WEBVTT - The RealReal CEO Talks Luxury Brands and Consumers

0:00:02.520 --> 0:00:07.880
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News for more.

0:00:07.880 --> 0:00:10.600
<v Speaker 2>Now on the second hand luxury market, we're joined by

0:00:10.680 --> 0:00:14.440
<v Speaker 2>Ratti Levet, the Real Real President and CEO The Real Real,

0:00:14.440 --> 0:00:17.919
<v Speaker 2>of course, the world's largest online marketplace, were authenticated resale

0:00:18.000 --> 0:00:21.680
<v Speaker 2>luxury goods. Well, Ratty, you've been doing extraordinarily well at

0:00:21.680 --> 0:00:25.880
<v Speaker 2>the Real Real, you know, increasing margins, increasing, you know,

0:00:26.640 --> 0:00:28.639
<v Speaker 2>just the amounts that you sell. How much have you

0:00:28.720 --> 0:00:31.920
<v Speaker 2>been benefiting from things that are maybe a detriment to

0:00:31.960 --> 0:00:33.200
<v Speaker 2>the economy like tariffs?

0:00:34.440 --> 0:00:35.760
<v Speaker 3>Yeah, you know, it's interesting.

0:00:35.840 --> 0:00:37.840
<v Speaker 1>So what we're seeing, we're seeing the buyer be quite

0:00:37.880 --> 0:00:41.880
<v Speaker 1>resilient at the Real Reel. We're seeing consumer trends being

0:00:41.920 --> 0:00:46.800
<v Speaker 1>quite strong around findelty, watches, handbags. We're definitely probably a

0:00:46.840 --> 0:00:50.680
<v Speaker 1>tariff beneficiary, but at the same time, there's other things

0:00:50.760 --> 0:00:55.640
<v Speaker 1>kind of impacting our business. Resales becoming more mainstream, that's

0:00:55.840 --> 0:00:59.120
<v Speaker 1>number one, and definitely seeing that led by the gen

0:00:59.280 --> 0:01:00.880
<v Speaker 1>Z and malen Old consumer.

0:01:01.720 --> 0:01:04.440
<v Speaker 3>We're seeing fine jewelry and watches be very popular.

0:01:04.480 --> 0:01:08.200
<v Speaker 1>Like I mentioned, gold pricing, silver pricing going up, and

0:01:08.200 --> 0:01:11.480
<v Speaker 1>then we're also seeing gifting becoming less of a stigma

0:01:11.480 --> 0:01:14.480
<v Speaker 1>on resale. So almost sixty percent of consumers now say

0:01:14.480 --> 0:01:18.759
<v Speaker 1>they prefer the secondary market out right. So seeing luxury

0:01:18.959 --> 0:01:23.120
<v Speaker 1>and seeing resale specifically becoming much more mainstream right now.

0:01:23.440 --> 0:01:26.960
<v Speaker 2>Now you've been aggressively cost cutting, restructuring your commission model

0:01:26.959 --> 0:01:30.080
<v Speaker 2>and so on, is there any danger that you will

0:01:30.319 --> 0:01:32.560
<v Speaker 2>maybe not get in the supply that you need in

0:01:32.680 --> 0:01:34.399
<v Speaker 2>order to keep supplying this market.

0:01:35.600 --> 0:01:37.080
<v Speaker 3>Yeah, So, you know, it's interesting.

0:01:37.120 --> 0:01:39.080
<v Speaker 1>I think that one of the things is that there's

0:01:39.120 --> 0:01:42.480
<v Speaker 1>two hundred billion dollars trapped in people's closets. That's just

0:01:42.520 --> 0:01:45.600
<v Speaker 1>in the US alone, and so we're it's such an

0:01:45.720 --> 0:01:49.240
<v Speaker 1>untapped industry. At the end of the day, eighty billion

0:01:49.280 --> 0:01:53.600
<v Speaker 1>dollars gets added to that every year, so so much good,

0:01:53.680 --> 0:01:57.680
<v Speaker 1>so much luxury goods, just in the US alone, And

0:01:57.760 --> 0:02:00.680
<v Speaker 1>so many of these people have never consigned any before.

0:02:00.880 --> 0:02:04.960
<v Speaker 1>So we're seeing people become kind of introduced to luxury

0:02:05.000 --> 0:02:09.080
<v Speaker 1>for the first time. So double digit new sellar growth

0:02:09.080 --> 0:02:11.640
<v Speaker 1>for example, So people are really starting to change the

0:02:11.680 --> 0:02:14.840
<v Speaker 1>way they shop, and they're checking the prices in the

0:02:14.880 --> 0:02:18.400
<v Speaker 1>secondary market before they're even purchasing in the primary market.

