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We visited The RealReal in advance of its IPO and saw why its leading the luxury resale market
We visited The RealReal in advance of its IPO and saw why its leading the luxury resale market
Bethany BironJun 27, 2019, 17:55 IST
Bethany Biron/Business Insider
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The RealReal - a San Francisco-based online luxury consignment retailer - is expected to price its IPO on Thursday, positioning it as the first resale company to go public.
The company's anticipated valuation of $1.5 billion points to a growing demand for luxury resale goods as U.S. consumer demand grows within a $6 billion market.
We visited one of The RealReal's brick-and-mortar locations to see how the reseller has excelled in the business of luxury consignment.
In a lush outdoor cafe at The RealReal store in Soho, Manhattan, a young man plops down at a table and reaches eagerly into a shopping bag to extract his purchase - a pair of Balenciaga socks, cheekily designed to look like Bernie Sander's campaign logo. He rolls the socks up his ankles carefully before snapping a few photos, sliding his leather sandals on over the socks, and then walks jubilantly out of the store.
The shopper was one of several trendy customers hoping to score a deal on a Birkin bag or a pair of Gucci loafers on Wednesday afternoon, one day before The RealReal's anticipated IPO. The move comes more than three years after rumors first arose over a possible IPO, and will solidify The RealReal as the first resale company to go public. Analysts estimate it will receive a valuation of $1.5 billion.
Since founder Julie Wainwright started selling secondhand designer goods from her kitchen table in 2011, The RealReal managed to carve a niche within the burgeoning resale market and appeal to consumers seeking out sustainable fashion options. While companies like Vestiaire Collection debuted a similar model, The RealReal excelled in both product selection and its meticulous authentication processes - a daunting task when grappling with a counterfeit market worth an estimated $461 billion dollars.
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The RealReal IPO highlights the explosive growth of the luxury resale market, as an increasing number of companies look to capitalize on the business. According to a report from Bain & Company, the U.S. resale market for high-end goods was estimated to be $6 billion in 2018 and is expected to reach $51 billion globally by 2023. In response, resale companies that historically carried mid-market brands including Depop, ThredUp, and Poshmark (which is also expected to file IPO paperwork this year) began their foray into luxury.
We visited its Soho store, one of three total physical retail locations in New York City, and saw why the company is leading the luxury resale movement.
The RealReal currently has ten brick-and-mortar locations across the U.S. in Los Angeles, Miami, San Francisco, Chicago, Dallas, and New York City.
We visited its location in the heart of Soho, once a haven for struggling artists and now a high-traffic luxury shopping district.
The brightly lit, two-story location is immaculately organized by size and style. The first floor is dedicated to womenswear and accessories such as handbags and watches.
As we walked in, we found specially curated sections dedicated to highly coveted brands like Chanel.
On a nearby table we spotted even more Chanel.
However, the luxury brand isn't thrilled about its prominence within the reseller — Chanel is suing The RealReal, "alleging the marketplace sells counterfeit products and that only Chanel can authenticate its goods."
The company also sells luxury home goods, which we saw scattered around the store.
As we walked toward the back of the first floor, we found the women's shoe shop.
The shoes were in near-mint condition, and boasted labels like Prada and Fendi.
There are iPads for shoppers to browse additional items online.
Next, we stopped by the watch and jewelry area. The RealReal has an impressive selection of luxury watches. The company works with a team of more than 100 brand authenticators, horologists, and gemologists.
The back wall is devoted to handbags. The RealReal is known for its expansive selection of some of the most expensive bags in the world, including the Birkin bag.
The Hermes Birkin bag was once "the rarest handbag in the world." Now shoppers can browse hundreds of Birkin bags online, with select styles like a crocodile skin tote with gold detail commanding price tags as high as nearly $40,000.
Part of The RealReal's draw is a model based on the circular economy mission of reuse, reuse, recycle. Near the fitting rooms, we saw this sign highlighting its sustainability efforts.
The company recently began partnering with sustainable fashion designers like Stella McCartney.
The fittings rooms were particularly spacious and clean.
Next, we went downstairs to visit the men's department, also home to the consignment offices, cafe, and outdoor garden.
The men's section featured popular items like this Louis Vuitton luggage, as well as unique finds like a 32-piece Renzo Romagnoli, available for a whopping $995.
We also found apparel like this Saint Laurent leather jacket, on sale for a cool $2,236.
Down from $2,785!
The lower level is also home to the luxury consignment office, where sellers can book appointments with RealReal staffers to authenticate their products and get them on the market.
Interested sellers can also request in-home pickup or ask for a free label to ship their items directly to The RealReal.
Sellers earn up to 85% of the selling price of the items. Here, RealReal employees apprise and evaluate merchandise.
The Soho location recently opened a cafe, which sells an assortment of beverages and snacks.
We decided to give the oat milk latte a try and relax in The RealReal's outdoor garden.
Despite selling pricey luxury items, the latte was surprisingly less than $5 — a rarity in New York City.
In the middle of the garden is a tree originally planted by John Lennon and Yoko Ono in 1971 when they lived in the building.
With The RealReal leading the way, resale companies will continue to expand and grow, catering to growing consumer demand for pre-worn luxury.
