UPDATE: November 19, 2018: In a statement emailed to Retail Dive, The RealReal said the company, "unequivocally rejects Chanel's claims. Chanel's lawsuit is nothing more than a thinly-veiled bullying effort to stop consumers from reselling their authentic used goods, and to prevent customers from buying those goods at discounted prices. They are trying to stop the circular economy. The RealReal stands behind its authenticity guarantee and will continue to provide a safe and reliable platform for consumers to resell luxury items."
Chanel last week filed a lawsuit in federal court against The RealReal, alleging that the consignment retailer "sells CHANEL-branded products, including handbags, which it purports to be genuine but are in fact counterfeit," according to court documents.
The RealReal's customers must rely on its own authentication process and not Chanel's, according to the court documents, which the French design house says is misleading. "The RealReal presents and conducts workshops for consumers on Chanel titled 'History of Chanel' and on authenticating luxury goods, including CHANEL products, when the workshops have not been authorized or approved by Chanel," documents show.
"Chanel recently learned that Defendant The RealReal has sold counterfeit CHANEL handbags," which "causes irreparable harm," the company said in its complaint, which was filed last Wednesday in the United States District Court in the Southern District of New York. The RealReal didn't immediately return Retail Dive's request for comment.
The RealReal has staked out its share of the lucrative online resale market at the luxury end, touting a strict authentication system and even cooperation from some of the upscale brands it sells.
Kering — the parent company of upscale brands Gucci, Yves Saint Laurent and others — for example, told analysts that it is actively working with The RealReal on merchandising, and Neiman Marcus previously partnered with the consignment startup. But Chanel apparently wants little to do with such sales.
And those sales are growing. So-called "re-commerce" upstarts are growing 20 times faster than the broader retail market and five times faster than off-price retailers, which offer a similar treasure hunt, according to Coresight Research. The total U.S. apparel resale market will grow at a compound annual growth rate of 13% from $18 billion in 2016 to $33 billion in 2021, according to that research. Clothing, shoes and accessories currently make up 49% of total U.S. resale sales, according to CoreSight.
Founded in 2011, The RealReal claims to provide the largest selection of pre-owned, authenticated, luxury items — including women's and men's fashion, fine jewelry, watches, fine art and home goods. Its unique position on the luxury end of that burgeoning market has drawn the attention of investors. All told, the startup has snagged $288 million in funding, $115 million of that coming just earlier this year in order to expand the company's brick-and-mortar operations.
Authentication is key to reputation and sales of expensive goods. Stadium Goods touts a similarly careful system for its rare and collectible sneakers, and marketplace eBay seemed to respond to The RealReal's authentication challenge earlier this year by expanding its own.
Chanel wants to stymie the whole process, however, according to court documents. The brand "is seeking to prevent ... The RealReal from 'continuing to mislead consumers into believing that The RealReal has an association, affiliation or association with Chanel and/or that Chanel has approved of or authenticated the second-hand and counterfeit items'" Chanel says The RealReal is selling. "Chanel takes this action in order to protect its brand, its goodwill and hard-earned reputation of the CHANEL Trademarks, ... and to protect consumers," according to the court filing.