Consigned to eternity
Leading US luxury consignment company, The RealReal, recently launched a Sustainability Calculator to show the impact that consignment has on the planet. The company worked with sustainability consultancy Shift Advantage to develop the methodology quantifying greenhouse gas (GHG), energy and water saved from women's clothing items consigned. Experts from World Resource Institute (WRI) and the Ellen MacArthur Foundation, and sustainability expert Michael Sadowski reviewed and provided feedback on the methodology.
The RealReal is a leader in authenticated luxury consignment. With an expert behind every item, it ensures that everything that is sold is 100 per cent real. There are 90+ in-house gemologists, horologists and brand authenticators who inspect thousands of items available online each day. As a sustainable company, it gives new life to pieces by brands from Chanel to Cartier, and hundreds more, supporting the circular economy. It makes consigning effortless with free in-home pickup, drop-off service and direct shipping. At its stores in SoHo New York City and Los Angeles, customers can shop and consign and meet with the experts to learn more about luxury authenticity and sustainability. At ten retail locations across the US, its expert staff provides free jewellery, watch and handbag valuations.
Subir Ghosh speaks to Allison Sommer, director of category marketing, about the company and the consignment sector.
How did this idea itself come about? I mean the need for you to work on such a Calculator.
The RealReal, a leading luxury consignment company, launched a Sustainability Calculator for consignment on the occasion of National Consignment Day on October 1 in the US. The objective of this calculator is to create a sound, science-based tool to quantify the positive impact of consignment on the planet. This first generation calculator focuses solely on women's apparel. The initial calculation measured the impact of 2.5 million women's clothing items consigned to The RealReal, with the results showing that the company has offset 65 million car miles in greenhouse gases and energy since 2012.
Transparency and accuracy are part of The RealReal's core values. We knew logically that our circular business model, which extends the lifespan of luxury items, was environmentally friendly, but we wanted to be able to share with our customers and consignors exactly how much.
The RealReal has certainly grown big, both in terms of say the number of employees and multiple locations across the US. Did you expect the venture to turn out to be this big? Has it been bigger than you thought it might be?
It was always the plan to be a billion dollar business, as the opportunity was right there with the volume of luxury goods being sold worldwide.
How big is the luxury consignment business in the US? Both in terms of money, as well as the number of items that are sold annually? How have you seen this sector boom in the last few years? Any particular contributing factors?
$60 billion go into the US every year in personal luxury products. We estimate that in the US alone, there's about $70 billion worth of luxury items in people's closets. There are numerous reasons for this sector booming in the last few years. For starters, the consumer mindset has changed. Luxury buyers are making purchases knowing they can earn back 60-80 per cent of the original cost when they are done with them. They have learned they can leverage the ROI (return on investment) on their luxury purchases, and take those earnings to purchase the newest styles in the primary market. Our job is to educate consignors on what brands hold resale value (which can shift from season-toseason or year-to-year) so they are well-informed when shopping brands in the primary market. It's the new luxury life cycle and a key driver of the circular economy for fashion, particularly for millennials and GenZ. Consumers are also becoming more ecoconscious and gravitating toward companies and practices that share those values. Consigning and/ or shopping resale is good for the planet, and more and more consumers are taking to it-especially younger generations. Essentially, people are becoming mindful about their purchases. That's why The RealReal has become so popular-you can buy from us and resell it the next season and make up to 85 per cent back. We hear from our customers and consignors all the time that we are really changing the way they shop. Consignors will often consult with us when choosing between a Louis Vuitton or Gucci handbag as their next investment piece-because they want to know which one will earn them more when they decide to consign down the line.
How long did it take for you to work on this with Shift Advantage? The methodology itself is outlined in your press statement; but what about working out the methodology itself?
We began working on calculating the environmental impact of consigning about a year ago, starting with finding the right partner in Portland-based Shift Advantage to help us develop the usage of average fabric types.
Do you think gaps still remain in your methodology? For instance, the "impact by material" considers only averages for each material type. Doesn't this leave room for error?
Traditional retailers and brands are able to conduct life cycle assessment (LCA) studies following vetted methods presented by leading sustainable textile organisations. Since we do not own the supply chain for the products we sell, and since our inventory is hyper-fragmented across hundreds of thousands of designers and product SKUs, we had to rethink how to apply the concept of an LCA to our unique business model. This means required assumptions and averages- fabrics, production techniques, item inventory, item weights-in order to complete the calculations. To that end, we were rigorous in our approach and vetted final outputs with a team of industry experts, including from Ellen MacArthur Foundation, World Resources Institute, and others, and incorporated their feedback before publishing any results.
The world has a consumption problem. How do you, at your end, encourage end-buyers to consume less, and fill in that missing link in the circular economy?
