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Business
U.S. online luxury reseller The RealReal
Inc is talking to investment banks about the possibility of an initial
public offering (IPO) later this year, people familiar with the matter
said on Friday.
FILE PHOTO: Luxury handbags for sale are displayed at The RealReal shop,
a seven-year-old online reseller of luxury items on consignment in the
Soho section of Manhattan, in New York City, New York, U.S., May 18,
2018. REUTERS/Mike Segar
REUTERS: U.S. online luxury reseller The RealReal Inc
is talking to investment banks about the possibility of an initial
public offering (IPO) later this year, people familiar with the matter
said on Friday.
The company - which specializes in online
secondhand luxury apparel and goods - has sent out a request for
proposals to prospective advisors and underwriters to manage the listing
this year, said the sources, who asked not to be identified because
they were not authorized to speak publicly.
The RealReal declined to comment.
In July last year, The
RealReal raised US$115 million of private funding in a deal led by
Perella Weinberg Partners, with additional participation from new
investor Sandbridge Capital and existing investor Great Hill Partners.
The deal valued the company at US$745 million, according to data
provider PitchBook.
Since then, the company, which was founded in
2011, has focused on expanding its brick-and-mortar presence with
outlets in new areas and more online fulfillment centers.
The
RealReal's success is built on a profitable mix of the boom in
e-commerce, the millennial interest in the price and environmental
benefits of recycled clothing, and the caution of established high-end
brands about what selling their wares on the web can do to brand value.
Fellow e-commerce platform Farfetch went public in last September at
the top of its target IPO price range, raising US$885 million.
(Reporting by Joshua Franklin and Harry Brumpton in New York; Editing by Sonya Hepinstall)
(CNN) — A
new fashion season, a new set of must-have pieces. The inevitable
wardrobe purge. But what's unwanted by one will find a happy home with
another -- and this corner of the market is becoming a hotly contested
battleground for the luxury industry.A report by US online reseller ThredUp
claims the apparel resale market was worth $20 billion in 2017, with
the potential to rise to $41 billion by 2022. According to Crunchbase,
ThredUp and luxury resellers Vestiaire Collective and The RealReal have
each received venture capital funding well over $100 million. The Luxury Closet secured an additional $8.7 million in funding last month, taking the pre-owned luxury company's funding total to over $20 million since it began in 2011. Based in Dubai, they're one of a handful of operators including Garderobe and Shedd bucking the emirate's box-fresh image. And what's helping these businesses is the sheer abundance of luxury to hand."It's
a fantastic area," says Kunal Kapoor, CEO of The Luxury Closet. "(The
Middle East has) the second-highest average value closet in the world.
There's a lot of supply out there."According to figures from market research provider Euromonitor International,
the UAE has the fourth-largest market for luxury goods per capita in
the world (behind Singapore in third, Hong Kong, China, second and
Switzerland, first).
The Luxury Closet CEO Kunal Kapoor with a staff member checking the authenticity of an item.
The Luxury Closet
Micha
Maatouk, managing director of "pre-loved" luxury boutique Garderobe,
believes the trend for offloading and selling high-end closet items can
be traced back to the global financial crisis. "It was a tough time in
Dubai -- all over the world I think -- in 2008-2010," she says. "When we
thought about opening this business, part of it was because people
weren't spending in the same way as they used to on luxury."
Dubai unveils plans for $2 billion tech-driven mega mallMaatouk,
previously a manager at Chanel, set up a brick and mortar store in 2010
on the beachfront in the Jumeirah area, away from Dubai's mega-malls.
She describes discreet "hush hush" buyers, not wanting to be seen
purchasing secondhand goods, but says shoppers are more open to the idea
than when she began."Bear
in mind this is a culture -- and I include ex-pats in this too -- that,
when it comes to fashion, still very much values the new," notes Olivia
Phillips, digital editor of Grazia Middle East.But
Phillips also says some consumers "are taking a much more mindful
approach to shopping, and a global move towards sustainability has meant
that wearing pre-owned fashion is now as much a badge of honor or a
signifier of virtue as much as it is about looking good."
Garderobe's Dubai store in the Jumeirah area.
Both
Garderobe and The Luxury Closet act as a broker, authenticating,
photographing and storing items for sellers. Each posts listings online,
The Luxury Closet on an app too, with the companies taking a percentage
on the value of items when sold.
"We
have about 22,000 unique units online and we're uploading nearly $5
million of inventory a month," Kapoor says. Garderobe keeps around 3,000
items in its store and up to 10,000 online, says Maatouk. At the time
of writing, the most expensive item listed on The Luxury Closet was a
gray ostrich leather Hermes Birkin bag, on sale for over $52,000.
While
supply is driven by Emiratis, buyers come from all over the world.
Maatouk estimates Garderobe has shipped to approximately 30 countries
and The Luxury Closet says it has delivered to 89.
Access
is a large part of the appeal, Kapoor explains. Pre-owned is the
opportunity to buy what might otherwise be impossible, in terms of cost
or availability. Kapoor previously worked for Louis Vuitton and says that
many luxury brands keep certain lines offline. (Chanel, for example,
does not sell its ready-to-wear collections on its website.)
So is this business model any more egalitarian? And what do the big-name labels think?
"What's
interesting is that this is a market that the brands themselves can't
necessarily control," says Sue Rissbrook, UK head of retail at
PricewaterhouseCoopers, a professional services network.
"The
brands themselves are obviously hugely concerned about fake products,
and that is where they're always paying attention," she adds. (A report
by Research and Markets estimated global losses incurred by luxury brands due to online counterfeits alone exceeded $30 billion in 2017.)
A model walks the runway during the Amato show at Fashion Forward
October 2017 held at the Dubai Design District. In recent years the
emirate has positioned itself as a fashion hub.
Cedric Ribeiro/Getty Images Europe/Getty Images for FFWD
In fact, some retailers appear to be eyeing this secondary luxury market with relish. Recently Richemont, the Swiss parent company of watch brands including Cartier, Jaeger-LeCoultre and Piaget, bought Watchfinder, a UK-based online and shop-based seller of secondhand timepieces.
"If
you're a big online business and you already sell these big brands at
full price, brand new, why not also offer your clients the possibility
to recycle?" comments Maatouk. "They close the loop."
Kapoor
says The Luxury Closet has already signed a few partnerships, although
did not divulge the retailers' names. Maatouk says that Garderobe is
also in talks with different partners.
There's
clearly room to grow. "Pre-owned is less than 1% of retail sales (in
the Middle East)," says Kapoor, citing data from consulting firm Delta
Partners.
"The
thirst for pre-owned fashion is on the up, but I wouldn't say it's
exploding quite yet," cautions Phillips. "But, like so many things in
Dubai, tastes, interests, movement and styles are fast evolving -- and
that's exactly why it's such an exciting place to be right now."
