Dear Reader,
I am excited to share with you the launch of our new rebranded newsletter - The Inflection Point - your weekly dose of key microtrends that will shape our future, delivered with love from the entire nwo.ai team.
We will be covering key topics in Consumer Products, Travel, and everything around Healthy and Sustainable Lifestyle in a weekly byte-sized fashion, so stay tuned.
In this pilot edition we have prepared something special (and longer) and would definitely love to hear your feedback, so please feel free to connect with us and let us know what you think.
This week’s newsletter in a nutshell: The growth of sustainable luxury, renewable materials, the rise of secondhand marketplaces, and our forecast for the re-commerce market for the next 12 months.
As consumers were forced to stay home during the pandemic, online retail sales have increased. Millennials and Gen Z, the current market definers, have also become increasingly ‘woke’ to the sustainability and environmental impact of fashion, and are making their purchasing decisions based on these principles. It’s no surprise then that UK-based secondhand marketplace Depop has been acquired by Etsy for $1.62 billion, American fashion resellers Poshmark, ThredUp, and RealReal have all now gone public, while European rivals Vinted and Vestiaire have both recently raised money at unicorn-level valuations.
1. Sustainable luxury: Fashion retail’s next big thing
Correlating to NWO’s signal of a 911% growth in digital interest in sustainable luxury over a period of three years, the global used-clothes market is now worth $40 billion per year, with a projected annual growth of 15% to 20% for the next five years.
2. Luxury fashion and lifestyle focus: Renewable materials
- Materials innovation
Consumer decisions are being increasingly affected by the environmental impact of their purchases. We are seeing a clear shift of values and preferences towards companies that employ ethical sourcing practices, which has also led to an increased focus on materials innovation. This is supported by its Impact Score increase from 49 in December 2020 to a peak of 100 in 2021, with a future estimate hovering just slightly below 80.
- Fur-free:
As luxury brands and companies started adopting fur-free policies in 2017 and 2018, the interest in fur-free goods reached a peak in mid-2019, perhaps coinciding with the growth of vegan activism in the same year. However, the interest in fur-free materials has declined since NWO’s signal peak.
- Latex materials
The interest in latex extends beyond fetish fashion. Latex mattresses have seen continuous growth in interest as mattresses made of natural latex are not only eco-friendly, but they’re also more durable and dust-mite resistant.
- Cashmere
Known for being soft, light, and insulating, cashmere is an expensive luxury material made of natural fiber used in making scarves and sweaters. Interest in cashmere tends to decline every summer and picks up again in winter as luxury consumers go on the search for sustainable cashmere due to growing concerns over the environmental and social impact of cashmere farming as well as fast fashion’s role in churning out cheap cashmere.
- Linen
Made using all parts of the flax plant, linen is lightweight, antimicrobial, fully biodegradable, and requires minimal water to produce, making it a sustainable fabric for clothing, bedding, and soft furnishings. A luxurious fabric favored by the upper echelons of society, interest in linen has grown exponentially in the past year, and the forecast suggests continued growth in the next year.
- Denim
Denim is one of the most widely accessible materials which can be found everywhere. Whether rich or poor, everyone owns at least a few pieces of denim, but it’s also environmentally harmful to produce. While sustainable denim exists, it’s not as readily available as regular denim, which explains the temporary interest in sustainable denim last April before its decline.
3. Sustainable luxury sectors: Winners and losers
Which sectors are winning and which sectors are losing in Sustainable Luxury
- Sustainable furniture
According to a report by Grand View Research, the global eco-friendly furniture market size was valued at $35.2 billion in 2019. NWO indicates a massive signal spike in sustainable furniture recently, and the emergence of eco-friendly luxury furniture will only contribute to market growth over the forecast period as wealthy eco-conscious millennials and Gen-Z consumers drive the demand for sustainable luxury furniture.
- Vegan skincare
With vegan activism still going strong, there has been huge interest in vegan skincare recently as skincare enthusiasts go on the search for cruelty-free products to battle skin issues caused by constantly wearing a mask. To capture the vegan market share, high-end skincare brands like Drunk Elephant and Fitglow have launched vegan products while Juice Beauty is working on being 100% vegan.
