Millennials Spark Disruptification in the Fashion Industry — Here’s How to Profit
Millennials are reshaping the retail industry.
The latest that’s about to be disrupted by the millennial consumer movement is the fashion industry.
In all, GlobalData, a retail analytics firm, calculates that the secondhand clothing market is growing 21 times faster than the overall industry.
Millennials, with the help of Generation Z, have turned the tables on the clothing industry by rejecting luxury brands and labels. These days, when you walk into a downtown coffee shop, you’re more likely to see comfortable, practical wear instead.
This Disruptification has created a threat to fast-fashion retailers — but created an opportunity for us to profit with this trend.
The coming of age of the millennial generation is creating a shift in big companies across the board. Millennials are becoming the world’s most powerful consumers.
Part of the reason is that they are embracing technology. And it shows in the rise of new-world companies:
- Ridesharing companies like Uber are killing car sales.
- Food delivery services like Grubhub have transformed restaurants.
- Netflix surpassed Disney as the world’s most valuable entertainment company.
And now, they’re disrupting the clothing market by embracing secondhand fashion with open arms, creating a “recommerce” renaissance. Recommerce is the process of selling previously owned products.
According to thredUP, the world’s largest online thrift store, 18- to 37-year-olds are adopting the secondhand clothing trend 2.5 times faster than other age groups.
As you can see in the chart below, thredUP also notes the resale clothing industry is expected to more than double from $24 billion in 2018 to $51 billion by 2023.
Secondhand Clothing Is Taking Over U.S. Closets
GlobalData also projects that the secondhand clothing market will grow more than two times faster in the next 10 years. Secondhand clothing will soon take up 33% of U.S. closets.
So, with millennials and Gen Zers leading the way, we are in for a change in the retail sector.
These generations are proving that they’re trendsetters successfully making a significant impact on an established industry. Many are environmentally and sustainably conscious consumers with lots of buying power.
Millennials alone are more than 80 million strong in the U.S. According to Accenture, by 2020, millennials are projected to spend $1.4 trillion in the U.S. per year.
They will represent 30% of total retail sales and do 60% of their shopping online.
The boom of the secondhand clothing market began in 2013. Before that, the market mainly consisted of thrift and donated items.
But with the advancement of technology, e-commerce and innovation, 2013 marked a transitional year for the secondhand clothing market.
The concept of recommerce has taken off since the mid-2000s.
We see it everywhere.
From major mobile operators like AT&T selling refurbished phones to global commerce companies like eBay giving consumers the platform to sell used goods online…
Recommerce is here to stay and is set to grow leaps and bounds with the help of millennial and Gen Z consumers. That means there’s plenty of room to profit.
Get in on This Exploding Industry
The Global X Millennials Thematic ETF (Nasdaq: MILN) is an exchange-traded fund (ETF) incorporated in the U.S. This fund tracks the performance of the Indxx Millennials Thematic Index. The ETF invests in companies that provide exposure to the millennial generation.
This ETF includes companies such as PayPal, eBay and Amazon, which are notable players in the recommerce market.
This ETF is up 25% year to date and poised to continue growing for years to come.
I think this is the best way to buy into this millennial fashion industry trend and rake in the profits.
Until next time,
Director of Investment Research, Banyan Hill Publishing