The RealReal Teaches You To Treat Your Wardrobe As An Investment Portfolio

There was once a time when high-end luxury items were rare to find. The cost of these items also made them an unlikely investment for the average person. The RealReal is the undisputed global leader in the resale market for luxury items. The company has destroyed the old paradigm by providing pre-owned luxury items at discounted prices.

The RealReal, now valued at $450 million, also gives owners of luxury items the opportunity to sell items they no longer use on consignment. To date, the company has sold more than eight million pre-owned pieces of clothes and accessories through its website, internet popups and physical locations in Los Angeles and New York.

Rati Levesque is the chief merchant for the RealReal. Recently, Levesque took the time to share her thoughts with a reporter. The following is an account of the exchange, written in the words of Rati Levesque.

I view our company as a gateway drug. People who have never owned an item by Chanel or Louis Vuitton may become curious and purchase one. Once they experience the quality of the item, they then may decide they would like a handbag also.

I often explain to people that luxury has a lifecycle. An item is made well, purchased well, and then resold. Luxury items have done well at holding the resell value in recent years and many people are now viewing these purchases as more of an investment than a vanity purchase.

The typical resell value of a luxury item is between 60 to 80 percent. This situation also benefits the primary markets for luxury items as 80 percent of consignors spend the money they earn on new items.

We are extremely interested in educating people on the luxury resell market for luxury items. We explain to them things like what's trending up or down. We also provide them with solid strategies to decide what they should hold and what they should consign at a given time. We adjust prices constantly based on supply and demand. We pass this information on to our sales team and they pass the information on to clients.

The RealReal staff is equipped with information that tells potential buyers much more than what might look cute on them. They are able to tell them what they can expect to recoup in the resell market for that Louis Vuitton item once they no longer wear it.

One real-world example of this concept took place when Celine announced she would no longer be a part of the Phoebe Philo for Celine line. The number of searches for products in the line went up by 30 percent almost immediately. Next, we saw a similar increase in sell-throughs for the products. This alerted us to the fact the price could be increased for this product that was now a collectible. We ended up raising the prices by 20 percent.

Watches have outperformed many items for us over the last two-and-a-half years. Millennials and Generation Z members are showing more interest in vintage watches.

Classic brands like Coach, Chanel, and Louis Vuitton all do well. People are growing weary of everything looks the same philosophy that began to dominate the social media age. They are searching for ways to stand out from the crowd. The ability to find authentic pieces at affordable prices adds to their satisfaction.

Our physical stores double as company warehouses. This is because each of the items in our stores is available for purchase online. The RFID system we use allows us to locate any object in a store once an item is ordered by an online customer. This gives us the flexibility necessary to provide optimal service to both online and in-store customers.