Canadians turn to the second-hand market amid tepid economic growth

TORONTO - When Amahl Arulanandam decided to get back into playing guitar in 2014, he turned to Kijiji.

The online classifieds site helped him score a Jackson guitar for $250 - a steep discount from the $600 he estimates it's worth.

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Since then, Arulanandam has bought three bicycles using Kijiji. The first turned out to be a dud, but that hasn't deterred him.

"I make a reasonable amount of money but it's not a regular, fixed income," says the freelance musician.

"Anywhere that I can save money just to make sure that I'll have a float for later on, in case I have a dry month, that's always helpful."

The second-hand economy - which includes everything from used goods stores to classified websites to online communities where users can trade goods - provides consumers with an opportunity to save money on their purchases or earn a little extra cash by selling stuff they no longer need.

With the economy projected to grow at a tepid pace this year, some economists say the number of Canadians participating in this segment of the economy is likely to grow.

"In every downturn, there are always people that get harder hit that are looking for ways of trying to MacGyver a better quality of life with whatever they've got," says Armine Yalnizyan, a senior economist with the Canadian Centre for Policy Alternatives.

"And it doesn't always take money. You can spend less and live well, if you can figure out how to work with others who can trade stuff that you want."

According to a report sponsored by Kijiji released earlier this week, roughly 85 per cent of Canadians took part in some form of second-hand transaction last year.

The report, which polled 5,990 people online, estimates that the second-hand economy contributes as much as $36 billion to Canada's GDP.

The Marketing Research and Intelligence Association, the polling industry's professional body, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.

While much of the second-hand economy involves purchasing goods outright, there is another component that doesn't involve money changing hands at all.

In online bartering communities like Bunz Trading Zone, popular amongst millennials, users swap their unwanted items for things that they need.

Emily Bitze started the Toronto-based community in 2013 when she was working at a vintage shop and found herself so stretched one day that she couldn't afford pasta sauce for her spaghetti.

"I lived paycheque to paycheque," Bitze recalls. "There were often times where I couldn't afford to actually buy food."

Bitze decided to create a Facebook group where she could trade goods with her friends. Since then, the online community has swelled to more than 30,000 members, and Bitze recently launched a smartphone app. A countrywide expansion and a U.S. launch are in the works.

Lindsay Tedds, a co-author of the Kijiji study and a professor at the University of Victoria, says most transactions in the second-hand economy represent new economic activity - purchases that wouldn't have happened otherwise. That means they aren't detracting from economic growth.

However, in some instances consumers who would have bought new goods are turning to the second-hand economy instead - a phenomenon that can further fuel the cycle of slow economic growth, says Yalnizyan.

"If they're buying used because it's something they need and can't afford it new, it will slow down the economy," Yalnizyan says.

Bunz partner David Morton says that isn't the millennial generation's problem to solve.

"We're going to let the economists sort that out," says Morton.

"Whoever is to blame for the current economic situation - it's not us. We've just entered the workforce. The people who have been working and voting and being a part of the system since before we were alive, they're the ones who put us in this position. We're just taking care of us."



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