The RealReal: Brand Audit

BRAND AUDIT

Contents The RealReal Brand Audit Marketing, PR and Branding Professor Monica Belot Ellie-Paloma Bursby

HISTORY & BACKGROUND........................................................................................................................1 MISSION & VALUES.....................................................................................................................................3 MOODBOARD................................................................................................................................................5 MARKETING MIX...........................................................................................................................................7 BRAND ESSENCE WHEEL...........................................................................................................................9 VALUE PROPOSITION STATEMENT.......................................................................................................11 COMPETITIVE ANALYSIS SUMMARY....................................................................................................13 COMPETITIVE ANALYSIS MATRIX.........................................................................................................15 COMPETITIVE ANALYSIS POSITIONING..............................................................................................16 INDUSTRY DEFINITION..............................................................................................................................17 PESTEL ANALYSIS......................................................................................................................................19 SWOT ANALYSIS........................................................................................................................................21 TARGET MARKET......................................................................................................................................23 CUSTOMER PERSONA..............................................................................................................................24 RECOMMENDATIONS................................................................................................................................27

From https://www.forbes.com/sites/maggiemcgrath/2021/06/04/founder-of-therealreal-julie-wainwright-proves-unicornsarent-just-for-young-tech-bros/?sh=4ee4d87520e8

History & Background 01

After the shut-down of her previous company, divorce from her husband and subsequent ostracism from Silicon Valley, Julie Wainwright created The RealReal, luxury consignment company, in 2011 right from her kitchen table. Using a U-Haul to visit consigners from her house in Marin County, Wainwright was interested in “upcycling” from an early age, thanks to her artist parents. She tells Forbes “My mother would go to people's homes and, if for example they had a nice rug, she'd say, ‘When you’re ready to sell it, I’ll buy it from you.’” The company has gone from being a start-up that Forbes valued at $300 million in 2015, to an IPO with a market cap of 1.244B, as of Sept. 24, 2021.

The company started off with a focus on Women’s fashion and accessories, but now deals with a range of products, as well as non-resale items as well. Products that are sent in by consigners go through a rigorous authentication process through which their quality and state is determined. This then determines the price they can be sold at. They are then photographed and put on the website and either held in a warehouse or sent to a store location to be displayed and kept there until their purchase. Once they have been purchased, they are taken off the site and a pre-established percentage of the revenue is sent to the consigner.

02

From https://www.therealreal.com/about

Mission & Values The RealReal website states that their aim is to honour heritage brands and empower consignors and buyers in extending the lifecycle of luxury items. They have a firm commitment to sustainability and believe that the future of fashion is circular.

Outside of simple consignment, TRR follows the 3 Rs: Resell. Revive.

Reimagine.

03

Resell: Everyone who either sells or buys luxury items with TRR plays an important role in reducing the waste created by the fashion industry.

Revive: TRR partners with outside brands on upcycling initiatives.

Reimagine: TRR collaborates with 80+ brand partners on various collaborations to help establish different industry standards and practices.

The RealReal delivers on their promises in sustainability to their consumers by being carbon neutral and implementing sustainable choices in the business, such as using FSC-certified packaging and only using LED lighting and cork flooring in their brick and mortar stores. Their authentication process ensures their consumer is receiving what they purchase and their use of brick and mortar stores creates an experience for the customers to have in person that is an extension of the one they would have online.

04

Moodboard

05

06

Marketing Mix

Product The RealReal is a consignment re-sale store that sells a wide range of curated luxury products - both used and unused. Products such as clothing, beauty, accessories, jewellery, kid’s items, home decor items and furniture can be found on their online store as well as on-site locations. It appeals to both consumers who want a way to sell their belongings and consumers who want to purchase rigorously vetted second-hand pieces.

Place All items are displayed on the website and can be sold through there. A link can be accessed from their social media pages so consumers have instant access to it, wherever they are. They also have 14 store locations around the US where purchases can be made from that specific stores, however all items are placed on the website anyways. Several of their stores also have cafes in store, which aides in creating an elevated experience for the customer as well as a greater sense of community.

