Second hand is for life, just not for Christmas

By Chris Lidington, Associate Partner - Retail & FMCG, CACI

First published in Retail Destination, 7 September 2023

It’s never too early to talk about Christmas. Last December, The Telegraph claimed that there’s “just no need to buy new[1]” and forecast a Christmas season of pre-loved gifting, fuelled by the cost of living crisis. Whilst this is, in theory, a nice idea that would certainly benefit the circular economy – and I’m sure many people happily gifted and received second-hand presents last Christmas – our data points to a rather different consumer reality.

Our data platform, Brand Dimensions, compares spend across 300 well-known brands that represent the UK market as a whole; a tool that comes in handy when trying to identify spending patterns and behaviour. It goes without saying that many retailers experienced their best month in December, but a few saw sales drop off over the Christmas period. One key trend points to the future of the retail market and the circular economy in particular, and should make many think a bit more about what they can do to prepare for the coming Christmas period, in order to capture the spend of both conscious consumers and the wider population in-store and online.

Brand performance in December 2022 suggests that ‘new’ still heavily outweighs ‘pre-loved’ when it comes to Christmas gifting. Retailer giants such as Next and Zara had big sales growth from November to December, up 34% and 31% respectively, a trend they’ll have seen for decades. On the other hand, sales on second-hand marketplace platforms Vinted and Depop dropped off during the same period, Vinted in particular falling by 30%, albeit from a best ever month and a remarkable year of growth. The simple suggestion is that consumers opted to not go for second hand when purchasing gifts, so pre-loved at Christmas isn’t mainstream…yet.  

If that is the case, in spite of The Telegraph’s rational argument for second-hand gifting growth, the questions is, why? Something we can assume is that people prefer buying from high street retailers, as the knowledge that you can get the item when you need it, and with a reliable returns policy offers peace of mind for both the gifter and the giftee, a key incentive when looking through the cost of living crisis lens. With less to spend, second-hand is a gamble without easy recourse, especially when buying for someone else.

And whilst box-fresh is still the preferred choice for Christmas the lines are becoming more blurred with the overall trend towards second-hand evident. The growth of ‘second-hand’ brands is exponential – Vinted has seen sales and transactions grow seven-fold in less than two years – and charity shops are opening interesting new department store type concepts in bustling shopping centres. The most prominent example of this is Charity Super.Mkt’s ‘department store for second-hand style’, taking over the vast ex-Topshop space in London’ Brent Cross for four weeks.

The Christmas period is of course a time where consumers have a higher propensity to spend and are more likely to visit shopping centre environments, and no doubt when it comes to second-hand customers will be more trusting if they can see the potential gift in real life, so why not take advantage of prime shopping moments to help bridge the gap?

Nearly three-quarters (74%) of people aged 18-24 are more willing to spend more on a brand that aligns with their core values. This is also supported by more than half of 25-34 year olds (57%), so there is a path to growth for brands that can showcase how their products correspond with what these groups increasingly want, in spite of the cost of living crisis.

We’ve seen some brilliant examples of brands that have evolved and pushed their ESG agenda in order to appeal to this audience: from UNIQLO’s ‘RE.UNIQLO’ free alterations in store, to Levi’s ‘Buy Better, Wear Longer’ campaign, to Nike’s recycling scheme, and even Apple selling refurbished phones. Historically these schemes would be seen as devaluing the brand, now they’re seen as crucial for keeping customers engaged.

Woven through this is the role of online, don’t forget the Online Halo. It is important for brands to recognise the value of their Online Halo, by co-mingling the in-store experience with online presence. With more and more consumers valuing a circular economy, engaging the offline customer will absolutely have positive ramifications for their approach to online. The shopping centre store should work really hard to amplify ESG, because it will no doubt convert online spend within this burgeoning community.

Given continued Christmas success for these traditional retailers, against expectations for a pre-loved boom, should they change for December 2023 to stave off a growing specialist second-hand market? Yes, in short. High street retailers will certainly have long-term success if they reconsider their offer around Christmas, to focus on sustainability initiatives and a circular economy. While big-name brands do come out on top during the festive period, given the rise in sustainability as a key motivator for spending decisions (particularly among younger audiences), they would benefit from more positive promotion of products and practices with evidenced ESG credentials – they shouldn’t rest on their laurels.

You’d certainly expect big names to start ramping up their efforts, and where better to start than offering sustainable initiatives bespoke for Christmas, when spend typically peaks? Let’s wait and see what they come up with.

While mass market continues to perform well, what lessons can platforms like Vinted learn from their Christmas drop-off, and how can they appeal more around this time? One option could be an algorithm to push premium items, for two reasons. Recent spend data highlights that despite rising costs to consumers, premium brands are performing pretty well – 35% of premium retailers saw sales growth when comparing December 2021 with the same month in 2022, compared with 19% that declined. This suggests a greater focus on quality over quantity in general spending; perhaps campaigns like Levi’s are working. Add to this the fact that people generally want to spend generously during the festive season, and you can see why someone might be more likely to buy a second-hand ‘vintage’ or premium gift. While pre-loved, it would still feel special, and there’s the added bonus of supporting the circular economy.

Aside from potential nervousness in second-hand gifting, another challenge to companies like Vinted is that in-store shopping has outperformed online more than many would have expected.

Could a Vinted in-store shopping experience be on the cards, or would that compromise the brand’s foundations? The nature of Vinted means it carries purchase risk and will struggle to compete with the return policies offered by high street retailers, something that could potentially be abated by a pop-up that allows returns for resale in the store itself.

Major retailers are changing their operations to retain customers removing friction between channels, surely it’s only a matter of time before the new wave of online retailers does the same? In addition to premium, pushing products that carry less risk, and are less self-evidently pre-loved (accessories, homewares etc), and introducing a premium gifting service with a guarantee of quality and packaging might help inspire more confidence.

This Christmas I’m expecting a heightened focus on sustainability from big name brands, combining purchase security with the glitter of the new. For consumers that already enjoy shopping on resell platforms throughout the year, I would love to see them having more access to premium items at a sensible price, opting to go for a special, one-off vintage piece for their loved one. I, for one, am very excited to see what Father Christmas has in store for me.

[1] https://www.telegraph.co.uk/christmas/2022/12/19/just-no-need-buy-new-rise-second-hand-christmas-presents/