STRATEGIES OF A FASHION ORGANISATION

WRITTEN BY

MAGGIE ROSE TAN

FOR

MKTG1170 FASHION & TEXTILES MARKETING

RMIT UNIVERSITY

word count 4,058

01
The objective of this report is to examine and analyse the luxury resale organisation, The

RealReal, it’s market situation and corresponding strategy, and provide future strategic

recommendations.

This report is based on both primary and secondary research. Primary research

involved government documents, statistics and data. Secondary research involved the

gathering of qualitative data through the review of literature, articles and reports. The

following pages include an analysis of the macro-environment, corresponding

strategies, competitors and customers.

Overall, the findings of this report indicate that The RealReal subsides within a

highly saturated, highly competitive, highly volatile and rapidly growing luxury resale

market. Findings from the examination of The RealReal, its macro-environment and

meso-environment, suggest four key future strategic recommendations:

1. Leverage advanced technologies,

2. Expand partnerships and seek cooperation,

3. Invest in international operations and marketing, and

4. Mergers & acquisitions.

Although various methods have been used to analyse and compile the data for

this report, the author acknowledges the data is not comprehensive. This report is

limited in that it does not include key financials and industry sensitive information as this

material is not readily available to non-industry pupils. This report is directed to the

Royal Melbourne Institute of Technology and Mr. Stephen Wigley, a Fashion & Textiles

Marketing teacher within the course.

02
EXECUTIVE SUMMARY
TABLE OF CONTENTS

04
EXECUTIVE SUMMARY………………………….…… 02
TABLE OF CONTENTS………………………….…….. 04
1.0 INTRODUCTION…….…………………………… 06
2.0 ENVIRONMENTAL ANALYSIS………………..…. 12
2.1 PESTEL ANALYSIS……………………………. 12
2.2 SWOT ANALYSIS……………………….……. 14
2.3 TOWS ANALYSIS………………………….…. 16
2.4 ANSOFF’S MODEL………………….…….… 18
2.5 BGC PORTFOLIO MODEL………………… 20
2.6 PORTER’S FIVE FORCES………………..… 22
2.7 COMPETITORS……………………………… 24
2.8 CUSTOMERS………………………………… 26
3.0 RECOMMENDATIONS………………………….. 28
4.0 CONCLUSION………………………….………… 32
5.0 REFERENCES…………………………….……….. 34
6.0 APPENDIX………………………………………… 38
1.0 INTRODUCTION
McKinsey research reports that the average person today purchases 60% more clothing

than they did 15 years ago - but keeps that clothing for only half as long as they used to

(Mckinsey, 2016). One in seven consider it a fashion no-no to be seen wearing the same

outfit twice (Business of Fashion, 2019). In a growing number of categories, consumers

are choosing to shift away from traditional ownership to newer ways to acquire product

(Business of Fashion, 2019). This shift to thrift is driven by growing consumer desire for

variety, sustainability and affordability (thredUP Resale Report, 2018). Young people

today crave newness and uniqueness (Cervellon, Carey and Harms, 2012), becoming

more interested in high quality second-hand clothing. Rental and resale models

lengthen the life of a product (Business of Fashion, 2019) while offering the unfamiliar

consumers desire. As online consignment stores and the sharing marketplace continue

to grow, consumers are purchasing fewer brand new products (Microsoft, 2019). In

response, many businesses are being pressured to re-evaluate their business models,

choosing to adopt service-based business models, to participate in this new economy

(Microsoft, 2019). Sources suggest that the secondhand market will be bigger than fast

fashion within the next decade (thredUP Resale Report, 2019) (Appendix 1), posing a

unique threat to traditional retailers, as well as a unique opportunity for those prepared

to re-evaluate and self-disrupt their business models (Microsoft, 2019). One organisation

dominating and disrupting the US market is luxury resale company, The RealReal. This

report will examine and analyse The RealReal, it’s market situation and corresponding

strategy, and provide future strategic recommendations.

06
COMPANY PROFILE

FOUNDED

2011

By Julie Wainwright

The RealReal is an online and brick-and-mortar marketplace for authenticated preowned

luxury goods.

www.therealreal.com

07
 MISSION

“Our mission is to empower consignors and buyers

to extend the lifecycle of luxury goods in a way that honors

luxury brands.”

