The RealReal’s State of Luxury: Move Over Louis Vuitton – It’s All Gucci, Baby!September 14, 2018
Booming luxury consignment retailer The RealReal has recently released its mid-year luxury resale report – the biannual version of its 2018 State of Luxury – highlighting trends, bestselling brands and emerging designers in the marketplace. Topping The RealReal’s search results and purchases for the first time in its 7-year run was trendy designer label Gucci, ousting previous top performers like Chanel, Louis Vuitton and Christian Louboutin. The Gucci dominance showed a reported 62 percent sales growth and accompanying search volume, popular across all demographics but especially notable among millennials, whose search for the popular brand increased by 48 percent. The report comes after a breakthrough year for the e-comm retailer who, in late July opened their second brick and mortar storefront on Melrose Avenue in West Hollywood. The RealReal is one of a handful of companies changing the game, and for brands like Gucci and Chanel who – along with the whole of luxury retailers – snubbed the idea of secondhand… the change is part of a bigger movement we’re seeing that’s championing secondhand as the progressive and obvious environmental and economical option. Consignment is slated to reach $41 billion by 2022, growing 24 times more than overall apparel retail according to a 2018 marketplace report. According to the report, 44 million women shopped secondhand last year, up from 35 million in 2016, with an audience of roughly one in three women 18 years and older. With undeniable data backing the growth of consignment, The RealReal is undoubtedly the industry leader, and in just seven short years has proven the power of their unique business model: authenticity – backing every single item it resells to be 100% the REAL real thing, plus sustainability – lessening the environmental impact created by discarded apparel and offering reselling as the remedy to an ethical extension in cyclical fashion.
Although The RealReal has broken new ground with their recent moves into IRL brick and mortar, their origins in online apparel give the company unique insights with available data across all luxury brands and their extensive database of 8 million items sold to date. This unprecedented look at consumer behavior and the trends in luxury fashion are really shaping the resale market while also supplementing the primary luxury retail market as a whole, providing an accurate reflection of impact and buyer demographics.
“Luxury resale has grown exponentially, and is more mainstream than ever. Both the industry and the public look to the resale market to identify macro and micro trends and to determine what consumers want right now,” said The RealReal Chief Merchant Rati Levesque. “With over 8 million items sold, our data speaks directly to these trends and we’re excited to reveal key insights in this report.”
The report continues The RealReal’s practice in data-driven metrics, taking the pulse of the market, reporting on current trends and forecasting how those trends will bend and impact the current luxury market in the seasons to come. With statistics on over 8 million items sold, The RealReal has a unique vantage point on the emerging directions in both buying and selling across primary and secondary platforms. The revelations reported by the retailer span various topics surrounding the ever-growing resale market: tracking ups and downs in the top-searched luxury brands, evaluating year-over-year sales growth numbers among the top ten selling brands, revealing the most popular brands and their key demographics broken down by gender, reporting trends in consignment, exposing the must-have it-bag both current and for collectors, informing men’s industry insights in apparel and the rise in sneaker resale, and producing relevant information on current, in-season fashion.
State of Luxury: Gucci Gang
According to The RealReal’s 2018 biannual State of Luxury report, the biggest surprise came from the recent rise of search results and purchases for the luxury brand Gucci, rising two spots in half a year from number three to a number one, surpassing Chanel – the brand still reported to be number one among millennial women – and Louis Vuitton.
Gucci’s rise in popularity on The RealReal is reflective of the current culture of popular luxury fashion. Just this year, Gucci’s parent company Kering SA reported a 48.7 percent jump in same-store sales during the first quarter of 2018. This followed a 43 to 49 percent increase in the two quarters before, according to Business Insider. The brands explosion of popularity is credited to teen and millennial shoppers, shaped by pop culture. Another report shows 55 percent of the brand’s sales for the first three quarters of 2017 being made to consumers under the age of 35, and the brand jumped 5 spots, from 15th to 10th as “most popular apparel brand” in a survey of 6,000 teens across the US.
The resurgence of ‘90s styles is partially credited for Gucci’s growth across platforms, with logo-mania usurping every corner of the market from high-end luxury to fast fashion, and brands like Gucci, Calvin Klein, Champion and Tommy Hilfiger reusing the trends from a bygone era for a new set of consumers whose proclivity to branded T-shirts, jumpers and hats reign. Since 2015, under the direction of Alessandro Michele, the brand has refreshed its look for a younger demo, bringing together eclectic use of colors and patterns while using the Gucci logo as a who’s who among the country’s biggest and best-dressed. The first quarter of the year showed Gucci’s online sales up by triple digits over 2017, another indication that its tech-savvy younger shoppers are at the helm of the brand’s growth, boosting sales with every single purchase behind the bright light of their computer screens.
