The RealReal raised $300 million in an initial public offering that valued the retailer at approximately $2.5 billion, according to CNBC. Shares of the company jumped almost 50%, climbing from $20 before the IPO to nearly $30.
The retailer is riding the wave of the second-hand luxury market, which accounted for $6 billion in sales in 2018, according to Bain & Co. Additionally, the market is on track to account for nearly 9% of all luxury sales by 2020, according to Berenberg.
The growth of resellers is coming at the expense of fast-fashion retailers: the secondhand fashion market is expected to reach $64 billion in annual sales by 2028, when the fast fashion market will reach $44 billion, according to thredUp.
“When we look at where we’re taking share from and share of wallet, it tends to be the fast-fashion market,” said Julie Wainwright, Founder and CEO of The RealReal in an interview with CNBC. “Our biggest group of customers and now consignors are now Millennials. They’re hyper-conscious about sustainability and the impact on the environment of buy-new.”
The RealReal has developed a strong message of corporate responsibility derived from the fact that resales can save unwanted clothing from the landfill. One initiative was the launch of a Sustainability Calculator for consignment as part of National Consignment Day in 2018. The Calculator lets shoppers track the environmental impact of their activity with the retailer.