Bad news is good news for these mall brands in the resale market

Key Points
  • On, a website that resells name brands clothing and accessories, "mall brands" are growing faster than the site-wide average.
  • The trend arises even as brands like The Limited, Wet Seal and Bebe — all typically found in malls — have closed stores lately and are struggling financially.
Pau Barrena | Bloomberg | Getty Images

Even with many retailers shuttering stores — and in some cases declaring bankruptcy — hope remains for some of the most troubled names in the industry, a new report suggests.

ThredUp, an online thrift store, wanted to know how well items from troubled mall retailers like Wet Seal, The Limited and bebe stores, were selling on their site. They found these brands were seeing better resales online — outpacing average industry growth — despite the heavily negative stream of headlines.

The site's analysis of brands was conducted over a series of months that ended in April, based on all the sales data from ThredUp's customers, spokeswoman Karen Clark told CNBC. ThredUp resells more than 35,000 brands on its website, with the majority of its shoppers either falling within the millennial or the 55+ age categories, she said.

For the analysis, ThredUp focused on brands that had announced major store closures lately — such as Crocs, BCBG and Ralph Lauren.

ThredUp discovered that seven of the 10 mall brands it analyzed actually outpaced the average resale growth rate, or baseline, on the consignment shop's website.

Demand for Wet Seal, which has plans to shutter more than 170 stores, is growing two times faster than so-called baseline brands, or those that contribute "average" sales volume to the website, Clark said.

Ralph Lauren, which has been closing brick-and-mortar locations since mid-2016, is a major outlier in other mall brands' finding success on resale sites. According to ThredUp's findings, Ralph Lauren is the slowest-selling brand analyzed and isn't seeing much of an improvement, especially from millennial shoppers.

"I think that more specifically looking at 'Why are mall brands suddenly picking up speed on resale sites like ThredUp?'" she added. "I think it's more a reflection of shifting consumer shopping behavior ... that consumers are changing the way they shop."

One factor that has been widely publicized is the shift of shoppers online. Many of these retailers have been hurt by slower foot traffic at the mall, but shoppers still desire their brands. They just want to purchase them online.

Consumers are also hungry for deals. Since ThredUp is a reseller of clothing, shoppers are able to purchase items for a fraction of their original price.

The negative headlines surrounding retail may have also contributed to consumers believing they would get an even better deal on some of these troubled brands.

This makes sense because shoppers today are constantly expecting "consistent discounts," Clark said, in ways that traditional brick-and-mortar retailers can't always provide.

"It's why places like TJ Maxx and off-price are doing well."