December, 2023
By Jade Christiansen González
Fall 2023 Intern at Centro CRECE
Before the rise of social media, buying second hand clothing wasn’t most people’s first choice. Now, in a time where personal style reigns over brand names, it has gone from taboo to trendy. The force behind this new tendency are Gen Z and Millennial consumers whose demand for second hand items is rapidly growing. In Puerto Rico, this trend is raising the number of second hand markets and independent sellers capitalizing on the business and opportunities created by growing consumer interest in purchasing preloved goods.
An example that demonstrates the rapid growth of thrifting in Puerto Rico is the Vintfresh Market, which started in February 2021 with 13 vendors and now has 55 vendors. Vintfresh has created a community building experience which revolves around thrifting and local food businesses. It has given a modern spin to the original “flea market,” often associated with older generations. “After the pandemic, consumer behavior has changed, as people seek individuality. This type of second hand market helps you create your stamp or what sets you apart. It even helps you foment a lifestyle of your own through home goods and other second hand pieces,” said Melvin Pallens one of the organizers of Vintfresh Market.
In general terms, second hand sellers have to comply with the same legal obligations as retailers of brand new goods, including permits, collection of IVU, and payment of taxes. However, entering the world of thrifting could be especially appealing for vendors as it provides certain opportunities to maximize profits. For example, sellers have the choice of accepting donations of secondhand goods to supplement or build their inventory. Said option could represent lower inventory costs, therefore the possibility of increasing profits.
This article explores the concepts of Value Creation, Opportunity Cost, and Economic Incentives, what they mean in the ecosystem of thrifting and how they influence second-hand commerce in Puerto Rico.
VALUE CREATION
The economic term of value creation proves value to be determined by the human brain and relative to the consumer. This can be explained by phrases like “beauty is in the eye of the beholder” or “one man’s trash is another man’s treasure.” Part of being a vendor of pre owned items is curating the merchandise. By ensuring quality finds, sellers are sparing buyers the trouble of going through friends and family’s closets or their local garage sales and donation bins. When customers buy thrifted[1] [2] [3] pieces, or previously used items, they are not merely purchasing an item or something to wear; they are acquiring something that holds a particular value relative to their specific expectations and desires. This can be explained through the concept of subjective value as they are adding value to someone else’s discards. The subjectivity of value creation in thrifting is founded on the principles of a free market economy, because consumers’ demands give value and new life to items that otherwise were destined to be thrown away.
OPPORTUNITY COST
Opportunity cost – or what must be sacrificed to pursue a particular obtainable opportunity – is another fundamental economic concept that offers insight into the rising popularity of thrifting. For entrepreneurs who have decided to open their own thrifting business, time is a crucial resource. They invest significant hours sorting through pieces, meticulously curating their selection, and ensuring items are of high quality and in-line with current style trends. On the other hand, consumers are attracted to the possibility of purchasing unique and selected items that fit their distinctive and custom style for less than the cost of a brand new unit. In fact, by adding new services such as “style bundles” , vendors are taking advantage of the existing gap between the growing appetite for personal style and the lack of it in the market. Through custom styling services, sellers increase the value of their offer because they look for and select second hand pieces according to the client’s style based on a Pinterest board or aesthetic description. Although the time spent searching for inventory represents an opportunity cost for sellers because it comes at the expense of other activities such as store management, client interactions, and business promotion, it holds tremendous value for consumers. In a scenario where these secondhand apparel shops didn’t exist, individual consumers would need to spend the time sourcing the goods themselves. This process requires skill, effort and time that the average consumer is not willing to spend. Therefore, the growing demand and popularity of thrifting, particularly in the context of the increasingly prevalent second hand consignment shops, can be explained by the concept of opportunity cost. These shops are able to justify higher profit margins by offering consumers the opportunity of saving their valuable time and energy by taking on the role of curating products, simplifying the shopping experience and enabling individuals to enjoy more of life’s pleasures.
ECONOMIC INCENTIVES
Individuals, whether in their role as consumers or entrepreneurs, are encouraged by the possibility of making a good deal. In fact, the economic incentives of selling or buying pre-loved goods are so attractive that it is now considered a “win-win” and smart choice for all parties involved, no longer associated with waste, rags or junk, or lack of financial means. “The idea is to avoid waste or throwing anything in landfills,” said Melissa Ramírez, CEO and Executive Director of Vintfresh Market. With the rising concern about fast-fashion ending up in landfills and contributing to climate change, supporting sustainability and ethically-made clothing is crucial for Gen Z consumers. Through thrifting Gen Z consumers have the option to practice sustainability while creating an original style with timeless pieces. According to ThredUp’s 2022 annual industry report, 62% of Gen Z and Millennials begin their shopping by going to second hand vendors. Moreover, the report indicated that 75% of consumers have shopped or are open to shop secondhand. In 2022, 1 in 3 apparel items purchased were bought from secondhand sources. An overwhelming majority, 83%, of Gen Z admitted to secondhand shopping, the report said. The growing trend of secondhand shopping among Gen Z not only reflects a shift towards sustainability, but also highlights how ethical values inspire consumerism.
CONCLUSION
The choice to sell and buy goods that were once considered worthless is only possible in a free market. This growing trend is not only important because it is profitable, but because there is a human desire for authenticity, sustainability, and the freedom of choice. The rise of thrifting reflects how anyone can seek value and opportunity in just about anything, even something that was once frowned upon. As well as how economic prosperity can sprout from the least expected sources.
*This article was written by Jade Christiansen Gonzalez on assignment for Centro CRECE and published by Centro CRECE. Users can share this article using the following link: https://centrocrece.org/the-economic-side-of-thrifting/
