Keywords

1 Introduction

Textile waste is one of the major problems in fashion and clothing industry (Claudio 2007), especially for overcrowded cities like Hong Kong. According to the report from the Hong Kong Environmental Protection Department (2011), the daily average domestic and commercial textile waste in Hong Kong is 197 t. Sustainable practices to reduce textile waste are, thus, needed to improve this situation and reduce the landfills pressure (Woolridge et al. 2006).

In the recent literature, Goldsmith (2012) addresses that textile recycling is a sustainable fashion practice. Textile recycling can be further divided into three categories: they are up-cycling, down-cycling, and reusing. For the second-hand clothing, the related products are usually classified as reusing which represents selling, exchanging, or giving away the used clothes or fashionable items. According to Textile Exchange (2012), this practice saves the energy and water, and reduces the release of carbon that is produced in the garment making processes from raw material to a new fashion piece. It is believed that the proper use of second-hand clothing products, which helps to promote the environmental sustainability, plays a significant role in changing the purchasing behavior and disposal habit of consumers.

In western countries, this environmental-friendly business has been well developed. Starting from the 1960s and the 1970s, second-hand clothing became a fashion trend. They are now being retailed formally in permanent retail stores, vintage clothing shops, consignment stores, and charity shops. Recently, this kind of business has got more prevalent and also expanded to online selling platforms, such as eBay and ASOS.com. Wilson and Thorpe (2000) even describe second-hand clothing purchasing business as a “multimillion-dollar global trade.” In Hong Kong, however, it is a different story that the second-hand clothing has only started being accepted since the 1990s (Palmer and Clark 2005). The degree of prevalence is far away from that in western countries and the commitment of this ecopurchase from Chinese is at a low level (Chan 2001). Despite this, there are studies which indicate that the second-hand clothing follows an international fashion trend and is influencing the fashion conscious of Hong Kong people, especially the younger generations (see, e.g., Palmer and Clark 2005).

Motivated by the importance of second-hand fashion retailing and the global awareness of environmental sustainability, this study examines via a case study on the existing mass market second-hand clothing business model in Hong Kong.

The organization of the rest of this paper is listed as follows. In Sect. 8.2, we conduct a literature review on the second-hand clothing related studies. In Sect. 8.3, we present a case study on a Hong Kong second-hand clothing retailer and analyze our findings. We conclude and discuss the future research direction in Sect. 8.4.

2 Literature Review

Second-hand purchasing is defined as getting the preowned items from specific methods or exchange places (Guiot and Roux 2010). Second-hand clothing, thus, refers to some used apparel items that are given away and being resold and reused (Goldsmith 2012). These all imply that second-hand business is run by collecting and recycling. Savaskan et al. (2004) state that a retailer, a manufacturer, or a third party can be the items collector (even though the supply chain’s performance will differ). In the scenario when the retailer leads the second-hand apparel collection program, they can collect the second-hand items back and transfer the products to manufacturers for remanufacturing. Alternatively, the returned fashion items can be directly reused as consumer goods by the retailers and resold to the consumers. It is obvious that the second-hand clothing retailers are those adopting the latter measure. Note that the nature of the vintage clothing is a bit similar to but actually different from that of the second-hand fashion items. To be specific, vintage clothing is referred to the clothing item which was launched from the 1920s to the 1980s while second-hand clothing can be the modern and contemporary used items (Cervellon et al. 2012). Thus, age of the fashion item is the difference between vintage clothing, and second-hand clothing.

