Online luxury consignment darling The RealReal grew its physical presence this week with the launch of its store in West Hollywood’s trendy shopping and entertainment district, Melrose Avenue. The brick-and-mortar opening is the second for The RealReal, their flagship in New York’s SoHo neighborhood. The highly-anticipated store launch comes on the heels of a recent Series G round of financing that brought in a cool new $115 million for the e-comm retailer late last month. Perfectly at home on the West Coast – as it’s based out of San Francisco – The RealReal’s entire brand offering comes together in an airy, contemporary, 12,000-square-foot showroom, complete with a sizeable “handbag vault,” luxury repair center and indoor/outdoor café serving fresh juices and SF-based Sightglass coffee. The space also includes a separate men’s department that boasts a “sneakerdome,” watch bar and full-service tailoring suite.
In personifying its online image by way of stunning storefront, The RealReal managed to create a bold and beautiful space with a multitude of professional services and behind-the-scenes offerings; and, in keeping with their steadfast mission and brand identity: authenticity, luxury, sustainability and passion combine right at the corner of Melrose and La Cienega Boulevard. Arguably the most interesting piece of the puzzle in an accomplishment of this magnitude, is the innovative inventory system created by The RealReal to unify their online and in-store inventory to guarantee that each one-of-a-kind piece is available to every possible buyer at any given time and never ever double-sold – technology that will no-doubt be essential as more successful e-tailers fill spaces in vacant storefronts. With The RealReal’s new space in L.A., the team leading the industry in authenticated luxury consignment gets to put their mission on display while growing brand awareness and promoting an influx of new consignment, all in one fell swoop.
The Summer Round of Funding
The RealReal’s Los Angeles store opened just days after it announced the closing of its $115 million round of Series G funding, led by PWP Growth Equity in late July. With this round, The RealReal’s fundraising now totals a whopping $288 million according to a release from the brand, making it the highest-funded retailer in the resale and luxury consignment space, passing up competitors like ThredUp and Vestiaire Collective. The RealReal CEO and Founder Julie Wainwright declared in the announcement the company’s intentions to use the new funding to grow its network of real-life retail, expand its innovative online-offline inventory technology and open new e-commerce fulfillment centers around the country.
As part of the investment, Chip Baird, co-founder and partner of PWP Growth Equity, joined The RealReal’s board of directors. Baird added that the brand is “redefining the consignment marketplace and how consumers acquire luxury goods. With a continued move towards e-commerce and the rise of second-hand good purchases, The RealReal is uniquely positioned to benefit from these shifting trends. We are excited to partner with the company as they work to bring their innovative marketplace to even more consumers and consignors.”
Second-hand fashion, once confined to thrift stores and saved for bargain hunters, has outran sales growth in the primary luxury sector, helping The RealReal expand its business and gain major attention from investors in the seven short years since its inception. It’s no surprise that financiers are looking to back online consignment: according to a 2018 industry report compiled by ThredUp, online resale is more than thriving, expected to be worth $41 billion by 2022. Driven by millennials seeking quality bargains and championing recycling, it’s reported that 44 million women shopped resale in 2017 compared to only 35 million the year prior. The trend continues – the growth of online consignment is slated to cause a chasm in the way we shop, with resale estimated to occupy nearly one-third of our closets by 2027 – outranking the likes of fast-fashion brands and growth rates reaching up to 9x faster than those of legacy retailers. Wainwright plans to take this estimated growth and run: according to WWD, The RealReal CEO wants to open more storefronts in New York City, and plans to roll out more watch and jewelry valuation centers around the country. The RealReal could be ready to list on the stock market within two years, Wainwright told Reuters, as the company expects the value of goods sold on the site to have roughly doubled to $1 billion annually.
The Real Real Impact on the Industry
Investors aren’t the only moneybags taking note – the brand is in talks with Louis Vuitton parent company LVMH and Gucci owner Kering over potential partnerships. Notoriously snubbed by luxury labels and blamed for diluting exclusivity and stealing sales, resale is now a major player with $25 billion in annual revenue and rapid growth estimates, meaning luxury companies would be remiss to not play along. Consignment’s rise in popularity combined with industry trends and the negative impact of fast-fashion on the environment stemmed a partnership between The RealReal and luxury British designer Stella McCartney. The two brands joined forces this spring in the hopes of innovating change throughout the industry and its distaste to resale. In an initiative titled “The Future of Fashion is Circular,” the two brands rolled out major campaigns that spanned radio, TV and social media platforms and shed a light on consumption patterns and the ties between fast-fashion and a negative environmental impact. The “Make Well, Buy Well, Resell” campaign was positioned as a model for the partnership in a call-to-action embracing a circular economy – a different way to think about fashion. This marked the first time that any luxury brand had actively embraced consignment and called for their own items to live circular lives in a resell model. The alliance created incentives for shoppers and consigners: The RealReal offered $100 to shop at a Stella McCartney store with any Stella McCartney item consigned. The RealReal also prominently merchandised the designer brand in their NY showroom and on the site.
