TheRealReal is a second-hand fashion retailer. The company specializes in both online and brick-and-mortar providing a marketplace for the consignment of authenticated luxury clothing, watching, jewelry, home decor, and fine art items. It recently went public and this has stirred interest for investors who want to know more about the company and its outlook for making a profit in the future. Here are 20 things you didn't know about TheRealReal that might help to answer some of these questions.
1. TheRealReal is unique in the marketplace
Although it's not common to read about a consignment company going public, there is a huge market in this niche of the retail sales industry. Consignment businesses operate from a platform that varies from traditional retailers who acquire manufactured goods in new condition. TheRealReal is dependent upon the general public to supply them with their stock of luxury brand items for resale to consumers with an interest in gently used luxury items at an average discount of 20% off the new price. What sets them apart is that each item sold undergoes a thorough inspection to confirm that it is as represented.
2. Products sold by TheRealReal are vetted and authenticated
The company employs a professional staff to ensure that each luxury brand item is authenticated as genuine prior to offering it for sale to consumers. The team consists of luxury fashion authenticators, art curators, horologists, and gemologists. Each item is inspected for authenticity, condition, and value. This ensures that there are not any knock-off items being offered as a genuine article. The staff is full-time regular employees who make up the in-house team of professionals and each is an expert in their respective fields.
3. The RealReal was founded in 2011
This company has been in operation for 8 years. Julie Wainright is the founder. She is an e-commerce entrepreneur. TheReal Real operates through an online e-commerce site as well as through a permanent retail store in New York City, with a second retail location opened in Los Angeles, California in 2018. The company also opened two pop-up locations in Las Vegas, Nevada and in San Francisco, California.
4. The company expanded in 2019
The RealReal made an announcement early in 2919 that the company would add additional e-commerce space to its location in Perth, Amboy, New Jersey. They're planning to expand the space by a half-million square feet. This is a significant increase in the area to house consignment items offered on the e-commerce website. The allocation would also apply to centers located in Secaucus, New Jersey, and in Brisbane, California.
5. The RealReal recently went public
The RealReal submitted the S-1 preliminary filing to the SEC to go public on May 31, 2019. The company went public on June 28, 2019, and is registered on the Nasdaq Stock Exchange under the ticker symbol REAL. TheRealReal did so to raise funds, offering common shares to the public for purchase. June 28th is the first day that it officially began the sale and trade of its stock.
6. The RealReal launched a sustainability campaign
One of the most common questions in the minds of investors is whether or not the company offering shares for sale is sustainable. In advance of this, the company took action by partnering with a luxury fashion brand called Stella McCartney in 2017. It took a full year for the partnership to become official, and it launched in 2018 with an extension of the agreement to continue through the year 2019.
7. The RealReal established an annual holiday
We learned an interesting bit of trivia about The RealReal. They established a new national holiday in honor of the consignment industry and those who love to save money by buying used. It designated as the first Monday in October to become National Consignment Day. This is a holiday that commences every year on the same day. To mark the occasion, the following year on the second annual National Consignment Day, The RealReal consulted with an environmental consulting firm called Shift Advantage and together with the firm, it is measuring the environmental impact of all of the consignments which are processed by the company. It will be interesting to learn how much the company is doing to lower the amount of waste that ends up in refuse sites.
8. The RealReal is an award-winning business
There are a few larger consignment businesses around, but few have achieved the level of success that we've seen in The RealReal. It's a unique company and it has been recognized for the progress that it has made in providing a valuable service for both sellers (consignors) and for buyers who save a significant amount by buying used. In 2016, The RealReal was honored with a Fashion Group International Innovation in Retail e-Commerce Award.
9. The company is promoting a new shopping trend
There is a tremendous market for gently used luxury fashion. Some shoppers can afford to pay the full price for luxury fashion items from big-name designers, but for others, it's simply out of their reach. Those who have previously held off on making the purchase of highly desired items are moving ahead with their purchases with a greater frequency. They know that they can wear the item a few times and if they grow tired of it, they can sell it on The RealReal and make back 80% of the amount that they paid. It's starting a new trend and giving the retail economy a big boost.
10. The RealReal has a brilliant business strategy
This company allows people with verified and authentic designer and luxury items to sell them through their company for an 80% return on their original investments. The RealReal has established a system by which many of the consigners also purchase discounted items through the site and then sell them at a later date. Although not all consignors make purchases on the site, a number of them do. This is a circular phenomenon that works in the interest of all concerned.
