Is there a growing market for cast offs? 2nd street thinks so!
The 2nd Street chain is a prominent second-hand, thrift, and re-use retailer with over 850 stores in Japan and nearly 100 international locations. It also sells online.
As part of GEO Holdings Corporation, a company listed on the Tokyo Stock Exchange, 2nd Street has ambitious growth plans both domestically and internationally.
Suburban Focus and Business Model
2nd Street outlets are primarily located in suburban areas rather than city centres. Car ownership plays a crucial role in the chain’s business model, which relies heavily on customers selling their goods rather than solely focusing on sales to shoppers. Interestingly, one of the chain’s current TV commercials highlights this aspect, emphasising the importance of customer participation.
Diverse Fashion Offerings
Fashion is a significant component of 2nd Street’s product lineup. The chain claims to sell items from over 7,000 brands, including luxury names like Coach, Paul Smith, and Issey Miyake. This extensive selection caters to a wide range of fashion enthusiasts looking for quality second-hand items.
2nd Street’s in store purchasing staff must have access to a database; the amount paid varies depending upon whether items are still in their original boxes (very important in Japan!), unopened, stained or torn. Staff are trained to quickly access and pay customers in cash. No worrying about PayPal’s margin! Customers must produce ID and fill out forms. There’s a paper trail in case items are found to be have been stolen.
Return Rates and Opportunities
2nd Street depends on consumers’ willingness to use and return items. Globally, the return rate for clothing is around 30%, while in Japan, it is lower, approximately 16%. Despite this lower rate, it presents a significant opportunity for the chain to attract more customers.
Seasonal and Diverse Product Range
2nd Street’s offerings are not limited to fashion. During the winter season, for example, local stores are well-stocked with snow boards and ski equipment, demonstrating the chain’s ability to cater to seasonal needs.
Customer Experience
The stores are designed to be bright and airy, with a layout reminiscent of Uniqlo. They feature fitting rooms and dedicated counters where staff check and value stock, ensuring a pleasant shopping experience for customers.
Market Dynamics
Japanese homes are generally small, and while the population is decreasing, the number of single households is on the rise. This trend supports the re-use market, as people seek to manage space efficiently without accumulating excess clutter.
Financial Performance
According to GEO Holdings, their annual revenue surpasses JPY 417 billion (US$2.6 billion). While not all of this revenue comes from 2nd Street (as GEO Holdings also operates another chain called GEO plus Okura Tokyo), the re-use business remains a substantial part of their operations.