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[SINGAPORE] The sustainable fashion market in Singapore seems to be expanding, with the recent news that popular Japanese second-hand clothing store 2nd Street will soon be arriving on its shores.

While second-hand fashion currently accounts for just a tiny portion of the overall apparel market in Singapore, projections by Boston Consulting Group show the segment is growing at a faster rate than the broader market. This means second-hand fashion could be an opportunity for mall operators – including those structured as real estate investment trusts (Reits) – to boost their green credentials.

Presently, most Reits are focusing their environmental, social and governance (ESG) efforts on greening their buildings, whether through integrating renewable energy sources or utilising smart sensors to improve energy efficiency. The Building and Construction Authority’s Green Mark is now a sought-after certification by building owners.

Besides policy nudges, tenants’ market demands have also been a factor in pushing Reits to green their buildings. This, however, is more applicable to office Reits vying to secure leases from international companies that have sustainability targets to meet.

On top of investing to make their malls more energy-efficient, operators could also widen their ESG efforts by looking for tenants that run sustainable businesses, which include second-hand fashion.

While second-hand stores have been popping up around Singapore over the last few years, very few of them are actually situated in shopping malls – which tend to be in better locations with good traffic – due to high rents.

The only exception is Refash. The second-hand clothing retail chain enjoys economies of scale, with 17 brick-and-mortar shops located in various malls across Singapore.

Most second-hand shops, which are often started by young Singaporeans with an interest in vintage clothing or have a passion for the environment, are in old, strata-titled malls or buildings at less-than-ideal locations.

A handful of these businesses have been able to open shopfronts in the hip Haji Lane area. However, they tend to attract tourists and a niche crowd, rather than the everyday shopper that frequents malls.

Some could argue that these second-hand stores are just a fad, but mall operators could help make a more sustainable way of consumer spending mainstream, such as by prioritising these businesses when renewing leases.

The financial market has developed sustainable financing solutions, such as debt instruments requiring borrowers to meet certain sustainability goals to receive a discount on their interest rates. Mall operators could come up with a similar mechanism for rents in their leasing contracts.

For instance, second-hand clothing stores could be eligible for rental discounts or rebates under lease agreements that consider sustainability attributes. These businesses are part of the circular economy, after all, since they are premised on extending the lifespan of garments and reducing textile waste.

And these shops do need that extra hand, as their business model is inherently difficult to scale. Their inventory turnover is limited, as the uniqueness of each piece of clothing means that only one of it can be sold. Their price ceiling is also low, since consumers would not be willing to pay high prices for used items.

If more second-hand clothing stores can overcome the high rents and set up shop in malls, their presence could raise more awareness among the general public on the importance of buying second-hand.

This could lead to well-known fashion brands opening a segment where returned items are resold in their physical stores.

Outdoor apparel brand Patagonia is a leader in this space, with a programme in the United States that allows consumers to trade in and buy used gear. Sporting goods retailer Decathlon in Singapore has followed in its footsteps by introducing a programme where customers can purchase returned goods at lower prices.

After all, the lack of awareness on the need for more conscious consumption has meant a lack of incentives for governments, financial institutions and fashion giants to do more to decarbonise the apparel industry.

The global fashion industry is responsible for 10 per cent of greenhouse gas emissions worldwide – more than the combined total of the aviation and shipping sectors, which each account for around 3 per cent of global carbon emissions.

Yet, compared with the fashion industry, a lot more capital is flowing into finding solutions to decarbonise the aviation and shipping sectors.

Granted, such ESG initiatives will probably not benefit mall operators financially, especially considering how niche the second-hand clothing market currently is.

But they can play a role in amplifying the importance of consuming sustainably, and boost their reputations as sustainability-focused companies.