11. The RealReal has established a solid reputation
The company has been in business since 2011. They've had about 8 years to build their reputation among buyers as well as sellers. The RealReal has dealt fairly with both buyers and sellers and they've earned a stellar reputation in the industry for selling items that are verified as authentic and in the condition that they are listed as. Customers receive no surprises and this has helped the business to become a trusted dealer in gently used luxury fashion, accessories and home items.
12. Used merchandise retailers are among the fastest-growing
Investors who are considering buying shares of stock in The RealReal may be wondering if this is a niche within the retail industry that is going to go anywhere or if it's going to fade away over time. The trends currently show that this is one of the fastest-growing sectors. The retail market for these items is forecast to reach the amount of j$41 billion by 2022. The market grew by 11.6% last year and the first half of 2018 showed a 7.6% increase. This suggests that the outlook for the growth of the resale retail market is positive.
13. The RealReal had a successful IPO
The RealReal went public on Friday, June 28, 2019, and priced its shares at $20 for common stock. This was higher than the expected range which ahd been set at $17 to $19 per share. At the close of the day, the stock closed at $28.90 per share which was an increase of 44.5%. This was a tremendously successful IPO that gives the company a market cap of $2.39 billion. It is worth noting that the day's high was $30.05 per share.
14. The market opportunity far exceeds the merchandise value
There is a big difference between the gross merchandise value of The RealReal and its market opportunity. The Chief Financial Officer of The RealReal, Matt Gustke shared that the gross value of the merchandise is estimated at $710.7 million, but what investors need to know is that the market opportunity is much higher than this. it was placed at $200 billion. There is currently a forecast in place for the secondhand retail market to soar past the fast fashion industry and to outgrow it by the year 2028.
15. While others are testing the market, The RealReal is taking decisive action
We learned that there are several new companies and some research firms who are just starting to test the waters to assess the used retail market. The RealReal has been doing it for 8 years now and they've just gone public. Jane Hali is the CEO of Jane Hali & Associates, a retail investment research firm and she is of the opinion that The RealReal, as the first of its kind to go public is actually ahead of the curve and setting the pace.
16. The RealReal is a disrupter in the retail industry
When it comes to the retail end of luxury fashion, we see that things are changing quickly. More exclusive brands are going to have to deal with the fact that there is some serious competition heading their way. While the high-end brands have an established clientele of shoppers who will not buy used, its likely that there is going to be a surge of new activity in the sale of items through consignment, and this may keep some customers away, preferring to obtain a significant discount on items still offered for sale on the racks of high-end retailers. This is a trend that could seriously disrupt the fashion industry at the retail counters.
17. The RealReal encourages entrepreneurship
This company is offering a platform for those who want to start up their own businesses. While there are fees charged for the services, there is a lucrative market for designer fashion. Buying and reselling is certainly nothing new, but from what we've learned about The RealReal and their operations, they've got it figured out, and they're providing a great arena for anyone who acquires genuine articles with proof of authenticity to resell these items.
18. It stocks the major brands
You can find most of the major designer brands available for sale on The RealReal in their e-Commerce site as well as at their brick-and-mortar shops. Birkin bags, Chanel, Alaia, Rick Owens, Gucci, Anita Ko, and many more. When it comes to fashion there is much more involved than clothing. It also encompasses the arena of shoes, booties, jewelry, watches and many other accessories. There are even certain types of housewares and art items offered on the site.
19. The RealReal is a trendsetter
We could see some big changes coming to the retail world, and they're coming soon. The RealReal has set a precedent in the used fashion industry by going public. Many who previously didn't even know that they existed are standing up and taking notice. The beautiful thing about it is that they're a raging success and this is just the beginning. As the word spreads and more people become aware of this growing market trend we may see some competitors arise in the near future.
20. This is a company to keep your eye on
If you're on the fence about whether or not to invest in The RealReal stock, it's a company that is at least keeping your eye on. It performed very well raising $300 million through its initial public offering and stocks closed at a higher rate than what was previously expected. This is an up and coming company and somewhat of a pioneer in the second-hand retail sector of the market with the boldness and daring to take their company public. The outlook is positive but only time will tell. Our bet is for a very sunny future for The RealReal.
Written by Dana Hanson
Read more posts by Dana Hanson