On Monday, The RealReal announced a new brand partnership with Gucci, making the brand one of the largest luxury names to officially support the secondary market.
The RealReal curated a Gucci-exclusive shop, which will include used and unused product directly from the brand (some of it from creative director Alessandro Michele’s personal collection) as well as consignors. Notably, Gucci will be consumers not only to consign with The RealReal, but also to buy resale through the brand’s exclusive shop by offering exclusive product and promoting The RealReal’s shop on its social channels, which no other luxury brand has done. The Gucci-provided product and consigned products will be mixed, with no indication as to which is which, in the shop.
It’s the latest example of Gucci’s forward-thinking strategy. Other luxury brands have been loathe to get anywhere close to resale (like Chanel, which has an ongoing lawsuit against The RealReal), as with more mundane concepts like e-commerce and social commerce. But Gucci has spent the last five years experimenting with new ways of connecting with customers, like joining TikTok in February and allowing customers to dress virtual avatars in Gucci via a collaboration with tech company Genies. That strategy has paid off, as Gucci is the No. 1 most popular luxury brand among Gen Z and millennials in 2020, based on search volume, sales and social media mentions, according to data from Luxe.
“Covid-19 was an abrupt awakening for a lot of brands,” said Allison Sommer, senior director of strategic initiatives at The RealReal. “A lot of brands were forced to confront things and see if they were doing all they could to stay innovative. The pandemic has shown that, even if you’re an incumbent luxury brand at the top of your game, you can’t get complacent or you will get leapfrogged by a competitor. Gucci is an example of a brand that has stayed focused on the future.”
A Gucci executive wasn’t available to comment for this story, but a spokesperson for the company said that a major part of its strategy in the last year has been to focus on younger consumers and, to do that, it’s working to reduce its carbon footprint and embrace new ideas around circularity. The brand has promoted these ideas through podcasts and videos under the Equilibrium banner, which is the hub for all of its sustainability efforts launched in June.
In June the company launched the Off the Grid collection, an ongoing, five-category collection that is made from material scraps collected from across the supply chain of its main collections and sold at a (slight) discount. It also uses Econyl, a regenerated nylon product that Gucci was the first luxury brand to adopt in 2016.
Sustainability is important to Gen Z. Data from the Sustainable Investment Group said 73% of Gen Z said they would pay more for a brand if they knew it was sustainable. On top of that, a rep from The RealReal said the vast majority of the company’s customers are under 35.
Highlighting sustainability and affordability through the Equilibrium project (which has its own Instagram account with more than 20,000 followers is one way Gucci has been scooping up more young consumers. According to data from Gucci, 62% of the brand’s $8 billion in sales in 2019 came from consumers ages 35 and under, and the brand’s fastest-growing segment is consumers 24 and under. Data provided by The RealReal showed that Gucci was the most in-demand brand on the platform for the third year in a row in 2020, based on search volume, sales volume (which was up 19% this year) and resale value — Gucci products typically sell for 2.3-times more than other comparable brands. The 18-34 age bracket is Gucci’s biggest audience on the site.
Meanwhile, Gucci has also collaborated with brands that popular with young people, like the North Face. Notably, when the collaboration was revealed last month, Gucci announced it on the Gen-Z favorite platform TikTok with a video of a flag waving at the top of a mountain with the North Face and Gucci logos on it.
Gucci has suffered during the pandemic, bringing in less than $2 billion in revenue in the first quarter of 2020, where it made more than $2.5 billion in the same period last year. Still, it has remained Kering’s best-performing brand alongside rising star Bottega Veneta.
While Gucci is the latest and biggest brand to get into resale, others like Burberry have worked with The RealReal in the past. Sommer said she hopes that these partnerships, which take the form of both big visible efforts like this one with Gucci and more discreet B2B sales that happen behind the scenes, will continue to grow.
With many of the traditional luxury channels like department stores drying up and retail stores falling out of favor, luxury brands need to start looking to new possibilities to keep afloat.
Resale is a particularly attractive model, allowing brands to offload excess inventory. The RealReal said it’s seen a 46% increase in consignment directly from brands since the pandemic hit. Chanel’s unwillingness to embrace e-commerce, for example, meant that when all of retail was shut down, the only way to buy a Chanel bag was through resale. With Gucci now a supporter of resale, more brands will likely follow suit.
“We’ve talked with many brands over the years, especially brands at Kering,” Sommer said. “It’s only a matter of time until more brands start to realize that resale is a big part of how people will shop going forward.”