CORE VALUES

We are curious, creative and dynamic.

We advocate growing our people from within.

We embrace and celebrate diversity.

We are data-driven.

We are obsessed with service.

We respect luxury brands.

LOCATIONS

Chicago

Dallas

LA - Century City & Melrose

Miami

NYC - Madison, Midtown & SOHO

San Francisco

Washington D.C.

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 SERVICES

Consignment Drop-Off

Jewellery & Watch Valuation

Home & Art Valuation

Watch Sell or Trade-In

Product Viewing

Personal Shopping

Personal Styling

Trusts and Estates

PRODUCTS

HOW IT WORKS

1. Choose what to consign


(7000+ luxury and premium designers)

2. Pick your method


(Free in-home pickup, free shipping, Consignment Office drop off)


3. Let The RealReal team do all the work


(Authenticate, photograph, price and sell)

4. Get paid


(Earn up to 85% commission)

09
 RISKS & CHALLENGES

- Failure to generate sufficient supply of pre-owned luxury goods.

- Failure to effectively scale operations in geographic regions.

- Failure to maintain future profitability.

- Failure to effectively manage growth.

- Inflation of new luxury goods.

- Past results may not represent future performance.

- Economic downturns and macroeconomic conditions or trends.

- Failure to accurately authenticate.

- Failure in promoting and sustaining the brand.

- Failure to attract and retain buyers.

- Failure to successful leverage technology.

- Party to lawsuits.

GROWTH STRATEGIES

- Attract new consignors and buyers.

- Increase the lifetime value of consignors and buyers.

- Amplify The RealReal brand.

- Increase penetration in existing infrastructure.

- Continue to invest in innovation and infrastructure.

- Strategically expand offline.

- Grow our international presence.

10
 2018/19 FIGURES

$711 million Gross Merchandise Value (up 44% over 2017) (Appendix 2)

$207 million Total Revenue (up 55% over 2017)

1.6 million orders (up 42% over 2017)

$136.9 million gross profit (up 56% over 2017)

80%+ Gross Merchandise Value from repeat buyers

$300 million raised in IPO

9.4 million historical item sales and market data

~$1 billion cumulative consignor payouts

2.6 million new items added in 2018

14,000 single-SKU's processed per day

80% of products sold within 90 days

96% sell-through ratio

57% mobile 39% website 4% retail

620,000+ unique, authenticated, pre-owned luxury goods on hand

11.4 million members

416,000 active buyers in over 60 countries

7,000+ luxury and premium designer brands sold

400 million item views

1700+ employees

11
2.0 ENVIRONMENTAL ANALYSIS
US/China Trade War
Duties on $300 billion of Chinese imports will rise to
15% on September 1 including secondhand clothing
(BoF, 2019), and China is threatening to impose
HIGH IMPACT
POLITICAL additional tariffs on $75 billion American goods.
THREAT
Companies with large manufacturing operations in
China may raise their consumer prices, impacting
consumer spending, fashion sector growth, and
global economic growth.

Interest Rates
U.S. Federal Reserve and other central banks are
raising interest rates, increasing the cost of borrowing
for many companies and consumers. (The State of
Fashion, 2019)
Inflation Rates
Inflation rates affect both consumers and businesses,
raising the price of goods and services in an HIGH IMPACT
ECONOMICAL
economy. Forecast of U.S. inflation is projected to rise THREAT
by 2.25% annually until 2024. (Statista, 2019)
(Appendix 3)
Productivity Growth
Productivity growth and increases in employment
rates are the key drivers of economic growth. The U.S.
is struggling to lift labour productivity, dropping by
1.4% YOY in June 2019. (CEIC Data, 2019)

Sharing Economy
The rise of the sharing economy means consumer are
spending less on big-ticket items (e.g. cars), making
luxury goods appear much more affordable than
before.
Demographic Shifts
HIGH IMPACT
Couples are getting married later, and younger
OPPORTUNITY
people are waiting longer before buying their first
SOCIAL AND
homes. (Pew Research Center, 2019) (BoF, 2019)
MEDIUM IMPACT
These transitions increase disposable income,
THREAT
bringing luxury goods within greater reach.
Minimalism Movement
A conscious move towards sustainability and
minimalistic lifestyles is leading the modern
consumer buying fewer products and extending the
lifespans of their purchases. (Passport, 2018)

