Neiman Marcus dips its toes in the resale market for the second time, buying a minority stake in Fashionphile.

WHAT HAPPENED: Neiman Marcus’ investment in Fashionphile, an online marketplace for secondhand designer handbags and accessories will allow consumers to consign items at some department store locations.

Why it matters

  • Following its one-year partnership with The RealReal that ended in 2016, Neiman Marcus’ minority stake in Fashionphile illustrates the company’s renewed interest in the resale market, which grew faster than it expected in the past few years. In 2018, luxury resale accounted for $6 billion of a $24 billion resale industry in the U.S., according to studies from Bain & Co. and GlobalData PLC—the latter predicts the market to reach $51 billion by 2023. Through a customer survey, Neiman Marcus also found that 50% of its shoppers purchase secondhand luxury products. Fashionphile is a smaller company than The RealReal, its main competitor—it will make an estimated $200 million in 2019 revenue compared The RealReal’s $500 million 2018 revenue). But Neiman Marcus’ decision to invest comes at a time when The RealReal is revving up to go public. It also mirrors Foot Locker’s recent $100 million investment in GOAT, a sneaker resale marketplace, and Farfetch’s $250 million acquisition of another sneaker resale retailer, Stadium Goods.
  • With Fashionphile “salons” at a number of Neiman Marcus locations, consumers will be able to consign pre-owned items and receive a payment immediately, which the department store hopes they will spend at Neiman. However, customers won’t be able to purchase Fashionphile products in person—they’ll have to rely on the company’s owned retail (it operates four boutiques) or its site. Other retailers have also embraced this strategy—Amazon customers can now make returns at all of Kohl’s locations, which gives Kohl’s more facetime with more shoppers and leads to more in-store purchases. Though the Neiman Marcus-Fashionphile partnership will grow the pool of customers who find the department relevant, it’s uncertain whether visitors will take the cash they earn consigning to buy Neiman products at full price.