From @TheRealReal Instagram: the resurgence of ‘90s styles and logo-centric designs make the Dior classic saddlebag the most popular on The RealReal, as reported in the latest edition of the biannual “State of Luxury.” This popularity is followed by Gucci, Louis Vuitton and Fendi logo bags.
For The RealReal, search volume for Gucci topped Chanel and Louis Vuitton from their first and second spots this year for the first time and is growing 48 percent faster among millennials than other age groups. Not only is Gucci killing it on the site for search popularity, but it is also the fastest growing brand for purchases, hitting another #1 position on The RealReal as the top brand in year-over-year sales growth, up 62 percent from the last biannual report among all age groups.
According to the insights found in the State of Luxury, Alessandro Michele’s vision for the company is perfectly paired with today’s consumer market, making Gucci a mainstay for new buyers and sellers alike, with shifts in the value of Gucci’s consignment retail up 12 percent. In fitting with this theme, the The RealReal reports the rise of popularity and resale value in iconic, logo-centric styles by heritage brands: the classic Dior saddlebag – up 89 percent in resale value, the Gucci web – up 51 percent, Fendi’s iconic Zucca saw a resale value growth of 32 percent and Louis Vuitton’s iconic LV Mountsouris rose 26 percent; these number are also solidified by the decline in popularity (and accommodating devalue) for past-season styles that weren’t designed with the same logo-centric method in mind.
From The RealReal “State of Luxury” 2018 biannual report: Gucci tops the site’s rise in sales growth and search rankings among consumers and is the number one brand consigned by millennial men.
For men, Gucci steals the show In The RealReal’s report as the number two brand for purchases, the number one brand consigned, the highest grossing men’s brand in resale value – up 21 percent since the last report – and one of the top sneaker searches for men across the country, the Gucci high-top reaching #1 status in Dallas, Texas searches and the brand’s iconic low-top number one in Philadelphia.
Once you wade through the pervasive Gucci-ness of the biannual report, there are a slew of other salient insights. Even though Alessandro’s designs reign, Hermès is still identified as the fastest-growing brand among The RealReal’s millennial consumers, the iconic French brand growing a whopping 71 percent among shoppers aged 18–34 in the first half of 2018.
Shifts in consignment resale value in older contemporary brands like Tory Burch are on the decline, a 34 percent downtick for the first half of the year. Vetements fell 22 percent as shoppers turn to Demna Gvasalia‘s latest designs at Balenciaga, and Johanna Ortiz resale value dropped 27 percent as competing brands with lower price points offer similar styles. On the ups in resale value along with Gucci’s lead: Golden Goose, following on the trends of women’s streetwear and luxury sneakers rising in popularity (up 33 percent), along with new contemporary brands like Ulla Johnson on the rise (up 15 percent). For men, resale value is led by brands focused on logo revivals and strong sneaker and statement outerwear offerings, with Gucci, Amiri and Balenciaga as top leaders; while Vetements ready-to-wear, Balmain ready-to-wear and Bottega Veneta leather goods all saw a decline in resale value.
For men, The RealReal highlights the “dad trend” to continue to pervade the market, with the look for dad-style staples leading the site’s top searches: Hawaiian shirts spiked 84 percent (thanks, Justin Bieber?), while dad hats saw a 67 percent uptick and fanny packs blew out a whopping 614 percent spike in the report’s short half-year span.
From The RealReal “State of Luxury” 2018 biannual report: The “Dad Trend” and the rise of ‘90s logo-centric styles are a major factor in Gucci’s meteoric rise.
The RealReal reports that Yeezy sneakers rule for men in the US coast-to-coast, and the top brands bought by millennial men are led by Rolex, Gucci and Louis Vuitton while the top brands consigned by the same demo keep Gucci and Loui V while adding Hermes to the leaderboard. A few surprises are found when you crunch the numbers. The brand Supreme, which is scattered throughout the site and highly reported to be fashion’s hot commodity, didn’t crack the top 10 brands bought by millennial men despite its hold on pop culture, but it did come in as the sixth most consigned brand – could this mean the beginning of the end for the fast-paced world of “what’s hot” in luxury retail? The RealReal’s State of Luxury could easily make that case.