07

Promotion The RealReal has an Influencer Program to help facilitate brand deals with Social Media Influencer. Their podcast, Circle of Influence, in collaboration with CFDA, Council of Fashion Designers of America, promotes the brand in the sustainability sector, as well as within the fashion industry and their partnerships with brands for their ReCollection 01 - where they transformed clothing from different well-known fashion houses into new, one-of-a-kind luxury pieces - has aligned them with well established luxury brands such as Burberry, Stella McCartney and Gucci. TRR also advertises in digital, print and national TV. TRR is very innovative with their promotion as they also partner with organisations outside of the fashion sector, such as the Ellen Macarthur Foundation and One Tree Planted.

Price The prices of re-sale items on TRR are lower than that of retail prices for the items and a clear distinction is made; estimated retail prices of the items are listed alongside TRR price and the difference is clear. For example, a Hermes 2020 Birkin that would retail for $23,000.00 but is selling on the TRR website for $19,550.00 (per the site). Similarly, a Chanel Classic Medium Double Flap Bag is listed for $5,415.00 whereas the estimated retail price is $6,800.00.TRR has Various Sales throughout the year, as well as deals with consigners where they receive discounts or store credit for items they sell.

08

Brand Essence Wheel 09

From https://www.therealreal.com

Own/ sell luxury second-hand vintage pieces

Explore personal style support slow fashion reduce fashion waste

Revenue: 300 million USD in 2019

Elegant

Ecofriendly

Sustainable Curated

Cafe's in store

"It-girl"

Luxurious

Innovative

Honest & Transparent

Founded in 2011

Informative

"To honour heritage brands and empower consignors and buyers in extending the lifecycle of luxury items"

IPO Authentic

Refined

Luxury Empower Sustainability

Well-dressed

Good human

Poised Environmentally conscious

Stylish

Distinguished

Cultured

Selfassured

Confident In the know

10

Ethical

Julie Wainwright

Elegant

From https://www.therealreal.com

Value Proposition Statement 11

FOR luxury-loving customers WHO honour luxury brands, want to extend the life-cycle of goods and find unique pieces at a slightly reduced price. OUR online and brick and mortar marketplace THAT re-sales authenticated luxury goods. UNLIKE sites like Vestiaire Collective OUR OFFER gives you stores to visit, more choice of products to purchase and the opportunity to sell and participate in the life cycle of the resold piece.

12

Competitive Analysis Summary 13

From https://www.therealreal.com

The RealReal is both part of the resale e-commerce sector as well as Luxury Goods sector.

In terms of resale e-commerce, it's main competitors are Rebag, Fashionphile, Vestiare Collective, Farfetch SecondLife, ThredUp, Depop, Ebay and Poshmark, although the last four are not exclusively luxury and only TheRealReal and Ebay handle furniture and home decor as well. The RealReal has a unique advantage over competitors by being both a market platform and a retailer, and in some of their stores, offering a multi-use environment. Through this they can better serve their consumers and compete with their competitors. Another unique advantage TRR has is that unlike their competitors, they offer non re-sale products as well at slightly discounted prices.

14

Competitive Analysis Matrix Brand Same Day Print

Value Proposition

Location

Type of Products

Online and instore

Clothes, bags, jewellery, accessories. home decor

to inspire a new generation of consumers to think secondhand first

Online

Bags, jewellery and accessories.

to make the resale process a breeze

Online and instore

Bags, jewellery and accessories.

1. We make authenticity our first priority.

2. When we want something, we’re all in.

3. The best service, always 4. We value what’s unique in people, in pieces, and in perspectives.

Online and instore

Bags, jewellery and accessories.

to empower consignors and buyers to extend the life cycle of luxury goods in a way that honors luxury brands

to become the global platform for good in luxury fashion - empowering everyone to think, act and choose positively.

to create the world's most desirable wardrobe by connecting a global community of fashion lovers

Online

Bags.

Online

Clothes, bags, jewellery, accessories. home decor

Consumer Ratings* 4.1 stars

2.4 stars

-

4.3 stars

-

3.4 stars

Unique Features

Authentication Process

Not just re-sale. Collaborations with fashion houses and labels. Partnerships with organisations.

Items are sent to either authenticators or copywriters, depending on the product/brand

Goody Box - After taking a style quiz, ThredUp will send you a personalised box of clothes you can choose from to keep.

In-house brand specific authentication process.