12
 Technology Solutions
Brands that create more personalized experiences by
investing in advanced digital technologies for
customers are seeing two to three times faster revenue
increase compared to those that do not. (Boston
Consulting Group, 2017) Leveraging new technologies
—like artificial intelligence and blockchain—retailers can
make more personalized and streamlined shopping MEDIUM
TECHNOLOGICAL experience for customers. IMPACT
OPPORTUNITY
Social Media
Users are now spending more than three hours per day
on average on social media platforms. (The State of
Fashion, 2018) This has a profound impact on fashion,
as customer purchase decisions are influenced by
social media, as well as peer reviews and influencer
marketing.

Sustainability
The modern consumer is becoming more socially and
environmentally conscious, and many are using
consumption as a means to express their beliefs,
choosing to purchase from ethical companies that
HIGH IMPACT
ENVIRONMENTAL align with their personal values. This growing
OPPORTUNITY
awareness and need for transparency is pushing
fashion retailers to reevaluate their supply chain and
integrate sustainable and environmental themes into
their products and services.

Tax Reform
Increases and cuts into U.S. marginal tax rates have
caused lulls and spikes in American luxury spending.
However, it also eliminates essential deductions such
as property taxes and income taxes, impacting big MEDIUM
luxury groups. (BoF, 2018) IMPACT
LEGAL
OPPORTUNITY
Sales Tax
AND THREAT
In 2018, the U.S. Supreme Court ruled that states can
collect sales tax from online retailers, overturning a
previous law where customers were responsible for
paying sales taxes.

2.1 PESTEL ANALYSIS

 STRENGTHS WEAKNESSES

Scale & Powerful Networks History of Losses

The RealReal (TRR) processed 1.6 million TRR experienced net losses of $52.3 million in
orders in 2018 (up 42% from 2017) and holds 2017, $75.8 million in 2018, and $23.2 million
over 620,000 unique, authenticated, pre- in Q1 2019. The company has an accumulated
owned luxury goods in their warehouses. In a total deficit of $281 million. Failure to
2019, TRR raised $300 million in its U.S. initial achieve or sustain profitability could adversely
public offering, valuing the company at $1.6 affect the business, financial condition and
billion. operating results.
Retail Locations U.S. Consignment Only
TRR operates three stores in West Hollywood TRR currently accepts consignments from only
LA, SoHo and Upper East Side NY, located in within the United States. The international
highly desirable, densely populated locations personal luxury goods market represents 78%
with strong foot traffic. of the total €260 billion market, equivalent to
Loyal Following €202.8 billion worth of luxury goods (Bain &
TRR boasts more than 11.4 million members. Company, 2019) (Appendix 5)
In 2018, total GMV reached $711 million (up Operating Expenses
44% over 2017), and more than 80% of that TRR has over 1,700 employees in the
came from repeat buyers. (TRR, 2019) company’s growing number of warehouses.
(Appendix 4) Trust and personal relationships Total operating expenses rose from $138
built with stakeholders over eight years million in 2017 to $210 million in 2018.
cannot be easily replicated. Short Operating History
Service & Trust TRR’s relatively short operating history and the
TRR differentiates itself with its end-to-end volatility of the market makes it difficult to
service and elaborate authentication process. assess future performance. Failure to address
This builds trust in buyers and consignors, the risks and difficulties facing the company
instilling confidence in first time buyers and may adversely affect business and its
consignors of pre-owned luxury goods, and operating results.
driving existing consignors to consign more
frequently and repeat purchases from buyers.