The RealReal – From eTail to IRL Retail
The company offering these insights on the market has a keen position in the marketplace. The RealReal has moved millions of products, over 8 million it says to be exact, so it’s sizable data on consumer search and purchase habits are of high value to consignment and luxury high-fashion alike, and in the very under-wraps world of luxury goods, tracking changes in search and spending habits is as reliable an indicator as any of the volatile fluctuations of heat and buzz. Founded in 2011 by Julie Wainwright, The RealReal operated online for a number of years before pursuing pop-up opportunities around the country whose successes led to the first brick and mortar stores: the 2017 introduction in NYC’s Soho neighborhood and a second location completed this summer in L.A.
The highly-anticipated summer opening of the Los Angeles store in west Hollywood followed a Series G round of funding that brought in 115 million new dollars for the e-comm retailer in 2018. Based in San Francisco, a west coast storefront was the logical next step after the success of its sister-store in NYC. New and fresh and bright, The RealReal location on Melrose in West Hollywood has already been praised by critics and shoppers alike, it’s airy, contemporary, 12,000-foot showroom boasting a “handbag vault,” a luxury repair center, a separate men’s department complete with a “sneakerdome” for the shoe-obsessed, a watch bar and a full-service suite specifically for tailoring needs. One of the most interesting aspects of the L.A. storefront is the innovative inventory system, engineered by The RealReal to fit its online consignment inventory model. The proprietary inventory system is unique in that it unifies their online shop with the in-store inventory, from L.A. to NYC, guaranteeing that each one-of-a-kind piece is available to every possible buyer at all times and never double sold.
The RealReal’s latest brick and mortar storefront in west Hollywood, L.A.
The New Game
The hundreds of millions of investment dollars made in The RealReal are really telling for the current market trends. Secondhand fashion has outrun average sales growth in the primary luxury market, meaning more and more consumers are turning to consignment for their high-end needs. With this trend toward the secondhand, it’s no surprise that investors want to back online consignment. Online resale is thriving, expected to be worth an astounding $41 billion by 2022, according to a 2018 industry report which goes on to state that shopping habits will continue to work in The RealReal’s favor as consignment slated to occupy one third of women’s closets in the United States by the year 2027, outranking the now high-performing fast fashion brands and legacy retailers. Just last year, a reported 44 million women reportedly shopped resale, adding 9 million new consumers since 2016.
Wainwright plans to take this lead and run: according to WWD, The RealReal CEO plans to install more of The RealReal brick and mortar stores in New York City, while the company is also in talks to introduce more watch and jewelry valuation centers around the country. With this momentum, Wainwright told Reuters The RealReal could be ready to list on the stock market within two years as site valuations are expected to roughly double to $1 billion annually.
Investors aren’t the only sector looking to back the growth of The RealReal. The retailer is communicating with Louis Vuitton parent company LVMH and Gucci owner Kering over potential partnerships, a huge step forward considering the history of conflict and hostility coming from the primary luxury market. This trend toward partnership can be traced back to The RealReal’s 2018 collaboration with luxury designer Stella McCartney who worked with the secondhand retailer in a campaign “The Future of Fashion is Circular.” The two companies came together to challenge the industry’s role in environmental waste, shining a light on consumption patterns and the negative impact of fast fashion. The “Make Well, Buy Well, Resell” campaign was a call-to-action for the industry as a whole – both the primary brands and those who bought and resold their goods. In positioning consignment as the natural next step in cyclical fashion, McCartney’s work with The RealReal marked the first time in history that a luxury fashion house openly embraced consignment and advocated for the items that they produced to live cyclical lives within the model of resale.
If a consumer invests in a quality piece in the primary luxury market, that buyer is putting their investment into quality items that retain value. Once this item no longer serves the consumer, the investment in quality lends itself to the opportunity in consignment. By reselling the item to a secondhand buyer like The RealReal, the seller gives the clothing new life with and creates a positive environmental impact by avoiding the landfill. In reselling the item, the seller also gets a return on their investment, which The RealReal has reported is likely to be put right back into the primary market, thus creating a mutually beneficial, cyclical lifecycle for The RealReal to mix with the primary luxury market. In the realization that consignment actually boosts the primary market, more and more collaborations will emerge as brands embrace their unique opportunities to give their designs new life through the years. The explanation of the model combined with The RealReal’s rise has struck a chord with luxury brands across the world. Chief Merchant Rati Levesque explains, “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.” This model, championed by The RealReal and mirroring the trends reported in the industry, is showing to make a huge impact both economically and environmentally. At the helm of the movement, The RealReal leads the way.
100% Gucci, 100% Real. Sold with major discounts and authenticated by the team of experts at TheRealReal.
Via @TheRealReal Instagram