Clair Trade - a different way of selling with the sight wherey ou can buy and sell items in one transaction, and only pay for the difference.

Partnership with Neiman Marcus in creation of physical locations and whiteglove service.

Part of FARFETCH's Positively FARFETCH initiative scheme.

VAST amount of goods sold online and all online.

In-depth certification process Small team of highly qualified authenticators specializing in specific brand names

Online, free-pick up of item from consigners home.

Payed Quality Control checks along with authentication fees.

*from trustpilot.com

15

Luxury Brands

Rigorous Authentication

Less Rigorous Authentication

Mass-Market

Competitive Analysis Positioning 16

From https://www.therealreal.com

Industry Definition

The global apparel market is expected to recover and grow from $527.08 billion in 2020 to $635.17 billion in 2021, the latest fashion industry statistics tell us. At the same time, both consumers and brands are becoming increasingly aware of the importance of sustainable fashion. (McKinsey) In 2020, U.S. retail e-commerce revenue from the sale of fashion apparels, footwear and accessories amounted to an estimated 110.6 billion U.S. dollars and is projected to grow to almost 153.6 billion U.S. dollars by 2024. (Statista)

17

34% of True-Luxury consumers —consumers that averaged $44,000 in total luxury spending— sell secondhand products, while 26% buy pre-owned goods (BCG x Altagamma) Estimated to be worth around $24 billion in 2018, the secondhand luxury market accounts for around 7 percent of the $365 billion personal luxury goods market. But, more interestingly, the secondhand market is growing four times faster than the primary market and is projected to double in value over the next five years. (Luxe Digital)

18

From https://luxe.digital/business/digital-luxury-reports/luxury-resale-transformation/

PESTEL Analysis POLITICAL Impact of the pandemic on the e-commerce industry.

ENVIRONMENTAL Ethical manufacturing (fast fashion scandals push interest to ethically reliable companies) Rise in awareness of waste issues in general as well as the waste generated by the fashion industry LEGAL Counterfeits and importance placed on the authentication process to reassure the customers.

ECONOMIC Re-sale vs Retail prices.

Low salaries of incoming generations: Gen Z and Millenials are the most interested in resale but the average millennial has experienced slower economic growth since entering the workforce than any other generation in U.S history.

Continued rise of “Buy now, pay later” purchasing.

These types of services, such as AfterPay and Affirm are showing huge growths in usage and interest.

TECHNOLOGICAL Rise in interest in e-commerce due to the pandemic.

Online sales are expected to continue growing and hit $6.388 trillion – nearly twice that of 2019’s total ecommerce sales.

Introduction of AR and VR dressing room experiences

19

SOCIAL Continuation in rise of interest in genderless fashion; much as 56% of Gen Z consumers shop outside of their assigned gender categories.

Continuation of awareness and interest in sustainable fashion - in the last year an average of 27,000 searches for sustainable fashion were made every month.

Supporting Black-owned businesses emerged in 2020 as one of the most effective ways for people to stand in solidarity with the Black community, something that has become of importance to consumers.

Luxe Digital reports that the top 15 Luxury fashion brands rising in popularity are as follows: Gucci, Chanel, Hermes, Dior, Louis Vuitton, Rolex, Tiffany, Prada, Versace, Armani, Valentino, Balenciaga, Cartier, Burberry and Omega.

Demand for understated handbags was nearly 5x stronger than that of statement "logo-mania" handbags in 2020.

Continuation of rise in purchasing power, specifically from China - Chinese consumers accounted for 90% of the growth in the personal luxury goods market and generated 35% of global luxury spending in 2019.

Millennial Chinese consumers are growing in appreciation and interest in luxury re-sale; over half of China's secondhand luxury shoppers are below 30 years old. However older generations still tend to dislike the idea of vintage and re-sale items due to cultural social stigmas. Only $1.7 billion accounted for sales of luxury re-sale items in 2018 in china Online International re-sale retailers are completely absent from the market in China. The main second-hand sellers are online platforms Plum and Feiyu. Chinese Vestiare Collective, TRR’s main competitor, has plans to open a ‘logistics hub’ in the region which, as of 2021, are still ongoing and will reportedly begin with targeting Hong Kong consumers.

However, the company is facing issues as it as been reported, shipping international goods within China is difficult to do.

