Luxury secondary market specialist The RealReal raised $300 million in its initial public offering on the Nasdaq in June, with its opening day share price valuing the business at $2.32 billion.
The valuation was not so much based on its profits — the business lost $52.3 million in 2017, $75.8 million in 2018 and $23.2 million in the first three months of 2019 — but on the value of its brand and the potential audience for clearance and pre-owned stock from major fashion houses and watch and jewelry brands, along with the mountain of data it accumulates from every touch point between its site and its customers.
The San Francisco-based operation is much more a technology company than a traditional luxury goods retailer. It offers a platform where retailers and brands can list unsold new or pre-owned stock on consignment from anywhere in the world, and sell it to a global audience of millions.
The model is almost identical to British rival Farfetch, which was valued at around $6 billion after its initial public offering in September last year.
The RealReal shares snippets of its data, and published a report this month on the marketplace, trends and best selling brands in women’s and men’s fashion, fine jewelry and watches, and home decor based on searches, sales and browser tracking of its millions of customers.
“The RealReal is in the unique position to identify luxury resale trends based on millions of items sold to millions of shoppers. This report is our annual look at what’s rising to the top,” says the firm’s chief operating officer Rati Levesque.
The top five brands that have ‘risen to the top’ in the last year are all major European fashion houses: Gucci, Louis Vuitton, Chanel, Prada and Hermes.
Watches saw a 132% growth in overall demand YoY, with luxury watch brands grabbing the greatest share.
Apple Watches fell to the bottom of the pack with a 94% drop in searches, while high-value watches soared to the top with searches for watches valued at more than $5000 up 79%.
While all high value watches saw year on year sales growth, the greatest surge was among higher end timepieces priced at above $3,000, the report states.
The report also tracks changing prices over time for the most popular models. Patek Philippe’s Aquanaut came top, by this measure, with resale prices soaring by 42% in the past 12 months. The price of Rolex GMT Master models rose by 34% over the same period.
Watch brands will also be noting with interest the youthful audience attracted to The RealReal. Watch sales were up 50% overall, year on year, but 18-34 year-olds accounted for a rise of 58% and 35-44 year-olds’ purchases rose by 145%.