Retail

Allison Sommer, from The RealReal, on the company's partnerships and the boom of resale

by Marjorie van Elven
15 Oct 2019

The stigma against second hand apparel and footwear is quickly becoming a thing of the past: according to a recent report by resale platform ThredUp, the market has grown 21 times faster than first hand fashion retail over the past three years and is expected to grow from 24 billion US dollars to 51 billion US dollars in the next five years, in the United States alone. That means the secondhand market will be 1.5 times bigger than fast fashion by 2028, when previously-owned items are forecasted to account for an average of 13 percent of American closets.

The market is so promising companies working in this space have been receiving significant investments. ThredUp raised 175 million US dollars in August, while Neiman Marcus acquired a minority stake in Fashionphile, a resale website for luxury handbags, accessories and jewelry. Similarly, Farfetch acquired sneaker resale platform Stadium Goods before launching its very own resale platform for designer bags.

But they are not the only ones. Zalando, the European fashion marketplace, opened a pop-up store in Berlin earlier this year to sell used fashion items purchased from customers of Zalando Wardrobe. Similarly, H&M has announced an ecommerce trial of second hand sales for its & Other Stories brand.

Looking to get a behind-the-scenes peek at the segment and where it is headed, FashionUnited is interviewing some of the most prominent players in fashion resale around the world. Make sure to drop by our website every Tuesday.

This week we’re speaking with Allison Sommer, Director of Strategic Initiatives at TheRealReal, the first startup in the new wave of luxury consignment platforms. Founded in 2011 by Julie Wainwright at her kitchen table, the company is now considered one of the most successful marketplaces for second hand luxury items. With over 1,700 employees and 10 million members, The RealReal operates an online platform shipping to 60 countries, three retail stores in New York City and Los Angeles, and 11 luxury consignment offices across the US.

After having raised 115 million US dollars last year, a deal which valued it at 745 million dollars, The RealReal filed for an IPO in June, raising over 300 million US dollars.

Brand partnerships are part of the secret of The RealReal’s success, the most well-known of which being Stella McCartney. Since 2017, people who consign a Stella McCartney item at The RealReal receive 100 US dollars in store credit to shop at all Stella McCartney stores worldwide. The idea is to extend the life cycle of products, keeping them out of landfills. “The partnership with The RealReal created an easy and impactful solution for our customers to participate in a circular economy”, said McCartney in a statement upon announcing the renewal of the partnership in January. There were certainly enough reasons to keep the collaboration going. According to the RealReal, the first year of the partnership saw consignments of Stella McCartney items increase by 74 percent.

Now, the company is adding another heavyweight to its list of partners: Burberry. The British label, which came under fire in 2018 for burning unsold stock as a means to maintain the brand’s image of exclusivity, has announced earlier this month that all customers who consign Burberry products at The RealReal will be offered an “exclusive” experience in select Burberry stores across the US, including British High Tea, champagne and a personal selection of new Burberry products picked by one of Burberry’s stylists.

Teaming up with Burberry makes total sense for The RealReal, as the demand for Burberry items is on the rise on the platform, up 64 percent year over year. Millennials and Generation Z are driving this growth, attracted by Riccardo Tisci’s flirtation with streetwear, but older generations continue to invest in the label’s signature trench coat, whose resale value is about 1.5 times higher than other trench coats.

Sommer is the one responsible for scoring such strategic partnerships for The RealReal. She joined the company in 2015 to lead its brand collaborations, sustainability strategies and retail marketing. FashionUnited spoke with her about the growth of the resale market, the collaborations with Stella McCartney and Burberry, and what the future holds for the now publicly traded company.

In your view, what are the main factors driving the growth of the fashion resale market?

Fashion is one of the top-polluting industries in the world. According to Ellen MacArthur Foundation, one garbage truck’s worth of textiles is landfilled or burned every second. Our customers are becoming increasingly aware of this negative impact and the vast majority tell us sustainability is an important reason they shop and consign with us. Sustainability is a big part of why 32 percent of our customers are shopping The RealReal as a replacement for fast fashion. We’re also seeing customers becoming more savvy. They’re checking resale value on our site before making luxury purchases in the primary market, investing in items with high resale value.

