Second-hand retail stores in Sweden operate in a dynamic marketplace increasingly shaped by consumer-to-consumer (C2C) online platforms. This qualitative study, grounded in industrial organization theory and Porter’s framework of competitive advantage, examined how these digital platforms impact traditional second-hand stores in Southern Sweden. It also explored the strategies adopted by these physical retailers to remain competitive. Semi-structured interviews with managers from second-hand retail chains were analyzed thematically, offering insights into the dynamics of the sector. The findings reveal that while C2C marketplaces have influenced donation patterns, particularly for high-quality items, they have not significantly disrupted sales or customer behavior in traditional stores. Customers continue to value the physical shopping experience, characterized by tactile browsing, discovery, and community environment. In response, stores have implemented various strategies, including differentiation through unique in-store experiences, curated inventory, and personalized customer engagement initiatives. Cost leadership strategies, such as volunteer workforces, and focus on social missions further enhance their competitive positioning. However, the stores' limited utilization of systematic customer feedback and digital platforms suggests opportunities for further strategic development. Additionally, a potential disconnect between societal missions and marketing efforts suggests the need for more effective communication of charitable contributions. Traditional second-hand stores can thrive in the digital age by embracing digital integration, clear sustainability positioning, and community engagement, while leveraging their unique strengths like physical experiences and social impact to differentiate themselves from online competitors. This provides actionable insights into the competitive dynamics between physical second-hand stores and online marketplaces, offering practical recommendations for adapting to an increasingly digital retail environment.