It has been suggested that it would be better for re-sale companies to focus on gathering inventory solely in China that will then be sold to consumers within the country.

20

STRENGTHS

WEAKNESSES

The first successful IPO of secondhand luxury - loyalty within customers and relationships is clearly good on some level.

Transparent communication on website - consumers value honesty.

Physical stores as well as website and app - utilising all avenues.

Introduction of multi-spaces to create a sense of community.

Brand identity is secure and clearly understood - target demographics are being reached.

Collaborations and partnerships with brands and organisations bring brand awareness.

Partnered brands are recognised and regarded highly TRR's brand equity is improved automatically through association.

Not limited to selling apparel and accessories.

TRR has had some Authenticity Scandals in the past years. Their reputation is poor because of this.

Customers have reported issues with contacting customer services.

It's difficult to find information on TRR website about the company and brand; not particularly user-friendly.

The company doesn’t accept goods from international sellers. It's competitor, Vestiare Collective, does.

TRR currently does not ship to China.

SWOT Analysis 21

OPPORTUNITIES

Rise of TikTok as a social media platform and as a viable marketing platform.

Celebration of Earth Day and continuing with other celebrations of these days as a means of marketing opportunities.

Greater consumer interest in the re-sale market and ethical transparency of brands.

Increasing popularity and interest in athleisure wear and the street-style aesthetic.

Rise in popularity and interest in podcasts.

Trend in development of mutli-use spaces (such as retail space alongside a coffeeshop).

Increased consumer interest in homeware as well as pet accessories.

22

THREATS

Other sites creating deals and relationships with brands wherefore they become the brands sole resale site.

Brands developing their own re-sale platforms with authentication offered directly from the brand itself.

Developing use of AI and V dressing rooms in competitors.

Closet rental services are growing in use and popularity among young people especially.

Consumers may begin to prefer renting vinatage pieces from these sights rather than purchasing them.

General competition from other platforms and competitors.

Competitors successfully monopolising China's luxury re-sale market.

The RealReal targets female millennials in metropolitan environments in North America who have the interest, access, and ability to purchase luxury goods, or has luxury goods to sell. This customer is typically an educated, young professional who is smart with her purchases and inthe-know on what vintage luxury goods are best to invest in and how they acquire their value.

She desires to express her individuality through what she wears and how she furnishes her home and has an understanding on how this communicates to the world who she is as a person.

Purchasing vintage luxury goods makes her stand out from the crowd, help protect the environment and live up to her ideal self-image.

Target Market 23

Customer Persona Name: Margot Rowe Age: 31 Location: Soho, New York City Work: Founder of a boutique PR & digital marketing agency based in NYC Relationship: Engaged, 1 dog

24

BIOGRAPHY Margot was born and raised in The Upper West Side in NYC and went to Brown University. Her father is a professor at Columbia University and her mother is an Interior Designer. Her family travelled yearly when she was growing up and her mother’s family is French. Visiting them in Paris helped shape Margot’s love and appreciation for certain fashion houses like Chanel and Hermes, and her grandmother would gift her vintage scarves and clothes from when she was young. Her parent’s supported her all through college however when she graduated, her allowance became smaller as she was expected to make her own way in life. It was through this that she became more interested in luxury re-sale. She founded a boutique PR agency, specialising in digital marketing using connections she’d made at college and through her family, and works hard at her job. She recently purchased an apartment in Soho with her fiancé, who works in software, and they have a rescue dog called Humphrey. They are saving for their wedding in the spring. She is smart, cultured and enjoys the finer things in life.

25

DOES - Prides herself on being a vegetarian and refuses to take Ubers, preferring to take the subway or walk places.

- Shops at her local grocery store and does pilates three times a week as feeling and looking her best matters to her.

- Updates her Instagram regularly, knowing the importance of an online presence.

- Buys her clothes from luxury designers, preferring to shop online due to her busy schedule.

- Likes to spend her time finding new dog-friendly places to eat with her fiancé - Frequents antique stores to find vintage pieces to furnish her apartment with.

- Organises her wardrobe and wonders what to do with clothes she no longer wears.

FEELS

SAYS “Trends come and go but style is forever.” *after someone compliments her bag* “Thank you! It’s vintage.”

