The RealReal CEO Talks Luxury Brands and Consumers

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Now on the second hand luxury market, we're joined by Ratti Levet, the Real Real President and CEO The Real Real, of course, the world's largest online marketplace, were authenticated resale luxury goods. Well, Ratty, you've been doing extraordinarily well at the Real Real, you know, increasing margins, increasing, you know, just the amounts that you sell. How much have you been benefiting from things that are maybe a detriment to the economy like tariffs?

Yeah, you know, it's interesting.

So what we're seeing, we're seeing the buyer be quite resilient at the Real Reel. We're seeing consumer trends being quite strong around findelty, watches, handbags. We're definitely probably a tariff beneficiary, but at the same time, there's other things kind of impacting our business. Resales becoming more mainstream, that's number one, and definitely seeing that led by the gen Z and malen Old consumer.

We're seeing fine jewelry and watches be very popular.

Like I mentioned, gold pricing, silver pricing going up, and then we're also seeing gifting becoming less of a stigma on resale. So almost sixty percent of consumers now say they prefer the secondary market out right. So seeing luxury and seeing resale specifically becoming much more mainstream right now.

Now you've been aggressively cost cutting, restructuring your commission model and so on, is there any danger that you will maybe not get in the supply that you need in order to keep supplying this market.

Yeah, So, you know, it's interesting.

I think that one of the things is that there's two hundred billion dollars trapped in people's closets. That's just in the US alone, and so we're it's such an untapped industry. At the end of the day, eighty billion dollars gets added to that every year, so so much good, so much luxury goods, just in the US alone, And so many of these people have never consigned any before. So we're seeing people become kind of introduced to luxury

I wanted to talk about prices Rotti because our very own Amandamal Bloomberg wrote just a few days ago twenty nineteen, the price of a Chanelle flat bag five eight hundred dollars. Fast forward to right now, it's over eleven thousand dollars. I'm wondering just how much the growth of the real real is coming out of the fact that people feel like they just can't they can't stomach the prices in the luxury market.

Yeah, so there's a couple of things happening.

Anytime the price increases in the primary market, our pricing goes up to So for whatever reasons, whether it's tariffs, whether the pricing of a Chanel bag goes up for whatever reason, our prices go up as well.

But like I said, what.

We're also seeing is more volume coming through, so more people being introduced to luxury and testing it out, and then they get that first paycheck, right, they get that first paycheck for the bag, and then they go back into the primary market. What we're actually seeing is that circular economy. And so they'll go back into the primary market with their check and buy the newest trend or buy something that they've been eyeing, and then they'll consign two or three things instead.

So we'll see that kind of trade up happening as well.

And what are the consumers typically gravitating for on the real real Are they looking for a bargain on a classic luxury item or are they turning to secondhand markets when they want to buy something trendier.

Yeah, so we're seeing that intersection between value and luxury. That's what we offer right at the end of the day. And then you've got very unique items.

So most of our items you.

Can't buy anywhere else, So they're looking for those one of a kind pieces. You know, they're kind of maybe done with the trends or everything's starting to look the same.

It's the badge of.

Honor to where something very unique from the real reel. So think of them like drops. Thousands of items get dropped every day that are very unique to the consumer consumer.

So that's number one.

Find jewelry, like I mentioned, watches, handbags, Vintage is a big one, as is condition. Again, seeing more of that value play come through. People are looking for that value. They'll take something that maybe is in fair condition instead of pristine condition, just so that it costs a little less.

At the end of the day.

You know, there are competitors out there now, fashion file, rebag and so on. How do you compete with them roalthy?

Yeah, So you know, when I think about the real reel, it's really around. We offer for very depth in products, So we don't offer just one category, right, it's handbags, it's jewelry.

Watches, fashion, textiles, sover where. All of that we're offering at the real reel.

So there's a lot and then we give you cash upfront and that's really important, right, versus trade up or trading. And then you earn the most with us, And that's really important to say.

And the reason why is.

Because of the trust that we built with the consumer, because we know, because you can sign with us because we've got almost fifty million members now that we've built trust with because of our pricing algorithms, you can earn the most with us at the end of the day.

I'm curious as well, how much are your physical stores contributing. Are they contributing to the bottom line? And you know, is it just a marketing play at the end of the day, And when does that bottom line, by the way, turn positive?

Yeah, so the.

Stores pay back very quickly actually, and what we see is a halo impact. So it's meeting the consigner where they are, whether they want to drop off in a store on their way to work, whether they want a van pickup at three pm this afternoon on demand. They can book that from their app, and we're seeing the consigner.

The seller can sign more.

Items when they inner act with the store, and more high value items because they're meeting with a gymologist and watchmaker. So yes, it's a place that people get introduced to our brand. A quarter of our new consigners come from the stores, from our retail locations, but we more see a halo impact, so from the consigner consigning more for us with us and then spending more.

At the end of the day too.

Brantie levec CEO of The Real Real, thank you for joining us.