In the existing literature, it is observed that consumers’ view on the “green” fashion purchase is a prevalent topic over the past few years. For example, Reiley and DeLong (2011) conduct an exploratory study to address the perception of the vintage and new clothing wearers towards the desire of uniqueness in the US. They adopt the “Desire for Unique Consumer Products” (DUCP) scale developed by Lynn and Harris (1997) to measure the degree of desire for unique consumer products. Interestingly, the vintage wearers have a higher desire for unique appearance when compared with the new clothing wearers, and they believe that they are the fashion leaders due to the wide variety of fashion product sourcing and their own mix and match unique style. Besides, Cervellon and Wernerfelt (2012) examine the perceptions and behaviors of consumers towards the sustainable fashion supply chain. They also explore the role of the online communities for green knowledge sharing. They select two American green forums as the data source and analyze the findings based on their observation on the discussions and interactions in these online communities over two different periods (from 2007 to 2008 and from 2010 to 2011). Based on the analysis on the green knowledge content, they find that consumers are more subjective in the period of 2007–2008 but they become more objective (e.g., relying on the scientific facts) in the 2010–2011 period. In addition, nowadays, consumers are more interested in sharing information and knowledge on a sustainable supply chain including the detailed ingredients of fabrics, the manufacturing processes, as well as how the fashion products can be reused. Recently, similar to Cervellon and Wernerfelt (2012), Shen et al. (2014) evaluate how the consumer perception of the sustainable fashion has changed over time. Different from Cervellon and Wernerfelt (2012), Shen et al. (2014) adopt a cross-time approach and collect the secondary data from two online fashion forums from 2004 to 2012 to statistically visualize the number of discussions related to sustainable production, green marketing, green information sharing, and green attitude. The role of the retailers with respect to the consumer green fashion practice is discussed rather thoroughly in Goworek et al. (2012). To be specific, Goworek et al. adopt a qualitative approach, which includes focus groups, home tasks, and workshops studies, to explore the consumer attitude towards sustainable fashion clothing. In addition, they discuss different measures for the fashion retailers to promote and increase the consumers’ sustainability mindset. Their finding reveals that people are relatively unaware of the environmental impact caused by the clothing. In addition, they are not willing to dispose the garment through a sustainable way. Thus, Goworek et al. further propose potential strategies for the fashion retailers to change the current disposal habit and purchase decision of the consumers. Their proposed strategies include partnering with the charity organizations to promote reusing the second-hand clothing, providing sustainability guidelines on the company websites and “QR codes” in stores, supplying the fashion products which are manufactured by the sustainable textiles, as well as offering clothing repair services.

Apart from investigating the perception on the green fashion purchase, recent literature also addresses the reasons explaining why consumers shop for second-hand fashion products. Guiot and Roux (2010) propose a scale for measuring the shopping motivation and examine the features and the motivations of the second-hand shopping in France via a comprehensive study. They find that seeking for uniqueness is the overall motivation for consumers conducting the second-hand purchasing while the economic motivation (i.e., pay less) for shopping the second-hand products leads to product recycling. Guiot and Roux further categorize four types of second-hand shoppers as (i) polymorphous enthusiasts, who widely use most of the second-hand products and frequently pay attention to the second-hand shopping channels; (ii) thrifty critics, who reuse and recycle the second-hand products from the private/personal sales; (iii) nostalgic hedonists, who address their nostalgic pleasure generated from the second-hand products such as jewelry; and (iv) regular specialist shoppers, who usually make purchase in the second-hand stores. Cervellon et al. (2012) investigate the reasons for vintage purchase and second-hand purchases in France through a quantitative approach. They find that the vintage clothing consumption is driven by critical factors such as fashion involvement, nostalgia proneness, and uniqueness seeking. Regarding the second-hand clothing consumption, they reveal that it is directly induced by the selling price but indirectly induced by ecoconsciousness.

Since the sourcing of the second-hand clothing depends on the disposal habit and donation preference of the consumers, the evaluation on this aspect generates valuable insights on the second-hand clothing business operations. Mhango and Niehm (2005) present the business trade of the Malaswi second-hand clothing market. They find that the sources of the second-hand clothing in Malaswi are mainly from consignment, donation, and purchase from the developed countries like the US and Canada. Morgan and Birtwistle (2009) explore the consumer’s fashion product disposal habits and the methods to increase the sustainable purchase. Their statistical results illustrate that the young female fashion innovators are not interested in textile recycling because they believe that their effort have very little impact towards environmental sustainability. In order to raise the social awareness of the textile recycling, they suggest that media can positively change the consumer disposal habits by providing transparent information on the benefits associated with sustainable purchases, and educate consumers with different recycling options. In addition, they advocate that for the second-hand clothing collectors, they should provide the most convenient way for people to donate their clothing. Recently, Lang et al. (2013) study a sustainability issue on the clothing disposal behavior in the US through an empirical analysis. Their analysis shows that there is a more frequent clothing disposal when people have: a higher fashion trend sensitivity level, a higher fashion shopping frequency, higher incomes, a higher product quality consciousness, and a lower price consciousness. Joung and Park-Poaps (2013) conduct a comprehensive empirical study on the cloth-disposal methods and the underlying reasons. By analyzing the data collected by 232 college students, they find that people resell and donate clothing mainly due to their environmental consciousness, while reuse and discard are driven by people’s economic awareness. Besides, the donation behavior is motivated by the charity factor and discarding behavior is motivated by convenience.