Many consignors have 'graduated' from shopping fast-fashion, which is harmful to the environment and doesn't hold resale value in comparison to buying designer fashion that is well made, more sustainable and earns you cash back.
Could you also tell us more about your collaboration with Stella McCartney?
We partnered with Stella McCartney-in an unprecedented partnership-to champion a circular economy campaign, whereby The RealReal shoppers who consign Stella McCartney will receive $100 to shop at Stella McCartney in the primary market. It's an incredibly collaborative and cooperative relationship. The campaign was announced on Earth Day, though the partnership continues beyond. Sustainability is a core part of who we are and what we do every day (as with Stella McCartney), so we wanted to harness the spirit and relevance of Earth Day to really shine a light on the importance of a circular economy and its positive impact on the environment. We're encouraging people to extend the life of luxury items so that we can keep them out of landfills and put them in the hands of new owners. Brands are realising the benefits of the secondary market-not just in helping extend the reach and covet-ability of their brands, but also the sustainability benefits. We're hoping that this partnership and campaign will give rise to more like it-whether that involves us or others.
Do you plan to share your Calculator with others? Or is this a benchmark that you wish to set for yourself?
The methodology of how we applied average fabrics to our unique model is proprietary and applicable in exact match only to The RealReal's operational chain and inventory set. However, we hope that other companies follow suit, measure, and share their footprint with their customers. The more people talking about sustainability, and taking action to put weight behind the words, the better. Increasingly customers expect that sort of transparency and corporate responsibility from the brands they love.
You have offset 65 million car miles in greenhouse gases and energy since 2012. Will you be updating this figure regularly? If so, at what frequency?
Yes, we will be updating it, eventually in real time.
And, also about being a member of Ellen MacArthur Foundation's CE100 USA?
The RealReal was the first luxury consignment company to join the Ellen MacArthur Foundation, the global thought leader in the circular economy. We recognised the inherent nature of circularity in our business, and we wanted to be an active participant in developing initiatives and spreading the word.
Fashion itself is global, and you ship worldwide too. Any plans of going global with your brick-and-mortar outlets? Or plans to collaborate with others elsewhere?
Introducing and building out brick-and-mortar was a big (and exciting) change for us. It's been an important extension of the brand and allows us to expand our service offerings. The stores have been an excellent way to introduce luxury consignment to those who aren't quite comfortable shopping online for more high-value items. To date, roughly half of the people who walk into one of our locations have never heard of us before and half the people have never consigned before-they are more comfortable doing business in a physical location. We have a team of experts in the store, and customers are able to get items authenticated, tailored, repaired, and valued all at the store-not to mention the store hosts a number of expert workshops open to the public each month. This element of our omnichannel business establishes a sense of trust and community that cannot be communicated in the same way online. We'll be looking into expanding our brick-and-mortar footprint in the near future given how integral it's been for the business
What has been the response to your Calculator announcement? Have sales shot through the roof? How has industry reacted to your initiative?
As a fast-growing startup, sales are always strong! The response has been very positive from both press and customers, who appreciate our initiative to take a stab at unravelling a complex problem and lead the industry by example. Since we shared the individual water and energy savings by our top consignors we've heard from, somehow this knowledge makes them feel more excited to consign with The RealReal than the commission earnings!
Sustainability is not an end in itself; it is a means to an end. So, what next can one expect from The RealReal.
We plan to build the data from the calculator into our website, so customers and consignors can have visibility at all times into consignments' impact on the planet. We also want to expand the Sustainability Calculator to other categories, such as men's fashion. We will always continue being an active participant in the circular economy, seeking customer-facing brand partnerships and educational opportunities. We want to contribute what we know about how to extend the life of wellmade luxury items, as well as learn from experts with other perspectives regarding how to change fashion into a more sustainable industry.
Your website does not say much about the beginnings, except that Julie Wainwright launched the venture out of her own home. Could you please elaborate on the early days?
The idea for The RealReal was born after Julie was out shopping with a girlfriend: her friend purchased items from a consignment rack in the back of an upscale boutique. Julie never knew her friend to shop consignment or buy from online resale websites. When she asked her friend "why", she said she trusted the shop owner, the shop was beautifully curated, and she was getting amazing deals on luxury designers she loved like Chanel, Louis Vuitton and Gucci. It changed Julie's perception of consignment. The lightbulb went off, and she did extensive research of the luxury and resale markets, and even tested resale methods herself. There was a massive market opportunity to create a beautiful shopping experience, preserve the romance of luxury brands, ensure authenticity and remove barriers to consignment-not to mention the business model would be impervious to the likes of Amazon. In December of 2011, Julie had her "aha!" moment. By early March, she picked out a name, registered the business, and raised capital. In June 2011, she opened the doors. She went from running the business out of her house to renting a warehouse and setting up a true office where all items would be processed and authenticated.
