Business models that are beneficial to society are enjoying growing appeal as consumers increasingly turn to retailers and brands that have meaning and purpose. What Is the Trend? Sustainable business practices influence consumers’ brand loyalty. Among respondents in Computer Generated Solutions 2019 Retail and Sustainability Survey, 28% said sustainable/ethical business practices make them brand loyal. And Gen Z was more likely to prioritize sustainability, brand name and company mission/purpose than other age groups. [caption id="attachment_93313" align="aligncenter" width="700"] Respondents could choose multiple options. Base: 1,000+ US Internet users aged 18+, surveyed in 2019 Source: Computer Generated Solutions [/caption]   And surprisingly, in 2018, 64% of women said they were willing to buy secondhand products, up significantly from 45% just two years prior. Looking at responses by age, millennials and baby boomers thrift the most, at 33% and 31% respectively. In addition, 74% of 18-29 year olds prefer to buy from sustainably conscious brands, according to the ThredUp 2019 Resale Report. The lower cost of second-hand goods maps to young people’s desire to be seen in new styles constantly but on a lower budget. See more in our report Luxury Differentiation via (Social) Values, Sustainability and Limited-Run Collaborations.   [caption id="attachment_93314" align="aligncenter" width="700"] Source: ThredUp 2019 Resale Report[/caption]   Model 1: Resale The ThredUp 2019 Report predicts the total secondhand apparel market will double in size in five years with resale driving the growth. The resale apparel market is expected to reach $20 billion by 2022, according to ThredUp. Other resale retailers include The RealReal and Poshmark. [caption id="attachment_93315" align="aligncenter" width="700"] Source: Crunchbase/Company reports/By the Numbers[/caption]   Our proprietary data suggests that 19.8% of surveyed respondents used resale, rental or subscription services last year. Among apparel shoppers, 6.8% used Poshmark, 3.7% used ThredUP and 1.3% used The RealReal in the past year. [caption id="attachment_93316" align="aligncenter" width="700"] Base: 1,628 US Internet users aged 18+ who have bought clothing or footwear in the past 12 months, surveyed in January 2019
Source: Coresight Research [/caption] Resale is circular and provides the opportunity for longer-term sustainability for the apparel industry. Resale could lower the apparel industry’s carbon footprint as the average lifespan of a piece of clothing lengthens as more consumers extract value from a single article of clothing. The United Nations Framework Convention on Climate Change (UNFCCC) estimates the fashion industry is responsible for 10% of total global carbon emissions and that the sector’s emissions will increase by more than 60% by 2030. Model 2: Rental Although indulgent luxury consumption still exists, more and more consumers want to get access to various luxury products by renting. Renting expands the potential pool of size of luxury shoppers, allowing consumers to participate in a lifestyle and enjoy the use of luxury products for a short duration, during which they can live the dream. Websites such as Villageluxe and Rent the Runway offer couture, designer clothing and accessories for rent at prices considerably below purchase price. As a peer-to-peer clothing rental marketplace, Villageluxe does not have a warehouse and leverages a “You Can Sit with Us” model, meaning that any woman who believes in the power of circularity and has a love for high fashion is able to partake in Villageluxe. The platform allows women to lend and borrow the approximate 95% of her wardrobe not in use and monetize it. This, in turn, potentially changes the way she purchases, knowing that the opportunity to mitigate a luxury purchase exists with Villageluxe. [caption id="attachment_93317" align="aligncenter" width="700"] Source: Company website[/caption]   As a peer-to-peer rental platform, Villageluxe found third-party expertise in ID verification was a necessity. So, the company teamed up with Jumio, an online mobile payment and identity verification company, to verify every user. Julia Gudish Krieger, Founder of Villageluxe, said: “There is exclusivity in luxury goods, and that's part of the attraction, but having the assurance to know that any woman can partake with confidence that every person on Villageluxe has been verified by both a government issued ID as well as bank credit card is truly a luxury.” [caption id="attachment_93318" align="aligncenter" width="700"] Source: Crunchbase/Company interview[/caption]   Model 3: Subscription Various subscription boxes for green living are another option. Subscription commerce not only offers a stable financial model with recurring monthly revenue, but also optimizes the distribution of resources. Take Kidbox for instance: The company delivers brand-name fashion that helps children in need. Each $98 package includes a sponsorship for a child in need. When kids get the boxes, they can choose what they like and send back what they don’t want. Co-founder and CEO Haim Dabah says Kidbox offers kids an early opportunity to participate in selecting their wardrobe while learning the importance of giving. [caption id="attachment_93319" align="aligncenter" width="700"] Source: Kidbox[/caption]   Model 4: Community Building People need community. Almost half of Americans feel alone and isolated, according to a 2018 study by Cigna. For brands and retailers, this means community is critical to success. Gathering people together is more than group selling or setting up a meeting. It is about providing customer discovery, fostering common interests and creating meaningful connections. One example is Part & Parcel, a company that empowers the plus-size community (in addition to selling it products). In May 2019, Part & Parcel launched a new social commerce community for plus-size women to sell a range of affordable wardrobe essentials. This model also powers economic mobility as it enables plus-size women to connect over an engaging shopping experience, in-person or online, and earn commissions. Key Insights

• More socially aware spending is an important and growing trend. Retail is becoming more closely aligned with sustainability themes such as being environmentally friendly, healthy, ethical and socially responsible.
• The rise of social commerce business models, including resale, rental, subscription and community building, have the potential to contribute to social and ethical values such as circularity, sustainability, sharing, community and giving back.
• Start-ups are discovering the opportunity in these new business models, such as Kidbox, Part & Parcel, Rent the Runway and Villageluxe.