In order to have a better understanding on how the second-hand clothing stores can differentiate from one another, McColl et al. (2013) study the commercial vintage fashion and examine the positions of the vintage retail stores with respect to their product sourcing, customer service, communication, and trading format. They define vintage fashion as “garments and accessories which are more than 20 years old, which represent a particular fashion era, and which are valued for their uniqueness and authenticity.” Based on the interview with vintage store managers, they find that the second-hand clothing should be in a good condition and the brand should be rare in the market. Besides, building a long-term relationship between the business owner and the customers is a key to success. They argue that the vintage shop owners/managers should be knowledgeable and skillful and these qualities create competitive advantages. For example, these vintage shop owners should know the fashion styles of the customers very well and be able to source the clothing for them. In order to promote their second-hand clothing business, McColl et al. believe that the word-of-mouth marketing strategy is an effective method. Also, the visual merchandising measures, such as the window displays and the store interior design, are also critical.

It is known that the traditional Chinese culture does not favor ones’ wearing of others’ used clothes (Cervellon et al. 2012). However, Hong Kong was a colony of the United Kingdom for 99 years. In the case study of Palmer and Clark (2005), British affected all the political, social, environmental, and cultural aspects of Hong Kong. As an international city, Hong Kong is also affected by different cultures from other countries. For example, in the 1990s, Japanese youth culture influenced Hong Kong youngsters’ fashion conscious for buying recycle apparels. At the same time, Hong Kong’s first noncharity-based second-hand shop, Man and Earth was opened. It provided artistic types of used clothes for young customers who looked for unique and unusual fashion pieces. In 1996, Hong Kong celebrities started to sell their used clothes in high price for charity purpose. On the other hand, high-income group Hong Kong women tend to purchase second-hand clothing outside the city, e.g., from other countries such as the US. Palmer and Clark (2005) conclude that second-hand clothing is an international fashion trend and influences the fashion consciousness of Hong Kong people.

It is apparent that numerous existing studies in the literature focus on the environmental sustainability practices conducted by fashion companies and the motivation of the consumers towards the second-hand products. However, only very limited studies explore the business development of the second-hand clothing retailers. Therefore, this study contributes to the literature by filling this gap and provides insights on how the second-hand fashion retailing operations could be developed in a city like Hong Kong.

3 Case Study

In order to gain a better understanding of the actual second-hand clothing business operations in Hong Kong, an interview was conducted with a Hong Kong second-hand clothing retailer, called Company Z.Footnote 1 In addition, secondary source of data was also collected. Note that case study is chosen as the research method here because this chapter is exploratory in nature (Yin 2009). Case study helps reveal some more qualitative insights around the topic and lays the foundation for future studies.

3.1 Company Background and Operations

Company Z is a Hong Kong new vintage house founded in 2012. It is a cross-culture operation that the owners are from Japan and Hong Kong. In Japan, vintage house and second-hand clothing stores are easily found. Purchasing and exchanging the used products are a part of their life. However, in Hong Kong, most of the commercial second-hand clothing stores are selling luxury handbags or clothing and it is difficult to reach the younger generation and the mass market. The mission of Company Z is to reduce waste, promote recycle, and cultivate consumers to develop reuse habits even for casual and nonluxury items. Through the exchanging practice, it is hoped that people can correct their overconsumption habit and concern more the environmental protection. Therefore, Company Z aims to be an environmental-friendly second-hand clothing shop. It provides second-hand clothing exchange service and the customers/donators will gain some credits which can be redeemed for the items such as handbags and even televisions. There is a redeem restriction in which each customer can exchange at most 20 items every day.

