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High-Income Consumers’ Rising Secondhand Purchasing Drives Luxury Consignment Growth

With high-income shoppers disproportionately growing their adoption of secondhand retail channels, The RealReal is seeing its consignment business grow.

The luxury resale online marketplace shared in its first-quarter earnings results, reported Tuesday (May 7), that consignment revenue rose 13% year over year.

“We believe our continued focus on the core consignment business is working,” CEO John Koryl told analysts on a conference call. “We’re growing our consignment revenue, expanding margins, delivering exceptional experiences to our consigners and providing outstanding luxury goods to our buyers.”

High-income consumers are increasingly purchasing resale goods. The PYMNTS Intelligence report “Consumer Inflation Sentiment Report: Consumers Shop Secondhand Stores as Often as Other Retail” drew from a survey of more than 2,300 U.S. consumers in December. It found that 43% of consumers bought a secondhand product in 2023. That share rose to 47% for consumers who earn more than $100,000 a year, with these consumers also the most likely to have increased their adoption of secondhand retail channels over the course of the year.

However, high-income consumers who purchased secondhand products during 2023 were less likely than those in other groups to have bought a clothing item in this way. Forty-nine percent of high-income secondhand shoppers made a pre-owned clothing or accessories purchase, versus 54% of those who earn between $50,000 and $100,000 a year and 55% of those who earn less than $50,000. Still, most high-income secondhand shoppers bought clothing.

As The RealReal aims to capture this high-end apparel resale opportunity, the company is using personalization to grow adoption.

“We used more targeted marketing spend to attract higher lifetime value consigners,” Koryl said.

To that point, personalized messaging can be key to meeting the expectations of high-income shoppers. The PYMNTS Intelligence report “Personalized Offers Are Powerful — but Too Often Off-Base” drew on responses from more than 2,500 U.S. consumers. It found that 83% of shoppers were interested in receiving personalized offers, and that share rose to 89% for those earning more than $100,000 annually.

The focus on the high end of apparel resale may account for the difference between The RealReal’s view of its consumers and mass-market resale marketplace ThredUp’s understanding of its customers. On an earnings call with analysts Monday (May 6), ThredUp CEO James Reinhart noted that while these financial challenges have consumers turning toward more budget-friendly buying options such as secondhand marketplaces, shoppers are cutting back overall. He highlighted low consumer confidence and cautious spending.

Conversely, The RealReal President and Chief Operating Officer Rati Sahi Levesque asserted that the company is not seeing this kind of caution.

“One of the things that we … look at during this time is average selling price,” Levesque said. “So, if the consumer is being a little more cautious in what they’re buying, then we’ll see average selling price go down a bit… We didn’t see that too much in Q1. … We’re cautiously optimistic right now. We feel pretty good about the trends there.”

High-income shoppers are pulling back less than others. The PYMNTS Intelligence report “New Reality Check: The Paycheck-to-Paycheck Report: Pessimism About Pay Rises Offsets the Effect of Falling Inflation” found that while 69% of low-income and two-thirds of middle-income consumers have cut back on nonessential spending, only 56% of high-income shoppers have done the same.

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