“A good wardrobe is one that is timeless.”

“It’s important to be a conscious consumer.”

THINKS - I enjoy it when people compliment my outfits.

- It’s important to me how people see me.

- I like finding rare vintage pieces.

- I work hard for what I have.

- Concerned with how to keep competing with agencies in attracting new clients.

- Uninspired by fashion styles she sees around her as she prefers ‘classic’ looks.

- Worried about not looking put together with her appearance.

- Excited for the future she is building.

- Conflicted with the knowledge that nearly 20% of global wastewater is produced by the fashion industry yet wants her wardrobe to be updated regularly - Frustrated when she can't find accessories that make her dog match her outfits.

24

25

RECEIVES MEDIA FROM 50

40

30

20

10

0

Pinterest

Celine Stella McCartney

Instagram Fashion Magazines

SHOPS AT

Podcasts News Publications

The Row

Isabel Marant

Recommendations from friends

Chloé

Youtube

26

25

Recommendations As of June 30, 2021, 56% of consigners are buyers and 13% of buyers, are consigners - per TRR website. A campaign should be launched aimed at the opposite; if you buy, there should be an incentive to sell, to generate more inventory. This could mean buyers being sent a time-limited offer of a discounted authentication meeting with an expert followed by a set commission payed thus becoming part of The RealReal seller "family", for example.

From https://www.therealreal.com

One unique aspect of the TRR is their ability to educate. There is a rising trend in interest in podcasts and so TRR's podcast should be continued and relaunched alongside their online publication RealStyle - focusing on interviews with designers, influencers and people in the fashion industry in ways that would highlight TRR's partnerships but also help educate consumers on topics of sustainability in fashion so to encourage them to purchase from TRR. Due to the rising interests in wardrobe-for-rents, particularly among generation-z, there is an opportunity to fill a gap in that growing market in the form of a reputable wardrobe service subscription. This could be endorsed by celebrities that are already known for caring about sustainability.

The rising interest in homeware brings opportunity for The RealReal to highlight the homeware aspect of the site - as this isn't found as much in the brick-and-mortar stores and is more unique to the company. The RealReal Home could be launched as a seperate platform.

27

Multi-use spaces are growing in popularity and TRR cafe spaces in store would be beneficial to focus on. Partnering with high-end artisanal local business for the coffee, beverages and any food served, such as partnering with Van Leeuwen Ice Cream in New York City in the summer or partnering with Wölffer Estate Vineyard in serving alcoholic beverages in the same way they do in luxury fashion houses, would be a notably creative way to generate exposure of the brick-and-mortar stores, garner media attention, and forge a greater sense of community within current consumers, encouraging loyalty to the brand. Celebrities could be endorsers of these sponsored events as well.

Due to the current and rising consumer interests in anything to do with their pets, allocating a part of TRR's website for pet accessories, and focusing attention on finding inventory for this - wether that be re-sale or not - could bring opportunity to generate large amounts of revenue.

Coincided with a campaign partnering with pet accessory brands (that are perhaps also environmentally-conscious) and allocating an amount of profit to shelters/foster schemes would bring mass attention from consumers.

A trial of introducing an AI virtual-try on option on the app would be advantageous as this would be a game-changer for the re-sale industry but would also aide TRR in discovering what would be useful for their clients. TRR doesn’t ‘model’ the clothing on their site; the items are shown on a mannequin so it is difficult for consumers to judge what the item would realistically look like on them so the introduction of this AI option would be beneficial in terms of that as well.

In China, vintage and re-sale items are overwhelmingly appealing to younger generations (primarily millennials) than older ones. Attention should be focused on targeting these younger consumers. This can be done through focusing on guerrilla-style marketing on Chinese social media platforms such as TikTok and Weibo, along with approaching Chinese Influencers of this demographic for partnerships. This along with launching a campaign to celebrate Chinese New Year and collaborating with Asian designers such as Phillip Lim, Comme des Garçons, Vera Wang and Monse (who already see success on TRR) will be beneficial in helping TRR reach those consumers. Along with focusing resources on targeting the Chinese market, research should be done on ways the market could be approached from a logistical standpoint (in terms of shipping and handling goods) as well.

