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Resale: Measuring the Impact of Physical Retail Resale Locations

R.J. Hottovy
Jun 23, 2023
Resale: Measuring the Impact of Physical Retail Resale Locations

With inflation continuing to shape consumer behavior around retail–leading to malaise across the broader category–we thought we’d revisit the topic of resale. We already looked at visitation trends and unit economics for several thrift store concepts earlier this year, including Savers, Value Village, Goodwill, Salvation Army, Plato’s Closet, and Buffalo Exchange. We’ve also looked at consignment trends from thredUp, the online resale/circular service provider for brands like REI, Patagonia, H&M, and American Eagle.

Placer’s visitation trends for thrift stores and ThredUP’s data reinforce the sizable opportunity that many retailers have within resale. According to ThredUp’s 2023 Resale Report, resale grew 5 times faster than the apparel retail segment in 2022 and is expected to continue to outpace the apparel retail over the next several years.

Source: ThredUp 2023 Resale Report

Since we’ve examined the traditional thrift store and the online consignment models, we thought we’d spend some more time on retailers’ resale efforts within their physical stores. There isn’t a one size fits all approach to in-store resale, and we’d expect apparel and sporting goods retailers to adopt multiple approaches, channels (physical stores and online), and inventory procurement models to build out a comprehensive resale platform.

This past week, REI announced plans to open a second store under its RE/Supply resale banner in the Clackamas Town Center (Oregon) in late August 2023. The new store will occupy more than 16,000 square feet and will be located “a few doors down” from a traditional REI store in the same center. The Clackmas store will follow REi’s first RE/Supply store, which opened in Manhattan Beach, California in 2020.

We’ve seen several discussions about resale driving visits to retail stores, so thought we’d examine REI’s Manhattan Beach RE/Supply store in greater detail. For starters, our visitation data suggests the Manhattan Beach started to outperform REI’s other Los Angeles market stores with respect to year-over-year visits in Sep. 2022 and has continued through May 2023 (below).

While we admit that year-over-year visitation trends for a single store location can be influenced by a number of factors–many of which can be situational and/or market specific–Placer data sheds some light on why RE/Supply might be ripe for more aggressive expansion. First, while the RE/Supply store is roughly average relative to the rest of the REI chain from a visit-per-visitor frequency standpoint, it ranks in the 93rd percentile in terms of visits per location on a nationwide basis (below).

With 19.6 visits per square foot on a trailing twelve month basis, the RE/Supply location also ranks well ahead of visits per square foot for the sporting goods category (metrics we first introduced in March). While we’ll wait for additional RE/Supply openings to make any definitive conclusions, there are early indications that physical store resale concepts are driving visits against the current macroeconomic backdrop. We expect other retailers to explore similar resale store tests in the months and years ahead.

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R.J. Hottovy

Head of Analytical Research,

R.J. Hottovy, CFA has covered the restaurant, retail, and e-commerce sectors for 20 years as an equity analyst and strategist for Morningstar, William Blair & Co., and Deutsche Bank. R.J. also brings a wealth of experience with early-stage investments as a committee member for the IrishAngels / Vitalize venture capital group. Over the past three years, he advised over 50 food service companies on more than $200 million in early-stage capital raises and M&A transactions.

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