When you typically think of consignment shops, the first thing that comes to mind are bargains. The second thing that comes to mind is low-priced shopping. The RealReal has changed that though, with their average shopper spending over $430 per purchase. Since inception this was done by focusing on on-line sales.
Consignment shops have found in the past the their overhead of maintaining a brick and mortar location can chip away significantly at their profits. This is why The RealReal started as an online business. It has recently opened a physical location in New York city to aid in the marketing of the business.
So, why won’t The RealReal run into the same issues that confronted its predecessors? Why is the company’s owner so sure that rent and expenses won’t overwhelm their profits? One of the biggest reasons is they are capitalizing on pop-up opportunities. These locations are known as pop-up because they are usually opened with very little notice. They require less interior build out of a retail space than typical stores as they are not intended for long-term use. Instead of customizing their stores, they keep the space in a similar condition as it was when they leased it and leave the expensive modifications up to future tenants after they leave.
Not only is The RealReal selective in its locations, it is selective in its staff. Those that work at the store are familiar with valuing products and how to market them. Twenty percent of the clientele sells items on consignment and half of those also purchase items. Selective inventory is a key when you do not have a large volume of storage space, as is efficient marketing.
With these pop-up shops, it will be interesting to see how much the composition of The Real’s costumer base changes. As of now it is close to a four to one ratio for female to male items purchased. These items can range from perfumes, jewelry and clothing for women to similar items for men focusing on high end jewelry. 2018 will be a key year to determine The RealReal’s path.