Every garment in this new Madewell store has already been worn
Today, Madewell joins forces with ThredUp, the largest online consignment and thrift store, to debut a new retail concept called a “Circular Store” on the second floor of the brand’s existing Williamsburg location. Customers will be able to shop an assortment of pre-owned Madewell products, repair and tailor garments, and drop off old clothes. While the store is temporary, the two companies say it’s meant to help them explore how fashion brands can start selling secondhand products in-house, including in their brick-and-mortar locations.
ThredUp launched in 2009 and has become a giant in the resale industry, having processed more than 125 million used goods from 35,000 brands. It went public in March of this year, after a blockbuster 2020, in which it generated $186 million in revenue selling millions of garments. The company has built three high-tech distribution centers around the country where it processes the hundreds of thousands of items that sellers send in daily, which are photographed and priced, before being put on the ThredUp website to be sold.
Madewell happens to be one of the most popular labels on ThredUp: The company says that every two minutes, a secondhand Madewell item is sold on ThredUp, and Madewell’s denim sells 40% faster than other denim brands. “We were convinced that Madewell was actually made well enough to withstand resale, which is not true of every brand,” says Erin Wallace, ThredUp’s VP of integrated marketing, who worked closely on developing the Brooklyn store. “This makes Madewell a very appealing partner to us.”
For the past two years, Madewell has partnered with ThredUp to sell secondhand products in-house. In 2019, Madewell started selling used jeans from thredUP in select stores, and in 2020 they began selling secondhand denim online through Madewell Forever, a resale site powered by thredUP. ThredUp sorts through Madewell products that arrive in its warehouses and curates a selection that it believes will sell well. “By now, I would say we’re in a committed long-term relationship with ThredUp,” says Liz Hershfield, senior VP and head of sustainability at the J. Crew Group, which owns Madewell. “They were just the right partner for us because they could build out something that made sense for our customer, and we could use their expertise in collecting and sorting through secondhand product, which we have no experience in.”
Hershfield says Madewell doesn’t currently generate revenue directly from selling secondhand products—including those in the Brooklyn pop-up—but she believes it’s still a valuable endeavor because it signals to consumers that the brand is concerned about sustainability. And it can also win over some consumers who are attracted by the lower price point of these secondhand products but may buy full-price Madewell goods in the future. “We believe this partnership drives traffic,” she says. “We know that Gen Z and younger generations are very focused on thrifting. So for us, it’s very important to gain the attention of this customer by offering something that shows that we’re really standing behind circularity.”
The retail store is the next stage in the companies’ relationship. The companies didn’t disclose the financial terms of the partnership, but ThredUp will handle the processing and curating of secondhand products, while Madewell will manage the merchandising in the store. The store has an educational component: Customers will learn how to launder and mend their own clothes so they last longer and preserve their value on the resale market. Madewell will also bring in experts from Patagonia to offer workshops on upcycling and repairing clothes.
But for most consumers, the main draw will be the ability to shop secondhand Madewell items in-store at around 30% of the cost of retail prices. Madewell was deliberate about displaying these items with the same attention to detail and branding as they do for new objects. While 42% of millennial and Gen Z consumers already shop resale, Wallace believes a store like this might convince some consumers who have never tried secondhand to give it a go. “Environments like this feel very nonthreatening and very much like what you might expert from a fashion boutique,” she says. “This lowers the barriers to getting them to try resale.”
The Circular Store in Brooklyn will be open until the end of October. Hershfield says if the store is a hit, Madewell may roll out similar concepts at other retail locations, and perhaps, eventually, a permanent secondhand store. ThredUp, for its part, is currently in talks with other labels to explore similar partnerships.
ThredUp makes pennies on each secondhand item it sells. But it believes it can eventually become profitable by processing an enormous volume of goods, thanks to its high-tech fulfillment centers that largely automate the sorting process. Last week, ThredUp said it will spend $77 million on its fourth flagship distribution center in Lancaster, Texas, which will open in mid 2022 and can hold 10 million items. “We want resale to be a meaningful channel for brands in the same way that off-price or wholesale is right now,” Wallace says. “Our position is that it is incumbent on us to make resale viable and profitable when incorporated into traditional retail. So whatever we can do to support retail partners in introducing more retail opportunities, we’re there for it.”