and Savers is trying to snag higher-quality items by placing drop-off trailers near locations frequented by wealthier shoppers. 

So far, secondhand apparel companies hold more promise than substance and have grown slower than the overall market.

DATA BYTES

Inside Out 2 Scored Big at the Box Office

• The summer box office has been off to a slow start after last year’s Hollywood strikes delayed expected hits such as Snow White and Blade

• Inside Out 2 has now cemented itself as one of the top-grossing animated movies in history, both domestically and worldwide

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Adult Toy Buying

@boringbusinesskieran

Adult toy buying 🧸 #business #toyindustry #trends #foryou

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To read the web version of previous stories, click here

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Thanks for reading,
Kieran & Justin Ryan