How do you see the future of the resale market and The RealReal's position in this market?

We’ve really only just begun. As more and more consumers continue to recognize resale as a smart, sustainable alternative to shopping fast fashion, it will only continue to grow. I also see resale becoming a built-in part of the luxury fashion ecosystem as brands continue to embrace it.

We’re well positioned in the market with our focus on luxury goods that retain value over time and are made to last, as well as the expert services we offer. We also see the growth of conscious consumerism benefiting us and helping drive the circular economy.

What can we expect from The RealReal in the near future, in terms of partnerships?

As brands increasingly warm up to the idea of resale, we’re having more conversations about partnerships to create a circular economy in fashion. Brands are now realizing that we fuel the primary market. Our consignors are excited to go back and buy new luxury, because they’ve experienced it has resale value. And they’re generating newfound income to shop by consigning with us. It’s full-circle.

How did the partnership with Burberry come about? Did The RealReal approach Burberry or the other way around?

We’ve seen more primary market players looking to the secondary market to help extend the discovery, reach and covet-ability of their brands. When Burberry sought a partnership with us, it was not only an endorsement of resale, but an indicator to other brands that circularity and resale are important parts of the fashion ecosystem.

Burberry was heavily criticized last year for destroying unsold stock. Following the outcry, the brand has pledged to stop the practice. Does The RealReal intend to work together with Burberry to address the problem of unsold products?

Right now our partnership is focused on promoting a more sustainable future for fashion by encouraging customers to extend the life of their products and raising awareness of the environmental benefits of resale.

Speaking of the environment, The Real Real is the first resale company to join the UN Fashion Industry Charter. Can you tell us more about what the company is doing in terms of sustainability?

We were very excited to be the first luxury consignment company to join the UN Climate Change’s Fashion Industry Charter for Climate Change. We’ve been rooted in sustainability since day one, so it was natural for us to be an active participant in actionable conversations about reducing fashion’s impact.

Our customers, regardless of age, care about sustainability. We wanted them to understand the positive impact they have on the environment through resale, so we built a first-of-its-kind Sustainability Calculator. It measures the water, energy and greenhouse gases offset by extending the life of clothing instead of producing new. Since January 2012, we’ve offset 329 million liters of water with the help of our consignors.

The RealReal is an example of a digitally-native startup which has transitioned from clicks to bricks. Can you tell us more about the decision to enter physical retail?

We’ve found that the stores are a great way to engage people in luxury consignment. By delivering a luxe shopping and consigning experience in a physical store setting, we’re able to attract and introduce many first-timers to The RealReal. The in-store business has also brought our brand to life. We’re able to connect our community directly with experts for consignment drop-offs or valuation meetings, and customers can see and try-on our pieces in-person.

Any plans to open more stores?

Absolutely. Brick-and-mortar stores will continue to be a focus for us and we plan to open more in the future.

Chanel filed a lawsuit against The RealReal last year, accusing the company of selling fake Chanel items. How does the company prevent counterfeit goods from reaching its platform?

Unlike most resale companies, The RealReal takes possession of all items and physically evaluates every one to authenticate it. All items are put through a thorough, brand-specific authentication process by The RealReal’s trained team of luxury experts before they are accepted for consignment. The RealReal has more than 100 gemologists, horologists and brand experts on staff, as well as hundreds of additional trained authenticators.

Some people argue resale platforms hurt luxury brands' image of exclusivity. Birkin bags, for example, are no longer unattainable, as resale websites offer hundreds of them. What do you think about this line of reasoning?

When we partner with luxury brands we’re not only looking to drive consignment and extend the life cycle of items but also generate more awareness for the designer brand. I think we’re helping to extend the discovery, reach and even “covet-ability” of their brands. Strong resale value can strengthen the brand as a whole. We’re seeing that consumers shopping retail in the primary market want to know the resale value of designers and items before they make a purchase. The mindset has changed and they are thinking about the return on investment for when they eventually consign it. We believe that when consumers see there’s a strong resale value in the secondary market, they’re more likely to purchase those items/brands in the primary market.

Next Tuesday: Thomas Plantenga, CEO of Vinted

Pictures: courtesy of The RealReal, The RealReal Facebook