28

Bibliography: https://www.ft.com/content/29428978-dcfd-11e8-8f50-cbae5495d92b https://investor.therealreal.com/node/6461/html#toc720814_4 https://www.nytimes.com/2019/06/27/business/realreal-ipo-secondhand-fashion.html https://ethicalmarketingnews.com/the-realreal-launches-sustainability-calculator-on-national-consignment-day https://www.forbes.com/sites/sharonedelson/2021/08/27/the-realreals-2021-report-reveals-gen-z-continues-to-be-powerful-driver-of-luxury-resale/?sh=4b242ce02d2d https://www.voguebusiness.com/companies/burberrys-partnership-realreal-secondhand https://therealreal.zendesk.com/hc/en-us/articles/360059012133-What-is-TRR-Sustainability-Calculatorhttps://investor.therealreal.com/social-impact https://investor.therealreal.com/news-releases/news-release-details/realreal-and-gucci-launch-circular-economy-partnership https://investor.therealreal.com/news-releases/news-release-details/realreal-2021-luxury-resale-report-reveals-record-growth-and https://www.forbes.com/sites/richardkestenbaum/2021/02/22/the-realreal-is-still-battling-fakes-it-wont-be-easy-to-get-it-right/?sh=3ba0a861cffd https://www.businessoffashion.com/articles/finance/inside-the-realreals-costly-risky-plan-to-dominate-the-secondhand-luxury-market https://www.forbes.com/sites/glendatoma/2019/06/28/the-realreal-ipo-luxury-reseller-latest-retailer-to-go-public/?sh=4aac430a6289 https://investor.therealreal.com/news-releases/news-release-details/realreal-announces-first-quarter-2021-results/ https://www.forbes.com/sites/pamdanziger/2019/09/13/the-fashion-resale-market-could-outpace-predictions-but-this-may-hold-it-back/?sh=3d4d5bac6b36 https://www.forbes.com/sites/pamdanziger/2019/09/13/the-fashion-resale-market-could-outpace-predictions-but-this-may-hold-it-back/?sh=3d4d5bac6b36 https://www.grandviewresearch.com/industry-analysis/e-commerce-market] https://www.forbes.com/sites/maggiemcgrath/2021/06/04/founder-of-therealreal-julie-wainwright-proves-unicorns-arent-just-for-young-tech-bros/?sh=4ee4d87520e8 https://www.oberlo.co.uk/blog/ecommerce-trends https://www.yieldify.com/free-guides/fashion-ecommerce-trends/ https://investor.therealreal.com/news-releases/news-release-details/realreals-annual-resale-report-reveals-top-trends-luxury-resale https://www.similarweb.com/website/therealreal.com/ https://www.forbes.com/sites/pamdanziger/2020/05/15/fate-of-luxury-depends-on-china-but-continued-success-there-is-not-guaranteed/?sh=3ca8b3a2530c https://seekingalpha.com/article/4365865-realreal-emerging-story-strong-growth-growing-pains-included https://www.insiderintelligence.com/insights/social-commerce-brand-trends-marketing-strategies/ https://www.metrocommercial.com/news/mixed-use-developments-a-look-at-whats-driving-this-trend/ https://bluhawk.com/mix-use-millennials/ https://www.korteco.com/construction-industry-articles/the-benefits-and-drawbacks-of-mixed-use-development https://luxe.digital/business/digital-luxury-ranking/most-popular-luxury-brands/ https://wwd.com/eye/people/emerging-chinese-fashion-influencers-to-know-2021-1234810034/ https://www.forbes.com/sites/sharonedelson/2020/12/23/shoppers-are-embracing-luxury-resale-this-holiday-season-like-never-before/?sh=232530456a25 https://www.businessoffashion.com/articles/global-markets/japan-used-luxury-goes-mainstream https://www.businessoffashion.com/briefings/china/will-luxury-resale-take-off-in-china-its-complicated https://www.alizila.com/pre-owned-japanese-luxury-goods-resellers-eye-chinese-consumers-closets/ https://www.bloomberg.com/news/articles/2021-04-21/vestiaire-sees-asia-s-luxury-shoppers-warm-to-secondhand-gucci https://digiday.com/marketing/vestiaire-collective-paving-way-online-secondhand-luxury-china/

© 2021, ELLIEPALOMA BURSBY