14
 OPPORTUNITIES
Technology
TRR generates and aggregates hundreds of
millions of unique data points, including data
from approximately 400 million item views by
potential buyers in 2018. By leveraging new
technologies—like artificial intelligence,
automation, machine learning and blockchain
—TRR can make a more personalized and
streamlined shopping experience for
customers while driving operational
efficiencies at scale.
Circular Economy trade war and rising interest rates.
The secondhand market for luxury goods rose Lawsuits
to €22 billion in 2018. (Bain & Company, 2019) In November 2018, Chanel filed a lawsuit
As the modern consumer is becoming more
socially and environmentally aware, many are
choosing to purchase from more sustainable
companies that align with their personal
values. TRR survey data revealed 56% of its
consignors and 64% of its Millennial
consignors cite environmental impact as key
motivators for consigning with the TRR.
International Expansion
The global personal luxury goods market
reached a record high of €260 billion in 2018,
representing 6% growth. (Bain & Company,
2018) (Appendix 6) Global expansion for
consignment will increase community growth,
create more inventory and generate more
data.
Millennials
Generation Y and Z represent 47% of global
personal luxury goods in 2018, accounting for
one-third of sales. (Bain & Company, 2019)
(Appendix 7) Millennials are growing into the
largest living adult generation and are
expected to drive 130% market growth as
their purchasing power increases. (Pew
Research Center, 2019) (Bain & Company,
2019) (Appendix 8)
THREATS
Fierce Competition
TRR subsides within a highly saturated, highly
competitive, and rapidly growing luxury resale
market, facing competition globally from both
online and offline players, and vendors of new
and pre-owned luxury goods.
Environmental Uncertainty
TRR rely on consumer discretionary spending
and may be adversely affected by economic
downturns and other macroeconomic
conditions or trends, such as the US/China
against the company, claiming the resale site
is listing counterfeit products as authentic.
These lawsuits are expensive and time-
consuming, and, if defeated, could have a
significant impact on the business’s image,
financial conditions and operating results.
Rising Prices
Global prices of Louis Vuitton’s Speedy 30
handbag suggest an increase of approx. 19%
per year since 2016. (BoF, 2019) Luxury
brands are raising prices significantly, and
multi-brand retailers set their own prices and
promotional discounts, which could adversely
affect TRR’s pricing strategy.
2.2 SWOT ANALYSIS
2.3 TOWS ANALYSIS

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 EXTERNAL OPPORTUNITIES (O) EXTERNAL THREATS (T)
• Technology • Fierce Competition
• Circular Economy • Environmental Uncertainty
• International Expansion • Lawsuits
• Millennials • Rising Prices

INTERNAL SO Maxi-Maxi Strategy ST Maxi-Mini Strategy

STRENGTHS (S) • Leverage scale & powerful • Leverage scale & powerful
• Scale & Powerful networks to generate data, networks and service & trust to
Networks invest in new technology, and dominate the crowded resale
• Retail Locations drive operational efficiencies at space by expanding inventory
• Loyal Following scale. in categories like menswear,
• Service & Trust • Leverage scale & powerful home goods and jewellery.
networks to expand physical
operations internationally.
• Encourage loyal consignors into
becoming buyers, and vice
versa. (Appendix 9)
• Leverage scale & powerful
networks to expand into other
models of the circular economy
(e.g. rental)

INTERNAL WO Mini-Maxi Strategy WT Mini-Mini Strategy

WEAKNESSES (W) • Leverage new technologies to • Partnerships and cooperation
• History of Losses find ways to operate more with luxury brands in
• US Consignment efficiently and relieve operating authentication will relieve
Only expenses. operating expenses and
• Operating • Global expansion will increase increase customer trust.
Expenses community growth, create more • M&A with competing resale
• Short Operating inventory, generate more data, businesses will increase market
History and bring more brand share, acquire valuable assets
awareness, increasing sales and and data, and promote growth.
growth.

17
2.4 ANSOFF’S MODEL

18
 CURRENT PRODUCTS
CURRENT Market Penetration Strategy
MARKETS • Leverage automation, artificial
intelligence and machine
learning technology
• Leverage social media and
influencer marketing
• Decrease sales commission fee
NEW Market Development Strategy
MARKETS • Expand shipments globally
• Expand brick-and-mortar
presence internationally
• Expand consignment globally
• Expand partnerships with more
brands
• Cooperate with luxury brands in
the authentication process
NEW PRODUCTS
Product Development Strategy
• Expand brand mix into ethical
and sustainable brands
• Expand into rental
Diversification Strategy
• Expand brand mix into more
affordable brands (related
diversification)
• Merge and acquire other resale
businesses
• Expand into the used luxury car
business (unrelated
diversification)
19
2.5 BCG PORTFOLIO MODEL

