Chapter 2
Structure of the SHC sector in the US and globally
This report argues that optimizing the scale of textile and clothing reuse worldwide will foster greater environmental sustainability. An infrastructure already exists to collect, process, sort, and sell used clothing to maximize reuse. The vital task of increasing clothing reuse is undertaken by the highly experienced and professional SHC and reuse sector globally. This sector specializes in effectively managing post-consumer textiles and has over four decades of expertise in developing the necessary infrastructure to efficiently collect garments, maximize their reuse, and responsibly handle textile waste. To establish an environmentally sustainable textile industry, it is crucial to leverage the deep knowledge and commitment that is already established in the SHC sector.
Key activities across the used clothing sector
There are three key activities within the used clothing and footwear value chain in the United States. SHC stakeholders interviewed for this report made clear that it is unusual for a single company to fulfill all of these functions simultaneously. Most businesses focus on either collection, operating thrift stores, or managing grading facilities. However, a few businesses in the US perform all three functions simultaneously.
The first activity is the collection of used clothing items. Often collection is done on behalf of for-profit and not-for-profit organizations. Consumers donate unwanted clothing into recycling bins, collection boxes or ‘sheds’. One business we interviewed has over 100 drivers collecting items across 12 Southern states each day from North Carolina to Alabama: they collect approximately 85 million pounds of clothing and footwear a year.
Another maintains 1,400 collection sheds across 10 Northeastern states. The clothing is then taken either directly to retail thrift stores or to grading warehouses for sorting. Organizations such as Goodwill seek to maximize opportunities for clothing to be resold, although it estimates that 5% of its donated clothes are currently sent to landfill, largely due to mildew which can contaminate entire bales of clothing.
The second activity is operating retail ‘thrift’ stores. Thrift stores in the US sell a proportion of collected clothing directly to US consumers. An industry leader that we interviewed estimated that around 50% of collected clothing and footwear items were of sufficiently good quality to be dispatched directly to US thrift stores for resale. The remaining 50% of clothes are sent to grading facilities to be processed and categorized.12
Thrift stores are important for local communities and in particular consumers on lower incomes. The opportunity to purchase used clothes is important in a country such as the US with high income inequality and immigrant populations needing affordable items.13 As researchers highlight: ‘As inflation and rising energy costs all contribute to the cost of living crisis, shoppers are turning to cheaper, non-essential alternatives to brand new clothing, and even cheaper fast fashion’.14
Our survey found that while
of Americans buy SHC for environmental reasons,
of Americans do so to save money and
agree that local second-hand clothing stores help to build sustainable communities.
Many thrift stores are ‘for-profits’ where the emphasis is on providing customers with an excellent retail experience: stores are clean, well-managed and focused on attracting younger and more upscale consumers. Over the last five years, there has been a sharp rise in the number of younger consumers, clearly influenced by social media, who often seek to purchase environmentally sustainable ‘vintage’ clothing items.
Our survey found that secondhand clothes purchases are highly correlated to age.
Gen Z are the most likely to purchase SHC
compared to Millennials
Gen X
Baby Boomers
In an organization such as Goodwill, according to stakeholders we spoke to, items remain in their 3,200 stores for around four weeks before being moved to Goodwill outlets, found in 35 states across America, where items are sold more cheaply, usually for 99 cents a pound.15 At Goodwill Auctions, ‘mystery’ bins are sold for as little as $35 each. A proportion of Goodwill stores and other thrift stores will also bale clothes that aren’t suitable for local markets in their local warehouses and sell directly to graders and exporters.
The third activity in the value chain is managing grading facilities and exporting garments and footwear to international markets. ‘Sorter-graders’ assess and sort textiles based on quality, condition, and format.16 After the clothing has arrived at a sorting center, items are separated and sorted into one of around 125 categories. The garments are then processed into bales, usually weighing around 100 pounds. A grading center will typically employ between 300 and 550 staff often processing more than 1,000 pounds of clothing per day. The sector is investing heavily in new technology and automation: for example, a high speed baling machine can do the work of 4-5 employees. This investment is vital to building more financially sustainable business models given that labor costs in the US are relatively high.
Stakeholders told us that items are then sold for reuse/resale in domestic or international markets where they can achieve maximum commercial value; alternatively, they can be ‘downcycled’ to rags or stuffing. A key challenge identified by industry stakeholders is the declining quality of fast fashion garments; fast fashion giant Shein lists over 10,000 new products per day and manufactures new designs within as little as three days. Yet design quality and durability has perceptibly deteriorated over the last decade which impacts on the used clothing value chain.
