What: The RealReal is closing down several flagship locations in the world.

Why it is important: Will the second-hand market ever find the way to profitability or shall department stores definitively consider it as a marketing stunt?

Luxury resale market is competitive, with The RealReal announcing lay-offs and store closures to trim costs, resulting in a loss of 80% of its share value in the past year. The company had a 'growth at all costs' strategy, but profitability is now the priority. The market rewards now companies that are trimming costs, moving towards profitability, and offer unique treasure hunt experiences.

The RealReal’s business model faces complications due to the high cost of authenticating luxury items, broadening category mix, and fierce competition from similar companies. Furthermore, the company faces the dichotomy of closing brick-and-mortar stores despite signs of in-store shopping's return.

However, the luxury resale market has untapped potential, with a projected growth of 20% between 2020 and 2025 and reaching $67 billion. The RealReal's competitors seem to be performing better, and a profitable business model is critical. Circular economy is seen as the future, and brands will seek to control the customer experience of resale of their own branded goods. Companies that enable this effectively may emerge as winners.

what the real real closures say about the second hand