The San Francisco-based company’s (Nasdaq: REAL) store in Newport Beach, one of its first brick-and-mortar locations in the country, now totals nearly 3,000 square feet, representing a store size two-and-a-half times larger than the initial door there.
It also translates into a roughly doubling of the inventory under the closely watched brand’s roof, too.
“The space next to us was available and we decided to go ahead and take it as an opportunity to move,” Vice President of Retail Courtney Hawkins told the Business Journal. “We know that we’ll offer a larger assortment for purchase, but we added another consignment office. The reason why we did all of this is we’re seeing our selling doing really well in Newport.”
The RealReal, founded in 2011, sells to shoppers looking for authenticated pre-owned luxury items in men’s, women’s, kids and home, while also providing a place for sellers to have their items appraised and then sold. It started as an online consignment shop before beginning a move into brick-and-mortar in 2017 via flagship doors and, more recently, smaller footprints it calls “neighborhood stores.” The Lido Marina store would be an example of the latter.
The expansion comes only a handful of months after the company’s early February opening in Newport Beach. It also comes amid news of big gains in U.S. retail sales, which jumped 9.8% from the prior month to $619.1 billion in March, according to U.S. Census Bureau data, as consumers opened their wallets fresh with stimulus funding in tandem with business restrictions lessening.
The RealReal declined to disclose whether the most recent stimulus checks helped boost traffic at stores.
Retail center and owner DJM, RealReal’s landlord at Lido Marina Village, appears bullish on the retail comeback.
It recently announced a $70 million recapitalization for its holdings at the nearly 17-acre waterfront retail and office center near the intersection of Newport Boulevard and Via Lido.
Some of the funds from the financing deal will be used to renovate a 15,000-square-foot boardwalk at the site, as well as upgrading more than 30 boat slips along the boardwalk.
Strong Sell-Through
March, for The RealReal, saw plenty of activity in Newport Beach specifically.
The month saw about 25% of the buyer base new to the brand. About half of those who consigned with the OC location were also new to The RealReal, with about 4,000 items total consigned at the Lido spot last month, officials said.
The RealReal also reported store traffic’s doubled since the February opening.
So far, logo-heavy items from Gucci, Burberry and Chanel have done well on the women’s side at the location. Sneakers from labels such as Off-White, Jordan, Air Dior and Yeezy, along with bags from Louis Vuitton and Gucci have seen strong sales on the men’s side. And, in the jewelry and watches category, Cartier jewelry and watches from Rolex and Cartier move quickly.
On the consignment side, the new store added a second consignment office, with the company’s drop-off service to sellers being used by about 90% of those looking to sell at The RealReal.
The company went public in 2019, and counts a $2 billion market cap.
It’s one of several firms that focus on pre-owned luxury goods that are rapidly expanding in OC (
Importance of Stores
The RealReal recently opened a store in Dallas with another slated for Austin and Marin. Those would be part of an earlier-stated goal of opening 10 stores by the end of June. It has yet to disclose its next set of store opening targets, but it would appear poised for further expansion as capacity restrictions due to the pandemic ease.
“We are going to probably want to open up a fair number of more [neighborhood stores] because they look like they can be substantially more efficient at acquiring and unlocking supply than our marketing investments alone,” CFO Matt Guske told analysts on the company’s most recent earnings call in February in speaking to the smaller footprint stores.
Executives aim to turn those locations profitable in a year or less, with the cost to open in the range of $200,000 to $300,000, Guske told analysts.
The CFO added he would be “pleased if two quarters from now you are talking about a more aggressive rollout of these stores. That would be a fundamentally healthy thing for our business.”
About 30% of new consignors in December came from across The RealReal’s physical store base, and those who are shopping from the company, online and off, have a tendency to spend triple what someone would spend who is shopping only on its site, the company said.
The RealReal, with its deep access to data, uses the analytics as a starting point in pre-determining where to open new stores.
Generally, Hawkins said, the company’s looking at markets with an existing consignor and customer base. When it comes to co-tenancy, it aims to be part of a tenant mix that serves a dual purpose in being a place where shoppers might run errands in addition to shopping for items such as clothing.
“Being in a neighborhood where we have an existing customer who’s buying and selling with us is very important and so that’s where we start with the data and, from there, we look at where do they shop and where do they go,” Hawkins said of what the company looks for in a market before opening a store.
“Lido is a great example. That’s where our customer is currently going. We want to be at a place that’s convenient, but also where they’re going to shop.”
