The RealReal’s first Los Angeles store opens July 30. It — not surprisingly — features a men’s section, a 1,500-square-foot handbag vault and a pressed juice cafe. But more interestingly, it also includes a proprietary inventory system that unifies online and physical merchandise.
The internal inventory platform, called RealReal 360 and built by the in-house technology team, is the company’s key to pulling off merchandising a store for a business that carries and sells only one of each item. Its cross-channel retail strategy depends on it: The company doesn’t pull merchandise it plans to carry in store off of its website, which presents the unique challenge of ensuring nothing is double-sold to a store visitor and one of The RealReal’s self-reported 5 million monthly users.
According to Rati Levesque, The RealReal’s chief merchant, between 500 and 1,000 pieces move through the store every day, sold either to a customer visiting in person or a customer shopping online. Pick-and-pack orders are filled daily from the store’s 12,000 square feet of retail space, and the store’s sales floor is restocked just as frequently, meaning no two visits will look the same.
The in-store strategy, which The RealReal tested out in its first brick-and-mortar store in New York City before opening in L.A., relies on customer data management systems, heat mapping and RFID technology to sell both in stores and online.
“We’re always looking at sales data, specific trends in one market and what customers there are buying already, as well as what we can predict they’ll be discovering next through trend forecasting,” said Levesque. “We see our stores as key to our growth — it’s a credibility play. Being able to show the customer or consigner who we are means both online and offline sales go up.”
The RealReal’s second store opens in the week after it announced it raised a $115 million round of Series G funding, led by PWP Growth Equity, last Wednesday. That brings The RealReal’s fundraising total to $288 million, making it the most-funded luxury online consignor among its peers, including ThredUp, Tradesy and Vestiaire Collective. That funding, according to a statement from founder and CEO Julie Wainwright, will contribute to The RealReal growing its store network further, improving upon the technology that sits behind online-offline inventory management and opening new e-commerce fulfillment centers.
“This is an aggressively competitive market, and The RealReal has aggressively gone after market share,” said Malinda Sanna, founder of the branding agency Spark. “Brick-and-mortar is an expansion play for roping in new customers, people who might not have been able to pick up on [the retailer’s] luxury quality and standards online. In stores, that quality is on display.”
Levesque said that in merchandising the L.A. store, special attention is paid to categories that are tough to sell online, like watches and expensive handbags. Each store is staffed with category experts, like gemologists, and offers on-site consultations with them by appointment. In addition, brands are highlighted due to local interest: In L.A., for instance, customers have an affinity for brands like Chloé, Isabel Marant and streetwear-minded designer brands like Yeezy and Givenchy. Clothing is set up in the store by size and in “shopping closets,” which group pieces together by size as well as trend and aesthetic. This format was tested in the New York store using heat-mapping technology: The store team could see that the people who shopped the stylized closets ended up spending more overall.
The RealReal’s L.A. store
“Online, our No. 1 search driver is size. We needed to recreate that offline,” said Levesque.
With the inventory strategy in place, the store is run like a restaurant, she said: Everyone is assigned a section of the store, in the front or back of the house, that they own. That person is responsible for tracking specific item movement, putting items that go into fitting rooms on a hold online, and replenishing the floor when something sells. RFID technology is used to track and find any items in store that customers ask about, since looking for a specific Chanel bag in stock would be like “finding a needle in a haystack,” said Levesque.
Increasing its store network is perhaps most critically important because it increases The RealReal’s overall inventory.
Online secondhand luxury marketplaces are only as good as the inventory they’re sitting on, after all, and it’s a marketshare game: One Birkin sold to The RealReal is one Birkin not sold to a competitor. With the L.A. store, The RealReal simplified the consigning process by offering curbside drop-off, as well as in-store workshops around best consigning practices and figuring out the investment value of different pieces. Levesque said that consignor lifetime value increases by 50-60 percent in areas with a physical store.
“We always had stores in the plan, and we plan to open multiple in multiple regions. It will be a big part of who we are,” she said. “ The stores help to grow the inventory overall, which is so important to us.”