Neiman Marcus Innovates a Resale Model

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For the past several years, each Earth Day has surpassed the one before it with tons of digital and physical media loudly \”talking the talk\” about saving the planet. Big shift: There is now a critical mass of vibrant \”green shoots\” (pun intended) emerging that signal consumers are \”walking their own walk,\” enough so, that they are driving all consumer-facing industries to \”walk the proverbial walk.\”

Many media platforms are leading the charge, even turning Earth Day into Earth Weeks and Months. Dare I say it, we are in Earth Day Perpetuity, now \”shouting the shout\” calling out designers, retailers and brands across all consumer-facing industries who are role models aggressively adapting their business models to support sustainability initiatives. I believe the term \”circular economy/commerce\” now popping up in the cultural conversation is a more realistic definition than sustainability — because it acknowledges that the profitable growth of commerce and the economy must also be as sustainable as all of the other \”green\” and humane initiatives.

To achieve both will be very challenging. It will require the melding of two inter-related dynamics:

  1. The most powerful force will be the millennial and Gen Z consumers, now overtaking boomers as the largest consumer cohort. They will continue to accelerate their demands for products with social and environmental values and purpose.
  2. Businesses must be able to figure out how to build circular strategies embracing social and environmental values that will actually enable cutting, or at least maintaining costs, and will enable maintaining or increasing prices and margins.

This is when I say, \”good luck.\”

All consumer-facing businesses are just at the beginning of this long, complex and costly venture. And if you are not among the pioneers, you may never catch up.

Innovation in Circular Commerce

For this article, I want to focus on Neiman Marcus\’ recent acquisition of a stake in Fashionphile, an online and brick-and-mortar secondhand luxury retailer. One of the reasons I choose Neiman Marcus is that the strategic and structural model they are developing with Fashionphile is translatable across all sectors of retailing, not just luxury.

With the acquisition, Neiman\’s has become the first in the luxury sector to essentially create a secondhand shop within select stores. It is a pioneering example among major retailers to initiate one element of circular fashion, in one product category and in one sector. The repurposing of apparel and accessories products by recycling, upcycling, reusing, reselling, swapping or just plain giving away the stuff to people in need is an element of circular fashion that is \”low-hanging fruit,\” because it is relatively easy to execute and more importantly, there is a ton of research and data that tell us that the new gens are clamoring for preowned products.

ThredUp, a managed online marketplace for all brands-from GAP to Gucci, recently released their 2019 Resale Report, which is mindboggling, in terms of the projected size and rapid growth of the resale market, consumer demographics and the innovation and technology that created the resale revolution.

I won\’t belabor the need for this resale solution (which you are all aware of). Roughly $400 billion worth of excess apparel inventory ends up in landfills or is destroyed every year. Only one percent is repurposed back into commerce.

So, what is the solution and the opportunity? According to ThredUp\’s report, here are some of the topline numbers (there is much more in the report, well worth reading):

  • The secondhand market will reach $51 billion in five years, up from $24 billion in 2018, and has grown 21X faster than all of apparel over the last three years.
  • Resale will exceed the size of fast fashion retail by 2028.
  • 64 percent of women bought or are now willing to buy pre-owned products, up from 45 percent in 2016
  • Millennials and Gen Z\’s are driving the growth, 2.5X faster than other age groups

Neiman Marcus: A Pioneer

So, Neiman Marcus is the first in the luxury sector to launch a resale model within its stores. Its acquisition of Fashionphile (founded in 1999) gives it a leading edge with the overnight inventory of 15,000 pre-owned ultra-luxury handbags and accessory items with \”best-in-class authentication.\” As opposed to The Real Real and Poshmark, two other pre-owned competitors, who are solely digital and operate as consignment models, Fashionphile buys the pre-owned luxury goods and owns the inventory.

Customers bring their used goods to the Fashionphile salons within Neiman\’s where they are greeted by ambassadors. The goods are authenticated and valued by the experts. The purchase is then made, or the customer may use the quote as a credit to shop at Neiman\’s for other products.

According to a company press release, the goal of the model is to \”create an elevated pre-owned experience for consumers by matching the physical footprint and loyal customer base of Neiman Marcus with Fashionphile\’s digital inventory of ultra-luxury items. And because there is limited overlap between buyers and sellers in the pre-owned luxury market, the partnership will help Neiman Marcus reach new, younger shoppers ahead of their peak spending years.\”


According to Geoffroy van Raemdonck, CEO of Neiman Marcus, the decision for Neiman Marcus to invest in resale came out of a customer survey the retailer conducted last year, which found that half of its shoppers were shopping on resale sites but were dissatisfied by the available services.

The resale customer is younger than the core Neiman Marcus customer, so as they begin to shop in the Fashionphile salons, the amount of collected data will be invaluable for personalizing engagement with the emerging young shopper, gaining their loyalty and cementing the relationship into the future.

Neiman\’s plans to open five to seven Fashionphile salons in the fall, projected to generate about $200 million in revenue this year.

The fact that Neiman\’s is out in front with this model should send a message to both the other luxury players and the entire industry. The next gen\’s desire for earth-saving, social and humane values, along with wanting access over ownership, is real. It\’s gaining speed and it will leave you at the station, if you don\’t figure out how to adapt and transform your business model to fulfill those desires.

Don\’t dismiss the power of the pre-owned, resale apparel market. It is an important piece of circular, sustainable fashion and easy to participate in. And it\’s the tip of the melting iceberg.

Go for it!



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