20
 HIGH MARKET SHARE
HIGH STARS:
GROWTH Streetwear
POTENTIAL Demand for streetwear is growing
among millennials with searches
up 237% YoY in 2018, and an
increase in women buying men’s
streetwear up 95% YoY. (TRR,
2019) (Appendix 10) Many
competitors in the streetwear
resale industry are dominating the
market; it will require substantial
investments to maintain growth
rate and fight competitors.
Jewellery & Watches
Jewellery & Watches category has
a high relative market share in the
company, accounting for 25% of
Gross Merchandise Value (GMV) in
2018, totalling to $175 million.
Watches saw 132% growth in
overall demand YoY in 2018. This
category may require more
investments to maintain growth
rate and fight competitors.
LOW CASH COWS:
GROWTH Women’s
POTENTIAL Women’s category has a high
relative market share in the
company, accounting for 67% of
GMV in 2018, totalling to $476
million. (Appendix 11) Profits and
cash flows are expected to be high.
Due to the low growth rate,
investments required should also
be low.
LOW MARKET SHARE
QUESTION MARKS:
Men’s
Men’s category has a low relative
market share in the company,
accounting for 6% of GMV in 2018,
totalling to $44 million. Men’s
streetwear and luxury saw 56% YoY
increase in 2018. This category
possesses the potential for future
growth but will require
considerable investment to gain
more market share.
DOGS:
Home, Art & Other
Home, Art & Other categories have
low relative market share in the
company, accounting for 2% of
GMV in 2018, totalling to $16
million. This category may be
underperforming as these
products require specialist art
curators and experts to
authenticate. Furthermore, artwork
and furniture that is oversized may
require more storage space, and
handling, packaging and shipping
by specialists with extra care. This
will require a large investment for
potential future growth, otherwise
the company should shut down
these categories so that funds can
be used elsewhere.
21

COMPETITIVE RIVALRY
MODERATE TO HIGH
IMPACT
The resale industry is in the
rapid growth stage with a
growing number of players
in the market. Furthermore,
market players are
strategically diverse and
target the same market with
similar products.
Economic and
psychological switching
costs for consumers are low
due to weak brand loyalty.
However, exit barriers are
relatively low.
22
THREAT OF
NEW ENTRY
MODERATE IMPACT
Entry in the resale market
does not require substantial
capital. However, it does
require technical and
specialist knowledge in the
areas of quality and
authentication.
Furthermore, the sale of
consigned goods is subject
to regulation in the U.S.
Numerous U.S. states have
regulations regarding the
handling of second-hand
goods and licensing
requirements of second-
hand dealers. These laws
and regulations are
complex, vary from state
and change often.
THREAT OF SUBSTITUTES
LOW IMPACT
There is no substitute for
apparel from other
industries.
However, consumers can
choose to spend on more
affordable clothing or fast
fashion rather than pre-
owned luxury goods.
Additionally, consumers can
choose to spend their
disposable income in other
ways such as health and
wellness, entertainment, or
travel, if clothing is not a
high priority.
 SUPPLIER POWER
LOW IMPACT
The RealReal rely on
thousands of individual
consignors across the U.S.
for its supply of pre-owned
luxury goods, processing
up to 14,000 SKU’s per day
in 2018. Potential
consignors may demand
high commissions which
would adversely affect the
company’s take rate and
operating results. However,
consignors are not
concentrated, nor do they
provide a specialist or
particularly rare input.
Comparative Industry Structure Analysis
2.6 PORTER’S FIVE FORCES
BUYER POWER
LOW IMPACT
Customers are growing
more powerful by exerting
pressure on businesses to
get high quality products at
affordable prices with
excellent customer service.
Typically, buyers of second-
hand goods would have
more power to negotiate
for lower prices and better
deals. However, The
RealReal’s sets prices and
their customers are not
concentrated, giving them
more power to charge
higher prices to increase
profitability.
The RealReal subsides within a highly saturated, highly competitive, highly volatile and

rapidly growing luxury resale market. The RealReal faces competition globally from both

online and offline players, and vendors of new and pre-owned luxury goods, including:

