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10/29/2021

CSA Exclusive: Neil Saunders provides insight into resale

Dan Berthiaume
Senior Editor, Technology
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Neil Saunders
Neil Saunders, managing director, GlobalData

There are multiple factors driving resale growth — and they will extend into 2022, according to one of the nation’s leading retail experts.

In an exclusive conversation with Chain Store Age, Neil Saunders, managing director of research firm GlobalData, discussed the latest trends in the U.S. secondhand market. He discussed resale in context of Mercari's first-ever Reuse Report, which details the growth of the resale economy and forecasts that by 2030, American consumers will spend $353.9 billion on secondhand items. This represents 153.5% growth over 2020 — and 3.2 times that of the 36.7% growth anticipated for the retail sector.

“There is not one factor driving resale growth,” said Saunders. “There are a lot of factors. One is value for money. Resale allows consumers to buy products much more cheaply, especially branded items. They can find things they can’t find elsewhere, with the ‘treasure hunt’ experience they get from off-price retailers. People like to explore, and resale also leads to a lot of impulse purchases.”

According to Saunders, online resale enables shoppers to have the experience of searching for unexpected, valuable items without having to visit a physical secondhand store. Saunders also said resale satisfies the growing consumer desire for sustainability in the products they buy.

“Consumers are considering the environment,” commented Saunders. “They like circular e-commerce. It also lets them sell and get rid of their own unneeded items. It’s a nice ecosystem.”

Ongoing disruptions in the global supply chain are also driving increased customer interest in purchasing products on the resale market, especially as the holidays approach, said Saunders.

“There are significant delays in the supply chain, and consumers are concerned they won’t be able to get what they want for the holidays,” he said. With resale, products don’t have to be shipped from overseas. They’re already manufactured. I’ve never seen the supply chain be such an issue ever before.”

[Read more: Study: 98% of retailers having supply chain issues; will last beyond 2022]

Saunders cited Mercari data which indicated close to 20 million U.S. consumers will spend roughly $7 billion during the 2021 holiday season due to supply chain concerns.

“These sales will be cannibalized from traditional retailers,” said Saunders. “Will retailers notice? No, because the whole market is going up. But it’s something to celebrate. The whole retail market is growing, but resale is growing faster.”

Beyond the holidays, Saunders sees a confluence of factors coming together to produce another strong year for resale in 2022. The Mercari Reuse Report predicts that resale retail will grow 11.7% year-over-year in 2022, compared to 2.5% annual growth in traditional retail.

“The supply chain will drive more money into the resale market, as will consumers tightening their finances,” he said. “With inflation, prices will go up tremendously on essentials like gasoline and heating, which will create more compression on disposable income. Also, customers receive enjoyment shopping secondhand platforms, all of which will make 2022 a good year for resale.

When asked if the growing success of resale will draw more traditional retailers into the space, Saunders said he thinks it will, but traditional retailers need to be ready for a challenge. He advised traditional retailers that want to enter the resale market to consider partnering with an established third-party platform that can provide them the necessary infrastructure and other support to succeed.

“Everyone wants a slice of the resale pie,” said Saunders. “But it’s a complicated business. You need all the logistics and the platform. Selling in the secondhand market and sorting what is available at scale is complex. The demand is there, but you may not have the supply. Retailers will struggle with limited supplies.”