The RealReal’s head of retail details his brick-and-mortar strategy and explains why in-person sales are still a big part of the $26 billion luxury consignment market, even during a pandemic

• The RealReal opened its fourth physical store in Chicago on Friday, marking its first foray into the Midwest and a larger strategic push to capture more of the fast-growing luxury resale market beyond the coasts. 
• Located on Chicago’s Michigan Avenue, the heart of the city’s shopping district, the new store is the The RealReals’s fourth physical location, along with New York City, San Francisco, and Los Angeles. 
• “That was the next location where we wanted to be able to set a footprint for people to come and actually touch and explore our products,” Dan Ocampo, The RealReal’s head of retail and expert operations, told Business Insider.
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The RealReal is eyeing the Midwest as its next frontier as it looks to take over an even larger segment of the rapidly growing $26 billion global luxury resale market. 

The company opened its first physical retail space in Chicago on Friday, part of a strategic push to capture more of the rapidly expanding high-end resale market in the Midwest. Located on Chicago’s Michigan Avenue, the heart of the city’s shopping district, the new store is The RealReal’s fourth brick-and-mortar venture, along with locations in New York City, San Francisco, and Los Angeles. 

“Brick and mortar is an important part of the business for us,” Dan Ocampo, The RealReal’s head of retail and expert operations, told Business Insider. “We understand how it really brings our brand to life when consignment could be a little tricky for most. It’s hard to envision what luxury consignment looks like.”

Though luxury consignment has long been a fast-growing segment of the retail market, it has fared particularly well during the pandemic. According to Cowen, “resale luxury could eclipse new luxury over the long-term” as a growing number of Americans discover high-end consignment both online and in physical stores. 

Further, the analysts found that interest in luxury resale is on the rise, with more than 33% of millennial and Gen Z consumers stating in a recent survey they engage regularly in resale marketplaces, up from 25% the year prior. Within the fast-growing marketplace, Cowen added that “other consumer age cohorts are showing encouraging adoption momentum as well.”

For companies like The RealReal, items like high-end jewelry and watches have seen a particular uptick in consignments and sales in recent months, as cash-strapped, homebound Americans look to pad thinning wallets during the recession.

According to The RealReal’s 2020 luxury resale report, sales of high-end watches like Rolex increased by 32% in 2020, while the average resale value for high-end watches is currently 1.6 times stronger than its lower value watches in stock. 

Ultimately, the increased interest in luxury consignment bodes well for The RealReal as it expands both its digital and physical footprint, by bringing on new brand partners like Gucci and experimenting with store formats. 

Though The RealReal has had a corporate office in Chicago for four years, Ocampo said the decision to open the new store in the city as the result of an extensive analysis of data — including metrics like clicks and conversions per area code — that will be used to inform future store openings elsewhere in the country. 

“We have so many different ways of looking at information on what makes sense for us and Chicago was at top of the list,” Ocampo said. “That was the next location where we wanted to be able to set a footprint for people to come and actually touch and explore our products.”

While the Chicago store includes many of the same features as its sister stores — including a cafe, ‘sneaker stock ticker,’ and iPads built into displays so shoppers can browse online inventory in real-time — its size allowed for it to put a larger spotlight on its expert and customer services 

“Chicago is the heart of the Midwest and it’s a major city for us as we continue to grow that market from a consignment side,” he said. “Looking at the information and seeing how we can grow the team there, we’ve been able to capture a larger base, and opening a storefront would definitely help expedite that.”