Second-hand clothing store retailers control the second-hand merchandise assortments and business model in the market and affect the choice of consumers. Through the interview with one of the shop owners, information such as the store operation concept and perception on the existing and future projected second-hand clothing market in Hong Kong were gathered.

Company Z is a unique second-hand clothing shop which adopts the product exchange system and gains profits for its daily operations through a systematic membership program. There are several kinds of membership in which customer can enjoy different rights.

For example, a customer who purchases a one-week membership has to pay a relatively higher fee (about USD20) compared to the one-month membership fee (about USD40 per month which means USD10 per week). Besides, all members have to pay an administration fee, and a discount price will be offered if they are introduced by the existing members. Company Z relies on both the membership fee and administration fee to run its business. It is interesting to note that Company Z does not sell any products through cash but people can get the fashion items via barter. In other words, customers are able to get the second-hand clothing if they donate the clothing and join the membership scheme.

Members who more faithfully participate in the product exchange program (e.g., they join a membership for more than 6 months) will be able to redeem more products from each donated item. All goods are provided by their members, and therefore, Company Z does not need to source any products. In addition, Company Z targets the customers who are respectful, courteous, and care about the future ecological health and treasure the world-limited resources. The majority of Company Z’s customers are younger females aged between 20 and 30. Company Z adopts a low-cost business operations model. Thus it is not able to support the expensive advertisement, and it relies on the words-of-mouth to promote the company. Company Z believes that the acceptance of preown fashion depends on personal values and education level, and marketing promotion cannot generate enough influences and change their purchasing habit. Besides, it does not run any online business since it is better to view the used-products personally in store.

Company Z also commented that running the second-hand clothing shop is difficult because this market is hard to promote. There are excessive consumerism culture and profit-oriented business culture in the market like Hong Kong. Hence, it is difficult for consumers and merchants to build a beneficial relationship. Moreover, most people still think that it is troublesome to conduct second-hand exchange practice. Some of them question the quality of these second-hand clothing and even believe that buying second-hand clothing will harm their personal status. Although the higher level of education and better flow of world information have helped the Hong Kong new generation to build a positive attitude towards the consumption and purchase of second-hand clothing, the second-hand clothing shopping is still not popular in Hong Kong. Furthermore, there are still some dishonest traders in the market, which will affect customer’s confidence on the second-hand products. These are the barriers of second-hand clothing market development.

Regarding the perception of second-hand clothing market in western countries, Company Z described it as a mutual market. There are numerous choices of clear and well-developed trading standards, merchandise assortments, processes and platforms. Yet, the choice of product varieties in Hong Kong market is narrow and limited. The product prices fluctuate a lot and even with unfair trading. Company Z also argued that the major reason attributed to this phenomenon is that there is a lack of cohesiveness, respect, and assistance.

In the future, Company Z predicted that resource is still limited and commodity price is dramatically increasing to an unreasonable level due to the unusual speculation in property market which is not favorable for the second-hand clothing market development. However, it is quite certain that environmental sustainability concern will continue to grow as it is a global trend.

3.2 Analysis

After conducting the interview with Company Z, we analyze the findings and the insights as follows:

  1. i.

    For the existing Hong Kong second-hand clothing market, the majority of the Hong Kong consumers do not have the habits of buying the second-hand clothing. Also, the prevalence of consumerism, increasing commodity price and profit driven business culture are not favorable for the development of the second-hand clothing business in Hong Kong.

  2. ii.

    Product quality and product price are the most important basic requirements that the consumers treasure on their purchase of second-hand clothing products. To be specific, second-hand clothing needs to be clean, tidy and with little differentiation (in these aspects) from the new clothes. Therefore, filtering and cleaning processes are essential. As reflected by the case study, it is found that the majority of the second-hand clothing consumers in Hong Kong are young adults who have a relatively low income level. This implies that the other commercial second-hand clothing business owners should determine the price of the products carefully in which it will affect the purchasing intention of the youngsters towards the second-hand clothing (Cervellon et al. 2012).

