Cotton-On, a dingy fashion store in the western suburbs of Mumbai is popular for export rejects. One can get a Michael Kors shirt for Rs 1,500 or a Zara dress for all of Rs 800. The store has a beeline of patrons digging out their favourite branded outfit from a heap of clumsily kept clothes. These sets of consumers are not exactly thrifty because they don’t hesitate to pay top dollars for a Zara outfit from its latest collection. What gets even more interesting is that this consumer set, predominantly millennials and Gen-Z, are also more than open to buying second-hand, better known as ‘pre-owned’ or ‘pre-loved’ fashion.

Be it a Chanel bag, a Zara outfit or Adidas shoes, the younger generation is more than happy to buy a pre-owned bag or a shoe at three-fourth the original price. In fact, the bulk of the action in pre-owned is happening in the premium and luxury segment, which was valued globally as a $28.3 billion market in 2021 (according to Imarc). By 2027, this market is expected to be valued at $47.1 billion. Delhi University student, Simone, in the past year has sold as many as 80-100 bags, shoes and clothes on the social commerce marketplace, Poshmark, at a 70%-80% discount. “Most of these products were either gifted to me or I had indulged in them during my various overseas holidays and I realised I didn’t need them. Therefore, instead of them eventually landing into landfills, it made more sense to ensure that they were used more effectively.” Celebrity stylist, Andleeb Shaikh echoes Simone’s views. “My closet was overwhelmingly large and the idea to sell was to reduce the clutter. I later realised that by doing so I was also contributing to reducing carbon footprint.”

Pre-owned or pre-loved is also being considered a form of circular fashion. It's well-known that the fashion industry is among the largest contributors to carbon footprint and for the environment-conscious millennials and Gen-Z buying pre-owned brands is a way to protect the environment. “Pre-Loved has actually picked up post COVID. People not just became conscious about costs, sustainability also became critical to them,” explains Anuradha Balasubramanian, director and head, Poshmark India Marketplace. “A lot of 45-50-year-olds are luxury owners, they have travelled a lot and have bought out of impulse which they list on Poshmark. People who are younger but can’t afford a Louis Vuitton or a Chanel are happy to buy it at a 40%-50% discount. This trend is picking up in the metros, we also have a lot of thrifters from the North-East who are actively participating,” Balasubramanian adds.

Apart from India, Poshmark has operations in the U.S. and Canada. However, the last couple of years has seen the emergence of a host of online thrift stores such as 1stDibs, Sellier Knightsbridge, Luxepolis, All Things Preloved and Bombay Closet Cleanse.

The revenue for most of these thrift stores comes from the commission they charge the seller. “Anything that a seller posts we take 20% of that as commission,” says Poshmark’s Subramanian. But how does one know whether the Zara outfit or the LV bag she is buying is not counterfeit? Almost all these websites offer authentication services. So, if a seller lists a Gucci handbag, the website transfers the money to the seller only after it has ensured that the listing is original.

Brands are also talking about selling pre-owned products. While some of them are recycling pre-owned products, the others are actually selling at a premium by giving them a vintage tag. Abeek Singhi, senior partner and MD, BCG, cites the example of fashion apparel brand, Cuyana, which offers a 20% discount to its customers who opt for custom-made clothes. “It’s not a question of just sustainability, it is how many times you use which makes a difference. If there is a small tear, Cuyana says we will repair it so that it lasts you longer, and when you stop using it, we will repurchase it, refurbish and sell it again. Brands have started encouraging the pre-loved category as it helps expand their market dramatically in both making it sustainable and larger”

Homegrown leather products brand, Hidesign, is also considering targeting the pre-loved buyer. “Our bags are known for lasting a lifetime and often consumers complain they get bored. Therefore, we are planning to encourage consumers to return their old bags, which we could recycle,” says Dilip Kapur, founder, Hidesign.

Brands such as Levis and Adidas have launched collections out of recycled plastic and have priced them at a huge premium. “Brands are inviting their loyal customers to return their old possessions, which they put back in the market for reuse. Consumers are also conscious of the choice they are making. They don’t want to contribute to over-creation,” says sustainability enthusiast, Joono Simon (CEO, Brave New World).

The trend of buying pre-loved brands is nascent in India, but it is certainly picking up fast. “During festivals and weddings we have a lot of sellers listing designer outfits of Indian designers such as Anita Dongre and Manish Malhotra and there are quite a few takers,” says Poshmark’s Subramanian.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.