The news that Depop – Generation Z’s favourite app for selling and buying used clothing – had been sold to Etsy for $1.6bn (£1.1bn) is a warning shot for fashion retailers.

For years, traditional retailers and “fast fashion” companies have moved too slowly on making their production more sustainable. Etsy’s acquisition of Depop shows that shoppers, led by an eco-conscious Generation Z, are taking things into their own hands, and it has commercial appeal.

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Fashion for an eco-conscious cohort

The fashion industry has been slow to integrate sustainability practices into production and retailing, leaving a gap for disruptive new redistribution models to fulfil consumer preferences.

In 2020, new users of Depop increased by 163% from the previous year, with a 200% growth in traffic and a 300% increase of sales. Its immense popularity is a reflection of the success of sustainable redistribution markets, particularly among younger users.

The rise of Depop and other consumer-to-consumer fashion redistribution platforms and apps (such as Vinted and Vestiaire Collective) illustrate the draw of the circular economy – making the most of resources already in circulation. This is especially appealing to younger consumers who are more concerned about sustainability, climate change and the future of the planet.

This generation has also been quick to adopt other sustainable life choices, like vegan diets. In contrast to the fashion industry, food suppliers from grocery stores to KFC have responded to this demand with increased availability of plant-based food products.

Participation in the circular economy is an illustration of consumers adopting responsibility for post-consumption behaviours and actively creating opportunities for other consumers to adopt more sustainable fashion practices, with the added benefit of an income.

One benefit of Depop is the accessibility of the app. Generation Z are a cohort who have grown up with digital technology, and apps are a familiar space for socialising, sharing and accessing information and consumption. Additionally, the inability to visit the high street due to the COVID-19 pandemic forced most consumption online. As consumers have grown used to their fashion being delivered, there is no disadvantage in shopping through Depop.

While consumers may want to buy more sustainable clothing, there are many established barriers, such as higher pricing, lack of fashion appeal, lack of information and misunderstanding of sustainable fashion terminology.

Consumers are not prepared to sacrifice their sense of self and identity in the name of sustainability, especially as many shoppers do not understand how the fashion industry is unsustainable. Over-consumption is often a response to experiment with identity formation.

Depop gets around some of these barriers by creating a market where Gen Z are both the sellers and the buyers, so the fashion sold on the app is specifically appealing to them. This is an example of collaborative consumption, a system which includes a number of alternative practices to enable commodities to be used for longer and by a greater number of people. This may include redistribution markets, such as Depop, as a platform for exchanging used clothing, or renting and borrowing clothes, such as is found in a fashion library system.

Retailers must act fast

The fashion industry lags far behind on the sustainability trend. The low cost of fast fashion encourages mindless consumption, and shoppers have been vocal about calling this out – for example, the social media campaign against online retailer Pretty Little Thing for selling a dress for 8p in their sale.

So, what can brands do to address these concerns?

Although some brands include a sustainable range made from organic or recycled materials, this often consists of basic items such a vests, t-shirts and leggings as opposed to “high fashion” garments. These lines are greatly overshadowed by the accelerated production of fast fashion.

Many retailers address sustainability by encouraging consumers to dispose of unwanted garments by donation rather than address sustainability in production and retailing – which seems like an own goal.

Some retailers encourage consumers to return unwanted clothing to the store – in return for a voucher to purchase new fashion. The problem of climate change and scarce resources cannot be solved through more consumption. The used clothing market in the UK is not sufficiently buoyant to resell clothes donated to stores and charity shops, meaning much of this ends up in developing countries, or, in the event of Brexit border delays, stuck in warehouses.

It is somewhat remiss that the fashion industry is so out of touch with consumer trends. The COVID-19 pandemic has altered social systems and consumption practices, and solidified younger consumers’ sentiment for conscious consumption. This new chapter, combined with the success of Depop, presents brands with an opportunity to reconsider their business models.

One fashion retailer embracing this well is Cos, part of the H&M group, which enables consumers to buy and sell used Cos clothing online. And London department store Selfridges has opened a permanent “pre-loved” department.

Given the momentum of Generation Z’s preference for collaborative consumption, my colleagues and I are expanding our research to examine engagement on redistribution markets, via apps and physical events, as well as the potential for renting fashion. We will also examine whether younger consumers perceive a loss of authenticity in Depop being purchased by Etsy, as when L’Oreal bought the Body Shop. It will be interesting to see whether the change in ownership affects the commercial activities of Depop.

It is clear from Etsy’s purchase of Depop that there is commercial appeal for more sustainable fashion. As alternative digital platforms for fashion grow in popularity, the fashion industry needs to change – and fast – if it wants to stay relevant.