The RealReal Soars as Luxury Shoppers Cut Back

The luxury fashion world’s loss has been The RealReal’s gain this year.

As The Wall Street Journal (WSJ) reported Thursday (Dec. 19), sales for the luxury resale website have grown for three quarters in a row as shoppers seek secondhand prices for first-class goods from the likes of Gucci and Chanel.

Now, the company is working to keep items selling quickly — it moves 75% of products in 90 days — by investing in tech to reduce the time to ready products for sale.

“We’re constantly pushing the envelope on what we could use technology for to drive efficiencies in our business,” Ajay Gopal, the company’s chief financial officer, told the WSJ.

“We have a real advantage in how we can benefit from the advancements in AI,” Gopal added, referring to artificial intelligence.

AI, the report notes, can help the company authenticate the products it sells. Before listing an item, an employee photographs different aspects of the product, like the strap and quilting on a Gucci handbag. Before AI, employees would have to compare those photos with the countless ones in its image archives to determine authenticity.

“Now, you’ve got a machine-learning algorithm that looks at the image at a much finer grain and then compares it to the images we have,” Gopal said, thus reducing authentication time.

Last month, The RealReal reported quarterly earnings showing revenue up 11% to $148 million, driven by a 14% jump in consignment revenue. The company processed 829,000 orders in the quarter, a 4% year-over-year uptick, while the average order value crept up 2% to $522.

“There is a lot of confidence in supply right now,” Rati Sahi Levesque, who became the company’s CEO in October. “Return to growth is a big talking point for us internally and will continue to change the way people shop. The intersection between value and luxury is really resonating with our consumer.”

The company’s success comes at a time when luxury brands have lost around 50 million customers over the last two years. While luxury demand is expected to be flat for the year, companies in the sector have lost more than 10% of their customer base, the first reduction in customer numbers in memory for the industry.

And as PYMNTS wrote earlier this week, consumers are cutting back across the board, whether they’re shopping at luxury boutiques or dollar stores.

“The ripple effects of economic uncertainty hit retail hard this quarter, particularly in discretionary categories,” Bellamy Grindl, founder of Retailytics, said in an interview with PYMNTS. “Consumer confidence often wavers during election years and inflation, coupled with rising costs, is impacting holiday spending this season.”

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