  3. iii.

    Gender of the target consumers should also be taken into the consideration. Females are more interested in participating in the fashion related issues (O’Cass 2000). Getting familiar with the consumers (in terms of their age and gender) helps the second-hand clothing business owners to decide which types of clothing products they should seek for.

  4. iv.

    Having a “green” attitude is essential over the second-hand shopping practice. Fortunately, with the influence of the global trend, the assistance of the information flow through the Internet, as well as the education on the resources scarcity problem, Hong Kong consumers become more concerned about ecohealth and wastage problem, and are more acceptant and willing to participate in the second-hand shopping.

  5. v.

    An interactive relationship between customers and second-hand shop owners is also an important factor to support the second-hand clothing business. This is because second-hand shops rely on garments donation from consumers while it is promoted though the words of mouth. In order to establish a better relationship with the customer, an interactive business model, such as donation with membership program and consignment program, is needed (see Mhango and Niehm 2005). These innovative programs can better draw the attention of the young people and motivate them to reusing the fashion clothing actively.

A summary of the findings and the insights on the case study of Company Z are summarized in Table 8.1.

Table 8.1 Summary of findings and insights from the case study
Full size table

4 Conclusion and Future Research

This study presents a case study on a Hong Kong second-hand clothing retailer. It helps us better understand the existing second-hand clothing market and culture. It firstly analyzes the advantages and the barriers of this business operated in Hong Kong. Even though most people think that it is troublesome to donate/exchange the fashion products and may perceive that second-hand clothing purchase will harm their social status, it is still believed that the level of these adverse factors for the second-hand clothing business development will be weakened when the people are educated to develop a “green” attitude. Moreover, it also reveals that second-hand clothing retailers should pay attention to the second-hand product quality and determine the business operation model carefully. Consignment or membership program can help establish an interactive relationship with the customers. The findings of this study generate important managerial insights on the potential and possible direction of second-hand clothing business development in a market like Hong Kong.

As a remark, based on the interview analysis, it is noted that Company Z is able to run a relatively low-cost business model that the owners do not need to tighten much capital for sourcing merchandises if they can better connect with customers or other textile disposal organizations. However, the second-hand shop owners should address the following challenging issues carefully in which they are the threats to their future business development:

  1. i.

    Supply of the second-hand clothing: business owners should ensure that there is a stable supply of the second-hand clothing and it is necessary to seek ways to motivate the customers to give away their garments even though they are not interested in the second-hand shopping. Joung and Park-Poaps (2013) find that people are motivated to discard their clothing if they cannot access the second-hand clothing collector easily. Thus, it is important for the second-hand clothing businesses owners to have more drop-off sites and to let people know their presence.

  2. ii.

    Increasing rental and advertisement costs: despite Company Z commented that it is more beneficial for the customers to view the clothing personally in store, selling through the online marketplace and the social networks should not be ignored as they all help to provide an alternative channel for getting and selling the second-hand clothing. The cost of establishing the online stores and the social network channel is also much lower than operating a bricks-and-mortar store in a market like Hong Kong. This measure helps support the low-cost operations model. Furthermore, the electronic words-of-mouth and other online advertisement supported by social media are also effective for the mass market second-hand fashion retailers to promote their products and business philosophy.

In the future, it is interesting to explore the business operations of the Hong Kong luxury-brand second-hand clothing shops (i.e., which sell the “designer labels” fashion products) and compare the customer behaviors’ similarities and differences towards the luxury-brand and nonluxury-brand second-hand clothing shops. In Hong Kong, it is observed that the luxury-brand second-hand clothing shops sell not only the preowned products but also the brand new items. Thus, it is also valuable to investigate the customer perception towards this kind of second-hand clothing shops, the optimal price setting of these luxury-brand second-hand products, as well as the risk level of such business operations. Furthermore, it is interesting to explore how second-hand clothing shop owners could establish a long-term relationship with the consumers and how to motivate them to donate and buy the fashion products continuously to achieve a self-sustainable business.