The SHC sector’s sorting processes focus on reuse, but also support the objective of increasing textile recycling rates. The largest SHC sorting centers in the world can process more than 50,000 tons of clothing a year with over 550 skilled workers. While sorting and grading is undertaken in the US (namely in Texas and California), it is also done in the United Arab Emirates (UAE), India, Pakistan, and Central America, where labor costs are generally lower.17 Collected and sorted clothing deemed unsuitable for reuse can be efficiently diverted into the recycling process.
Clothes that are not sold in the US or diverted into textile recycling are often exported around the world. Nearly 700,000 metric tons of used clothing was sent from the US to other countries in 202318, supporting an ever larger market for used clothing and contributing significantly to job growth. For American SHC operators, the most important markets are to be found in Central and South America where there is huge demand, not least because they have a developed market for second-hand clothes including well stocked and presented retail stores alongside outside marketplaces.
According to those we interviewed, consumers in these countries prefer second-hand clothes to the cheaper fast fashion alternatives available to them because they offer higher quality at affordable prices.
Maintaining the global market in SHC
Markets for SHC around the world have been expanding in Africa, Asia, the Americas, and Europe. The resale apparel market is expanding throughout the world, in both high-income and emerging economies. Between 2024 and 2034 the global secondhand apparel market is projected to grow from $43.49 billion to $125.18 billion.19 Yet progress is most likely to be stymied if regulators impose restrictions impeding the global movement of collected SHC.
Concerns over the global trade of SHC have sparked international debate, including whether the movement of such goods undermines domestic textile manufacturing in emerging economies. However, the evidence suggests that SHC does not impede domestic manufacturing and if used clothing were unavailable to consumers in importing emerging economies, households would struggle to meet their basic clothing needs.20 It is estimated that two-thirds of the world’s population rely on SHC.21
Restricting the movement of used clothing around the world economy will have several, fundamentally damaging effects. First, it will lead fast fashion companies in Asia to ramp up low-cost new clothing production to meet demand in developing countries. China currently dominates the global textile production market, exporting $159 billion worth of apparel in 2023.22 Other major textile producing countries include India, Turkey, South Korea, Bangladesh, Pakistan and Vietnam. New clothing production is energy intensive, often low quality and generates even more waste.
Secondly, if used clothing cannot be moved out of high-income country markets in the US and Europe, it is very likely to be incinerated, sent to landfill, or at best, diverted into recycling. As this report demonstrates, while recycling holds promise, it does not yet offer a solution for making the textile industry environmentally sustainable, as recycling processes themselves are energy-intensive, heavily consume scarce resources such as water, and can pollute the environment.
Thirdly, research from African importing countries such as Kenya and Ghana has shown that the environmental and socio-economic impact of the trade is significantly positive. Despite a dominant narrative that claims that Global North countries export “waste” to Global South countries, independent research from Ghana shows that less than 5% of imported clothing could be considered waste, and in actual fact, the imported goods are an important source of clothing for a vast percentage of the population and a job creator.23 In Kenya alone the trade employs 2 million people, supporting numerous more livelihoods.24 A separate study25 found that the SHC industry is an employment creation engine in Africa, generating millions of jobs throughout the value and supply chain.
Over 1.28 million people are employed in the SHC sectors of Angola, Guinea-Bissau, Malawi, Mozambique and Zambia, with each metric ton of SHC imported sustaining on average 6.5 jobs. This represents up to 25% of total service sector employment, in countries where a majority of the population relies on non-mechanized agriculture to support their livelihoods. These findings support our own investigations of markets in Central America, which found that the SHC industry will support over 3 million jobs across Honduras, Nicaragua, Guatemala and El-Salvador by the early 2040s and support those economies to the tune of $200million in annual tax revenues.26
Over half of Americans surveyed for this report (51%) agree that unwanted but wearable clothing should be exported abroad, while (44%) believe this is a critically important way to support countries in the Global South and protect the environment and should be encouraged. Just 12% feel clothes should not be exported abroad.
Restricting the global SHC trade would prove catastrophic, especially for impoverished communities worldwide that depend on affordable second-hand garments. Rather than stifling this vital industry, efforts must be made to enhance its efficiency and scalability worldwide. The diversion of clothing from landfills to reuse markets represents one of the most potent weapons against the apparel sector's environmental toll - an impact explored in depth in the next chapter.
