The luxury goods consignment site is focusing on building its retail efforts in key markets like New York rather than buying out legacy chains.
When clothing rental startup Le Tote announced last month it was buying nearly 200-year-old retail brick-and-mortar chain Lord & Taylor, observers saw it as another sign that new direct-to-consumer retail companies are eating the old.
But don’t expect The RealReal — a recently public luxury fashion site that sells secondhand clothing from brands like Louis Vuitton and Gucci — to make the same play.
“We’re not buying Barney’s — let’s just put that out there,” Julie Wainwright, The RealReal’s founder and CEO, told Recode’s Kara Swisher at Code Commerce in New York City on Monday.
TheRealReal, which went public in June at a $1.7 billion valuation, has strategically opened a few brick-and-mortar stores in key markets like New York. And Wainwright said the company plans to open two more stores a year for the next five years. It’s a good way to market the brand and attract people to drop off consignment items in person. But the bulk of the business — around 98 percent of sales — are online, according to Wainwright.
So far, that strategy seems to be working. In August, The RealReal had a strong first earnings call, with reported losses that were lower than expected and continued growth.
But not everyone always believed in Wainwright, who is one of only a handful of female founder CEOs to take her company public in recent years.
Wainwright recounted her difficulty finding venture capitalists in a male-dominated industry who would put money into the company’s series A round, especially in the US.
“The luxury market is huge. You got all this data on it. And one of the VCs is like, ‘You know, I just don’t think the luxury market is that big,’” said Wainwright. According to Wainwright, the VC was basing his analysis on a sample size of one: his wife, who preferred yoga pants to luxury clothes.
The forthcoming CEO had a tongue-in-cheek response to her initial doubters.
“That’s all right,” she said. “Get behind me, boys. I was there before you got there, I’ll be there when you’re dead.”
Author: Shirin Ghaffary