Briefing: April 7, 2023

A still-growing pool of consumers are buying pre-owned apparel, footwear & accessories, enabling the global secondary market to reach a value of $177B last year. According to a recent report from resale platform ThredUp, the resale market is projected to reach $350B by 2027, growing 3X faster on average than the global market for new apparel. Unsurprisingly, much of the market’s “strong growth trajectory” is being led by Gen Z consumers, more than half of whom say that they are “more likely to shop with a brand that offers secondhand apparel alongside new.”

In a further nod to Gen Z’s approach to retail & resale, 64% of shoppers in this demographic say they look for an item secondhand before buying it new and revealed that their motivations behind buying secondhand are ranked as: (1) value; (2) quality; (3) selection; (4) convenience; and (5) transparency.

By the Numbers …

– In the U.S., the secondhand apparel market is slated grow from $39B in 2022 to $70B in 2027.

– Online resale in the U.S. is expected to grow 21% annually over the next five years, reaching $38B by 2027, making it the fastest-growing sector of U.S. secondhand market.

– 37% of consumers spent more of their apparel budget on secondhand in the last 12 months. (1 in 3 apparel items bought in the last 12 months was secondhand, per ThredUp.)

– 63% of consumers increased their secondary market spend in response to inflation & 30% of Gen Z, in particular, said that they choose secondhand to afford higher-end brands.

The Brand POV: Brands/retailers are adopting resale at an accelerated rate in response to consumer demand, ThredUp found, stating that 86% of retail execs revealed that their customers are already shopping in the secondary market. As such, the top driver for brands/retailers that are entering into resale is “acquiring more customers,” followed by a push to become “more sustainable” and to “drive more revenue.” And from a big-picture perspective, more than 2 in 3 retailers that offer resale say that it is integral to the company’s long-term growth strategy.

THE BIGGER PICTURE: “Traditional brands & retailers are responding to demand by entering resale and are really the ones driving the market forward, and we expect increased adoption [of resale efforts by traditional retail entities] as secondhand becomes more of a lifestyle for consumers,” according to Neil Saunders, managing director of GlobalData. At least some brands are using the rise in resale – and the corresponding demand for vintage or other “it” items/bags – to introduce resale efforts of their own, with Gucci, for example, testing out a selection of vintage offerings on its site, as well as a recently announced resale venture with Vestiaire.

The counterpoint to the narrative about the overarching rise in resale activity is the fact that some of the very-biggest-names in luxury have been unapologetic about their unwillingness to actively participate in the resale market at this time. And in fact, in what appears to be one of the latest efforts by brands to cater to consumers w/o adopting the resale model (which at least some brands fear will cannibalize their sales of new products), some have been re-releasing new versions of “it” bags that have been garnering traction in the secondary market (think: MJ’s Stam bag & Dior’s Saddle), “looking to tap into early-2000s style nostalgia and recoup transactions that would otherwise be lost to second-hand marketplaces and resale sites,” according to the FT.

In Litigation News …

Hermès v. Rothschild – Rothschild’s counsel filed a reply memo in support of its motion for a JMOL or new trial, arguing that Hermès’ claims “are unsupported by evidence & that the jury was improperly instructed on the law applicable to this case.”

J. DOE 1, et al., v. GitHub, Inc., et al. – GitHub & Microsoft filed a reply in support of their motions to dismiss, arguing that the plaintiffs fail to articulate “harm to any IP or other legal interest that would entitle them to restrict the study, by human or machine, of software code that they made freely & publicly available.”

Moody’s Art LLC v. Fashion Nova – Moody’s has waged trademark infringement and dilution(?) claims against fast fashion retailer Fashion Nova for allegdly co-opting its “Sorry I Was Trapping” trademark.

Some trademark takeaways this week come by way of the web3 realm. New data from the USPTO (courtesy of Michael Kondoudis) reveals that the total number of crypto-related TM applications filed in Q1 (559) was down by 66% from Q1 2022. The number of applications for marks for use in the metaverse (i.e., virtual goods/services) was down 45% YoY – from 1,819 filings in the first three months of 2022 to 835 metaverse-related filings in Q1 2023. And finally, applications for TMs for use in connection with NFTs were also down, with companies filing 885 NFT-related trademark applications with the USPTO in Q1 2023 vs. to 2,530 in Q1 2022.

We have been tracking fashion/retail companies’ filings with the USPTO for applications for marks in the realm of AI to see if the trends mirror those related to web3 (namely, the rush in filings in late 2021 and into 2022), and thus far, the number of AI-centric filings by fashion brands has been minimal. This makes sense, as so far, most brands that are making use of AI are doing so with other companies’ tech (such as OpenAI’s Chat-GPT or Baidu’s Ernie Bot), and not via their own branded ventures. One exception here is the newly unveiled chat bot from Kering’s innovation arm KNXT, called /madeline.

We will continue to watch the relevant trademark developments in this space.

In some deal-making news … 

AMSilk has raised an additional €25M in an extended Series C funding round. The German industrial supplier of bio-fabricated silk protein materials says that it will use the new cash to accelerate industrial scale-up & expand commercial operations.

Native AI has raised $3.5M in a seed round in furtherance of its aim of “enabl[ing] brands to measurably improve products, customer experience, marketing & revenue through generative AI.”

Zyod – which offers apparel sourcing & manufacturing services to fashion brands on a global scale via a B2B platform – has raised $3.5M in a seed round.

– A Delaware bankruptcy court approved a deal that will see lenders Jefferies Finance, Cerberus Capital Management & FB Intermediate acquire “substantially all” assets of bankrupt beauty group Forma for $690M.

– And ICYMI: Authentic Brands Group made a binding offer on Mar. 31 to purchase Boardriders, a global action sports and lifestyle company. The deal will see Authentic “strategically diversify & expand its portfolio w/ the addition of Quiksilver, Billabong, Roxy, DC Shoes, RVCA, Element, VonZipper & Honolua.”