- Sustainable jewelry
Handmade locally by artisans, sustainable jewelry not only reduces carbon footprint but also supports the living wages of the local community. Interest in sustainable jewelry has grown exponentially over the past two years as eco-luxury consumers are purchasing conflict-free and ethically sourced gemstones, and NWO’s signal forecast suggests a sustained interest over the next year.
- Sustainable luxury makeup
Besides being vegan or free from animal testing, sustainable makeup is also free from harmful ingredients such as parabens, synthetics, artificial colors, and fragrances, while its packaging should be refillable and recyclable. With more people becoming more aware of what they put on their faces and how it impacts the environment, it’s no wonder that interest in sustainable luxury makeup saw an exponential 8794% growth.
- Sustainable luxury fragrance
Interest in sustainable luxury fragrance saw a massive and sustained interest in 2020, coinciding with the rollout of eco-design and responsible packaging initiatives by L’Oreal Luxe, with the launch of fragrances Angel Nova by Mugler and My Way by Giorgio Armani. Attuned to millennials’ expectations of sustainability, the bottles of these fragrances are refillable, and My Way is formulated with natural, fair trade ingredients sourced through partnerships with local NGOs, making it L’Oreal’s first fully carbon neutral fragrance.
4. Pre-loved luxury
NWO’s signal indicates that interest in secondhand luxury grew by 200% in 3 years alone. Within the microtrends under sustainable luxury, the following brand names show a considerable volume of chatter among consumers. Here's how they are faring:
- Gucci - Last year, TheRealReal announced that it’s partnering with Gucci to launch an e-commerce store featuring pre-loved Gucci items. This perhaps contributed to the 24% growth in the brand’s association to secondhand luxury.
- Louis Vuitton - LVMH, the parent company of Louis Vuitton has no plans to enter the secondhand market, which explains its weakest association to secondhand luxury.
- Balenciaga - Since creative director, Demna Gvasalia took over the brand in 2015, Balenciaga has been putting out relatable luxury streetwear that appeals to younger consumers. As its parent company Kering Group acquired a 5% stake in Vestiaire Collective, Balenciaga’s association with secondhand luxury is expected to see the biggest growth over the next year. Incidentally, Kering is also the creator of Materials Innovation Lab (MIL), which “seeks to identify sustainable and responsible alternatives in materials and fabrics”.
A look ahead: The meteoric rise of secondhand marketplaces
The secondhand marketplace exploded during the pandemic and holds a very strong forecast for the next 12 months.
- NWO’s signal indicates that Depop’s growth skyrocketed during the pandemic as younger consumers turned to online shopping for retail therapy. Recognizing its potential, Etsy acquired Depop for $1.62 billion and the forecast suggests demand heating up around spring of 2022.
- Here are the top 3 secondhand marketplaces by market cap.
- Vinted - An online secondhand marketplace for users to buy, sell, swap new or secondhand items. It is currently valued at $4.3 billion.
- Poshmark - An online marketplace to buy and sell fashion, home decor, beauty products, and more currently valued at $3.5 billion.
- Thredup - An online consignment and thrift store with mass-market, premium, and designer brands, currently valued at $2.2 billion.
Prediction
With younger consumers increasingly shopping online, “re-commerce” is expected to continue growing in the next 12 months. With Kering Group backing TheRealReal and Vestaire - both of which exclusively resell luxury goods - Poshmark and Thredup will likely lose more of their market shares. However, mass-market consumers will still find a need for Vinted, which will see sustained growth.
About NWO.ai
NWO.AI's predictive platform enables leading Fortune 500 companies and government agencies to anticipate and track global cultural shifts by aggregating, analyzing, and producing actionable reports on human-generated data. We are leveraging petabytes of external, noisy, and unstructured data from various sources - including search, social media, blogs, news, patent databases, SEC filings and we are continuously adding more sources. Our mission is to answer the what, when, and most importantly 'why' behind a consumer trend and enable our customers to detect these shifts as early as possible.
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