After the success of the “Future of Fashion” initiative, other brands have expressed their interest in working on similar projects. The RealReal’s sustainability campaign gave the company a chance to boldly proclaim their position: by investing in quality pieces, we collect luxury items that retain value; and, by reselling to consignment once the piece no longer serves us, the lifespan of the garment increases significantly – at the least, the piece gets out of the closet and takes on new life, and at most, avoids a landfill and its damaging environmental implications; the seller gets a payment for their old item, and is encouraged to invest again in another, new luxury item; and consequently, the cycle continues.
McCartney’s union with The RealReal wasn’t only a savvy and lucrative move on behalf of her brand, but it cemented her name as the most sustainable in luxury retail: “we have been working for years to ensure that our supply chains represent some of the most traceable and sustainable in fashion while also continuing to ensure that our products, which are made to last, have long lives and never end up as waste,” the designer said in an official statement. “This campaign is about raising the awareness on a circular approach to fashion. We alongside The RealReal are making the commitment now and we can only hope that others will follow.”
The Melrose Amenities The beautiful new space boasts some pretty extraordinary features to help bring their online personality to life in sunny California. The West Coast brick-and-mortar concept store opened to heightened anticipation, its huge space at the West Hollywood intersection bustling with excitement in its opening week. The brand aims to make the buying and selling in its store feel exclusive while still being easy and fun. Whole “departments” are dedicated to womenswear, menswear, sneakers, children’s clothing, handbags and jewelry. “Think of it as a resale department store with a full lifestyle assortment,” chief merchant Rati Levesque told The Hollywood Reporter of the L.A. space more than doubles the size of their other NYC brick-and-mortar. “We have a big base in L.A.; it’s our second biggest market,” says Levesque. “The favorite brands here are Chanel, Louis Vuitton, Celine, Ulla Johnson, Reformation and Rag & Bone. And sneakers are really popular for men.”
The 12,000-square-foot womenswear division is enclosed in glass walls, so the California sun is free to shine on its decidedly minimalist-meets-industrial affinities featuring rich wood casings and cool cement floors. Plush seating areas are strewn throughout the bright gold and yellow space, where Chanel handbags are sat next to Hermès scarves in groupings that feel both carefully-conceived yet unassuming. Meticulous pops of color fill the neat store by way of tiling, light fixtures, textured walls, green plants, and of course – carefully and emphatically – through the inventory. Apparel is designed to be shopped thematically by “story,” arranged by size, trend and aesthetic to help shoppers examine the large collections piece by piece. One section of the women’s store tells a “modern bohemian” story; in another, various shades of blue pop in a section housing designer denim. A Chanel story lives on a rack with the brand’s signature tweed jackets next to coordinating tees, and the store is filled with glass jewelry and watch cases displaying the world’s most luxurious brands.
The dedicated men’s store includes the soon-to-be-legendary installation christened the “sneakerdome,” a pristine, oval shoe paradise piled to the top with dozens of covetable kicks. Think: Yeezy X Adidas Boosts ($575 to $1,395), Louis Vuitton X Supreme sneaks ($1,195), and crystal-clad Christian Louboutin’s ($2,795). The equivalent on the women’s side is the feature dubbed the “handbag vault,” a 1,500-square-foot floor-to-ceiling shelf lining a back wall with Birkin bags, Chanel totes and one-of-a-kind vintage finds. The vault is the new home to “the largest selection of Hermes handbags in L.A., including hundreds of Birkins and Kellys,” says Levesque, along with other premium and limited-edition pieces, one-of-a-kind runway pieces, and current in-store offerings alike.
Beyond the designer apparel and accessories for the whole family, the Melrose center is filled with furniture and art on display – all for sale. Beauty products and skin-care find a home alongside The RealReal T-shirts and branded swag. In the middle of the complex, CaféCafé keeps the party alive with grab-and-go sandwiches, fresh-pressed juices, coffee and other necessary shopping-sustenance. For the past-5:00 crowd, an in-house whiskey bar sits next to the area saved for designer watches.