• Branded luxury goods stores

• Department stores

• Traditional brick-and-mortar consignment stores

• Pawn shops

• Auction houses

• Specialty retailers

• Discount chains

• Independent retail stores

• Online stores of traditional retailers

• Niche or single category resale players

• Technology-enabled marketplaces that offer the same or similar luxury goods and

services

Many competitors have longer operating histories, larger fulfillment infrastructures,

greater brand recognition and technical capabilities, lower commission fees, lower-cost

and faster shipping, larger databases, greater financial, marketing, institutional and

other resources, and larger buyer bases. Despite the saturated market The RealReal

operates in, their edge is that they offer consignors a reliable, convenient and fast way to

monetize their goods. For buyers, they offer a vast selection of unique, high-quality,

authenticated, pre-owned luxury goods at compelling prices.

24
 Direct Competitor Comparison Chart

THE FASHION-
VESTIAIRE POSHMARK TRADESY REBAG THREDUP WGACA HEROINE
REALREAL PHILE

Consignment ✓ ✓

P2P ✓ ✓ ✓ ✓

C2B ✓ ✓ ✓ ✓

Online ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Stores 3 4 7 3 6

Mobile App ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Authentication ✓ ✓ ✓ ✓ ✓ ✓ ✓

Returns ✓ ✓ ✓ ✓ ✓ ✓

Countries 1 All All 2 1 ? 2 All All

Shipping 66 40 All 2 All All 2 All All

No. of Brands 1570 5400 50 5000 9000 43 35000 68 1200

Founded US FR US US US US US US US

Year Founded 2011 2009 1999 2011 2009 2014 2009 1993 2017

Commission 15-50% 20-25% 15-30% 20% 19.8% N/A 5-80% N/A 6%

Users 400k 8m 2m 1m 20k 20m

Positioning Map

2.7 COMPETITORS
2.8 CUSTOMERS

26
 Consignor Buyer

• One-third of The RealReal’s business is in the United States and two-thirds

international
• The RealReal ships products to 66 countries worldwide
Geographic

• Approx. 80% female and 20% • Approx. 72% female and 28%
male male
• Approx. 81% had an annual • Approx. 77% had an annual
Demographic household income of above household income of at least
$50,000 $50,000
• Approx. 46% were under 45 years • Approx. 48% were under 45 years
old old

• Acceptance of reselling and purchasing of second-hand goods

• Fashion-forward and luxury-focused
• Value-conscious
Psychographic • Desire for newness, uniqueness and individuality
• Sustainably-minded

• 53% of consigners are also • 14% of buyers are also

buyers
• Approx. 40% of consignors were
Behavioral new to consigning
• 79.9% of GMV come from repeat
consignors (Appendix 12)
consignors
• Approx. 70% of buyers were new
to buying pre-owned luxury
• 82.2% of its GMV come from
repeat buyers

27
3.0 RECOMMENDATIONS
Findings from the examination of The RealReal, its macro-environment and meso-

environment, suggest four key future strategic recommendations:-

ADVANCED TECHNOLOGY

• Brands that create more personalized experiences by investing in advanced digital

technologies for customers are seeing two to three times faster revenue increase

compared to those that do not. (Boston Consulting Group, 2017)

• TRR’s biggest operating cost is in IT, product fulfilment and authentication. By

investing in its tech-driven infrastructure to find ways to authenticate items more

efficiently using technology, TRR can limit the number of authenticators cutting down

on operating expenses.

• By leveraging new technologies—like artificial intelligence, automation, machine

learning and blockchain—TRR can make more personalized and streamlined

shopping experience for customers while driving operational efficiencies at scale.

PARTNERSHIPS & COOPERATION

• Aside from Stella McCartney, which offers consigners credit toward new purchases,

no major luxury brand works directly with TRR. The company can expand its

partnerships with more brands that align with the company’s values, creating more

inventory and increasing customer trust.

• TRR is currently party to lawsuits and other claims that are expensive, time-

consuming, and could significant impact the company’s financial condition and

28
 operating results. Cooperating with Chanel and other luxury brands in the

authentication process will relieve operating expenses, increase brand awareness and

customer trust.

• There are many ways in which the secondary market can help luxury brands including

driving sales of new items, reaching a wider spectrum of consumers, increasing

profits, generating new data, and working together to combat the rapidly growing

counterfeit industry.