0:02:19.120 --> 0:02:21.680
<v Speaker 4>I wanted to talk about prices Rotti because our very

0:02:21.680 --> 0:02:25.960
<v Speaker 4>own Amandamal Bloomberg wrote just a few days ago twenty nineteen,

0:02:26.080 --> 0:02:30.000
<v Speaker 4>the price of a Chanelle flat bag five eight hundred dollars.

0:02:30.320 --> 0:02:33.720
<v Speaker 4>Fast forward to right now, it's over eleven thousand dollars.

0:02:34.160 --> 0:02:36.959
<v Speaker 4>I'm wondering just how much the growth of the real

0:02:37.000 --> 0:02:38.919
<v Speaker 4>real is coming out of the fact that people feel

0:02:38.919 --> 0:02:42.760
<v Speaker 4>like they just can't they can't stomach the prices in

0:02:42.800 --> 0:02:44.080
<v Speaker 4>the luxury market.

0:02:44.720 --> 0:02:46.280
<v Speaker 3>Yeah, so there's a couple of things happening.

0:02:46.320 --> 0:02:50.799
<v Speaker 1>Anytime the price increases in the primary market, our pricing

0:02:50.840 --> 0:02:54.200
<v Speaker 1>goes up to So for whatever reasons, whether it's tariffs,

0:02:54.480 --> 0:02:58.080
<v Speaker 1>whether the pricing of a Chanel bag goes up for

0:02:58.120 --> 0:03:00.320
<v Speaker 1>whatever reason, our prices go up as well.

0:03:00.560 --> 0:03:01.440
<v Speaker 3>But like I said, what.

0:03:01.440 --> 0:03:04.840
<v Speaker 1>We're also seeing is more volume coming through, so more

0:03:05.240 --> 0:03:08.960
<v Speaker 1>people being introduced to luxury and testing it out, and

0:03:08.960 --> 0:03:11.600
<v Speaker 1>then they get that first paycheck, right, they get that

0:03:11.639 --> 0:03:14.520
<v Speaker 1>first paycheck for the bag, and then they go back

0:03:14.560 --> 0:03:17.440
<v Speaker 1>into the primary market. What we're actually seeing is that

0:03:17.560 --> 0:03:20.760
<v Speaker 1>circular economy. And so they'll go back into the primary

0:03:20.800 --> 0:03:24.440
<v Speaker 1>market with their check and buy the newest trend or

0:03:24.480 --> 0:03:27.240
<v Speaker 1>buy something that they've been eyeing, and then they'll consign

0:03:27.280 --> 0:03:29.440
<v Speaker 1>two or three things instead.

0:03:29.480 --> 0:03:32.040
<v Speaker 3>So we'll see that kind of trade up happening as well.

0:03:32.360 --> 0:03:36.360
<v Speaker 4>And what are the consumers typically gravitating for on the

0:03:36.400 --> 0:03:39.320
<v Speaker 4>real real Are they looking for a bargain on a

0:03:39.400 --> 0:03:43.120
<v Speaker 4>classic luxury item or are they turning to secondhand markets

0:03:43.120 --> 0:03:45.559
<v Speaker 4>when they want to buy something trendier.

0:03:46.280 --> 0:03:50.720
<v Speaker 1>Yeah, so we're seeing that intersection between value and luxury.

0:03:50.760 --> 0:03:52.840
<v Speaker 1>That's what we offer right at the end of the day.

0:03:52.840 --> 0:03:55.200
<v Speaker 1>And then you've got very unique items.

0:03:55.200 --> 0:03:56.200
<v Speaker 3>So most of our items you.

0:03:56.160 --> 0:03:59.280
<v Speaker 1>Can't buy anywhere else, So they're looking for those one

0:03:59.280 --> 0:04:01.880
<v Speaker 1>of a kind pieces. You know, they're kind of maybe

0:04:02.040 --> 0:04:04.440
<v Speaker 1>done with the trends or everything's starting to look the same.

0:04:04.560 --> 0:04:05.400
<v Speaker 3>It's the badge of.

0:04:05.320 --> 0:04:08.360
<v Speaker 1>Honor to where something very unique from the real reel.

0:04:08.400 --> 0:04:10.800
<v Speaker 1>So think of them like drops. Thousands of items get

0:04:10.920 --> 0:04:14.440
<v Speaker 1>dropped every day that are very unique to the consumer consumer.

0:04:14.520 --> 0:04:15.640
<v Speaker 3>So that's number one.

0:04:15.920 --> 0:04:20.279
<v Speaker 1>Find jewelry, like I mentioned, watches, handbags, Vintage is a

0:04:20.279 --> 0:04:23.840
<v Speaker 1>big one, as is condition. Again, seeing more of that

0:04:23.960 --> 0:04:26.960
<v Speaker 1>value play come through. People are looking for that value.