The Melrose place is also the new home to various service components – gemologists and authentication specialists will be on site around the clock for complimentary fine jewelry and handbag valuations or fine jewelry repair services by appointment. A full-service tailoring center is housed in the men’s department, and professional stylists are on hand to pull pieces – even inventory found on the website. The RealReal is also making it easier than ever to consign, offering the option for curbside drop-off. CEO Julie Wainwright explained to CNBC the multitude of services as being like “open[ing] up what we do on the back-end to other people” – the continuation of their online image into the IRL space. She added that the company is “negotiating in multiple markets” for other stores but won’t settle for anything less than amazing, searching for big spaces bursting with character. As they do in the New York store, The RealReal Melrose will host discussions, seminars and workshops dedicated to styling, authentication and fashion – usually free of charge.
Perhaps the most interesting feat of the Melrose store’s debut is the way in which the brand has carefully conceptualized the necessity of unifying its online and physical merchandise. The RealReal keeps all its offerings available online, even new in-store consignment. The unique challenge became central to its cross-channel strategy, combining the inventory across platforms and ensuring every single piece is always accounted for and never double-sold. This internal inventory platform – called RealReal 360 – was built by an in-house technology team combines all of the brand’s products across channels: brick-and-mortar stores, desktop, mobile, e-commerce centers, and its luxury consignment offices. For a business that carries and sells only one of each item, The RealReal’s success in managing inventory relies on this technology.
Unifying the in-store and online inventory relies on a number of technologies, including customer data management systems, heat mapping and radio-frequency identification technologies. Levasque explained the strategy for The RealReal team on the sales floor includes a number of moving parts, and is most easily explained as being similar to the innerworkings of a restaurant: there’s front of house, there’s back of house, everyone is assigned a section in which they are responsible for tracking all movement from the items inside their section, and as soon as a pull is headed for the fitting room, the garment goes into a hold online.
Radio-frequency identification technology tracks every single item in the store, making it easy for the team to quickly identify the location of any product in their inventory. Inside each of the “stories” setup as curated “closet” sections, heat-mapping technology is used to determine which closets have the most appeal, and accompanying merchandising follows suit. Research in the New York store determined that customers who spend the most time shopping the “stories” end up spending more overall.
The company also uses data capture to customize the experience for every shopper, such as product preferences. “By the time a consumer enters the store, we know what they’ve obsessed over, we know if they’ve ever consigned or if they’ve purchased. We’re able to give them a more personalized experience when they walk in the door. We can also send a push notification when they’ve obsessed over a watch they really like and bring them to the store.”
According to Levesque, anywhere between 500 and 1,000 pieces move through the Melrose store daily, sold either in-store or ordered online. Pick-and-pack online orders are filled each morning, and the store’s sales floor is restocked just as frequently, meaning no two visits will ever look the same. “We’re taking in millions of items — even just this year — and we wanted to make sure we were giving customers the full 360-degree view of our inventory in our digital space, warehouses and brick and mortar locations,” Levesque told WWD.
The Next Steps
The RealReal has spent its first seven years in business proving that it deserves a seat at the table. Not only with the success of their consignment model, but as purveyors of the attitude and opulence inherent to the designer brands it sells. By placing their audience directly inside of their brand, The RealReal gets to tell their story in real-time, from beginning to end. Patrons who visit the Melrose store will see firsthand the expert-knowledge, authenticity, sustainability and teamwork that has always been at the helm of The RealReal concept.
To critics who say consignment steals sales from the full-price market, consider this: “What we’re finding is that people are taking the money they’re earning with us and spending it in the primary market,” says Levesque. “They’re going out and buying the new Chanel item, the new Gucci item. Over the next couple years, we’re going to be putting $1 billion into consumers’ hands from [commission on] items they’ve sold with us and they’ll spend that in the primary market.” The new model for sustainability in second-hand is as exciting as it will be impactful, economically and environmentally, and The RealReal is leading the charge.
As for the future of the brand, an increase in its network of stores is perhaps the most critically important next step. Wainwright has doubled-down on this notion, and an increase in store space will directly correlate to a surge in overall inventory that the company can, in the same day, display across the globe. Consignment marketplaces are only as good as their inventory, after all, and it’s a market share game; but at this point in the game, with major funding on their side and the estimated growth off the charts, the sky is the limit for this very real, very authentic, very inherently luxurious, second-hand retailer.
Shop The RealReal in Los Angeles: 8500 Melrose Ave., West Hollywood
Open 10 a.m. to 8 p.m. Monday-Saturday and 11 a.m. to 7 p.m. on Sunday
Additional information, and a complete list of in-store services, is available at therealreal.com/la
@therealreal brilliantly displays a few of the Birkin bags in its collection alongside a modern art installation.
Find more photos on The RealReal’s Instagram, or check out their spread here!