Amid ongoing consumer belt-tightening, The RealReal is seeing personalized messaging go a long way toward incentivizing spending.
John Koryl, CEO of the luxury resale marketplace, shared on a call with analysts Thursday (Feb. 29), discussing the company’s fourth quarter and full year 2023 financial results, that personalized communications have helped mitigate the effects of consumer cutbacks in the face of financial challenges.
“What people forget is we didn’t have a lot of capabilities on how to personalize our relationship with the customer,” Koryl said. “A year ago, we couldn’t say, ‘Hey, we haven’t heard from Marvin in a while here. Let’s offer him something to make it so that he can consign.’ We now have that capability. We have the exact same capability on the customer side.”
Indeed, personalized offers can be key to driving consumer engagement. The report “Personalized Offers Are Powerful — But Too Often Off-Base,” a PYMNTS Intelligence study created in collaboration with AWS, finds that 71% of consumers received personalized offers and are interested in them, and another 12% did not receive personalized offers, but are interested in them.
Additionally, The RealReal has a loyalty advantage over non-resale marketplaces in that it can leverage its existing audience on one side of the platform to drive adoption of the other.
“We still have a lot of opportunities of concern, turning customers into consigners and even consigners into customers,” said Rati Sahi Levesque, the company’s chief operating officer and president.
Overall, consumers who want luxury items demand digital options. Findings highlighted in the August edition of the PYMNTS Retail Tracker® Series Report revealed that 67% of luxury shoppers say that stores should feature higher levels of digital integration.
Plus, many consumers are buying secondhand in the face of economic challenges. PYMNTS Intelligence’s “Consumer Inflation Sentiment Report: Consumers Shop Secondhand Stores as Often as Other Retail,” which drew from a census-balanced survey of more than 2,300 U.S. consumers in December, finds that 43% of consumers purchased a secondhand product in 2023, with high-income shoppers disproportionately likely to make such purchases. Plus, 19% of consumers said they increased their secondhand purchasing during the year.
These concerns are continuing into the future. The PYMNTS Intelligence study “New Reality Check: The Paycheck-to-Paycheck Report: The Pessimism About Pay Rises Offsets the Effect of Falling Inflation,” which is based on a survey of more than 4,300 U.S. consumers, found that 83% are at least somewhat concerned about current and near-future economic conditions.
Still, in the quarter, The RealReal saw total revenue fall by 10% year over year amid ongoing changes to the business, minimizing its owned inventory and focusing on consignment.
Overall, The RealReal’s emphasis on personalized messaging emerges as a key tool in navigating the currents of consumer spending constraints. Plus, leveraging its unique position in the luxury resale marketplace, the company not only capitalizes on the allure of personalized offers but also harnesses its dual-sided platform to drive loyalty and adoption.
As consumer preferences increasingly gravitate toward digital channels and secondhand shopping amid economic uncertainty, The RealReal’s adaptability positions it well to navigate the evolving landscape.
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