GLOBAL EXPANSION

• In 2018, international sales represent only approximately 4% of TRR’s GMV, while the

international personal luxury goods market represented nearly 78% of the total

global luxury market. (Bain & Company, 2019)

• Investing in international operations and marketing will increase community growth,

create more inventory, generate more data, and bring more brand awareness,

increasing sales and growth.

MERGERS & ACQUISITIONS

• Resale is growing 21 times faster than the retail industry overall and is projected to

grow from $24 billion in 2018 to $51 billion in 2023. (ThredUp, 2019)

• A growing number of luxury resale players are exploring ways to partner with retailers

and brands in the primary market, including Farfetch’s acquisition of sneaker reseller

Stadium Goods, and Neiman Marcus’s minority stake in luxury resale site

Fashionphile.

29
• As brands and retailers are coming to terms with the growing market and

opportunities provided by resale, the large players among resale companies are

competing for partnerships with these brands.

• Furthermore, TRR could consider M&A options with other competing resale

businesses to increase market share, acquire valuable assets and data, and promote

growth.

30
31
4.0 CONCLUSION

32
Consumers globally purchase hundreds of billions of dollars of personal luxury goods

every year. These goods accumulate in homes over time and create a valuable market

opportunity for luxury resale businesses like The RealReal.

The objective of this report was to examine and analyse the luxury resale

organisation, The RealReal, it’s market situation and corresponding strategy, and provide

future strategic recommendations.

Through analysis of the macro-environment, external factors facing The RealReal

include the US/China Trade War, rising interest and inflation rates, declining productivity

growth, demographic shifts, social shifts, new advanced technologies, and sustainability.

Overall, the findings of this report indicate that The RealReal subsides within a

highly saturated, highly competitive, highly volatile and rapidly growing luxury resale

market, facing competition globally from both online and offline players, and vendors of

new and pre-owned luxury goods. The RealReal customer is worldwide but

predominantly American and female. She is value-conscious, sustainably-minded,

fashion-forward, and luxury-focused.

Findings from the examination of The RealReal, its macro-environment and meso-

environment, suggest four key future strategic recommendations:

1. Leverage advanced technologies,

2. Expand partnerships and seek cooperation,

3. Invest in international operations and marketing, and

4. Mergers & acquisitions.

33
5.0 REFERENCES
Bialik, K & Fry, R 2019, Millennial life: How young adulthood today compares with prior

generations, Pew Research Center, viewed 8 August 2019, <https://

www.pewsocialtrends.org/essay/millennial-life-how-young-adulthood-today-compares-

with-prior-generations/>.

Abraham, M, Mitchelmore, S, Collins, S, Maness, J, Kistulinec, M, Khodabandeh, S,

Hoenig, D & Visser, J 2017, Profiting from Personaliation, Boston Consulting Group,

viewed 10 August 2019, <https://www.bcg.com/en-au/publications/2017/retail-

marketing-sales-profiting-personalization.aspx>.

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37
6.0 APPENDIX

Appendix 1: Secondhand is Projected to Grow to nearly 1.5x the Size of Fashion Fashion

by 2028 (thredUP Resale Report 2019)

Appendix 2: Key Developments in the evolution of The RealReal

38
Appendix 3: Projected Annual Inflation Rate in the United States from 2010 to 2024

(Statista, 2019)

Appendix 4: % of GMV each year from repeat buyers (reflecting purchases made after

their initial purchase month) (The RealReal, 2019)

39
Appendix 5: Global personal luxury goods market value, by consumer nationality (Bain

& Company, 2019)

Appendix 6: Global personal luxury goods market (Bain & Company, 2019)

40
Appendix 7: Share of global personal luxury goods, by generation (Bain & Company,

2019)

Appendix 8: Projected population by generation (Pew Research Center, 2019)

41
Appendix 9: The RealReal consignor/buyer flywheel (The RealReal, 2019)

Appendix 10: Streetwear demand, by age (The RealReal, 2019)

42
Appendix 11: Gross Merchandise Value, by product assortment (The RealReal, 2019)

Appendix 12: % of GMV each year from repeat consignors (reflecting sales made after

their first consignment. (The RealReal, 2019)

43