0:04:27.040 --> 0:04:30.080
<v Speaker 1>They'll take something that maybe is in fair condition instead

0:04:30.080 --> 0:04:33.919
<v Speaker 1>of pristine condition, just so that it costs a little less.

0:04:33.760 --> 0:04:34.599
<v Speaker 3>At the end of the day.

0:04:34.760 --> 0:04:37.240
<v Speaker 2>You know, there are competitors out there now, fashion file,

0:04:37.360 --> 0:04:39.839
<v Speaker 2>rebag and so on. How do you compete with them roalthy?

0:04:40.880 --> 0:04:43.240
<v Speaker 1>Yeah, So you know, when I think about the real reel,

0:04:43.320 --> 0:04:47.960
<v Speaker 1>it's really around. We offer for very depth in products,

0:04:47.960 --> 0:04:51.520
<v Speaker 1>So we don't offer just one category, right, it's handbags,

0:04:51.800 --> 0:04:53.440
<v Speaker 1>it's jewelry.

0:04:52.839 --> 0:04:57.640
<v Speaker 3>Watches, fashion, textiles, sover where. All of that we're offering

0:04:58.000 --> 0:04:58.880
<v Speaker 3>at the real reel.

0:04:59.200 --> 0:05:02.159
<v Speaker 1>So there's a lot and then we give you cash

0:05:02.279 --> 0:05:06.160
<v Speaker 1>upfront and that's really important, right, versus trade up or trading.

0:05:06.400 --> 0:05:08.480
<v Speaker 1>And then you earn the most with us, And that's

0:05:08.520 --> 0:05:09.760
<v Speaker 1>really important to say.

0:05:10.000 --> 0:05:11.080
<v Speaker 3>And the reason why is.

0:05:11.040 --> 0:05:13.360
<v Speaker 1>Because of the trust that we built with the consumer,

0:05:14.160 --> 0:05:16.960
<v Speaker 1>because we know, because you can sign with us because

0:05:16.960 --> 0:05:19.840
<v Speaker 1>we've got almost fifty million members now that we've built

0:05:19.880 --> 0:05:23.719
<v Speaker 1>trust with because of our pricing algorithms, you can earn

0:05:24.120 --> 0:05:25.680
<v Speaker 1>the most with us at the end of the day.

0:05:25.839 --> 0:05:28.640
<v Speaker 2>I'm curious as well, how much are your physical stores contributing.

0:05:28.680 --> 0:05:31.560
<v Speaker 2>Are they contributing to the bottom line? And you know,

0:05:31.920 --> 0:05:34.159
<v Speaker 2>is it just a marketing play at the end of

0:05:34.160 --> 0:05:35.880
<v Speaker 2>the day, And when does that bottom line, by the way,

0:05:35.960 --> 0:05:36.640
<v Speaker 2>turn positive?

0:05:37.800 --> 0:05:38.680
<v Speaker 3>Yeah, so the.

0:05:38.760 --> 0:05:41.680
<v Speaker 1>Stores pay back very quickly actually, and what we see

0:05:42.200 --> 0:05:45.760
<v Speaker 1>is a halo impact. So it's meeting the consigner where

0:05:45.760 --> 0:05:47.839
<v Speaker 1>they are, whether they want to drop off in a

0:05:47.880 --> 0:05:49.800
<v Speaker 1>store on their way to work, whether they want a

0:05:49.880 --> 0:05:53.720
<v Speaker 1>van pickup at three pm this afternoon on demand. They

0:05:53.760 --> 0:05:56.720
<v Speaker 1>can book that from their app, and we're seeing the consigner.

0:05:56.800 --> 0:05:59.080
<v Speaker 3>The seller can sign more.

0:05:59.000 --> 0:06:01.440
<v Speaker 1>Items when they inner act with the store, and more

0:06:01.520 --> 0:06:04.880
<v Speaker 1>high value items because they're meeting with a gymologist and watchmaker.

0:06:05.240 --> 0:06:08.080
<v Speaker 1>So yes, it's a place that people get introduced to

0:06:08.120 --> 0:06:13.120
<v Speaker 1>our brand. A quarter of our new consigners come from

0:06:13.200 --> 0:06:16.160
<v Speaker 1>the stores, from our retail locations, but we more see

0:06:16.160 --> 0:06:20.000
<v Speaker 1>a halo impact, so from the consigner consigning more for

0:06:20.120 --> 0:06:22.880
<v Speaker 1>us with us and then spending more.

0:06:22.720 --> 0:06:23.760
<v Speaker 3>At the end of the day too.

0:06:24.360 --> 0:06:27.560
<v Speaker 4>Brantie levec CEO of The Real Real, thank you for

0:06:27.640 --> 0:06:28.160
<v Speaker 4>joining us.