New York City Is Tops (in Used Clothes)

5/17/2014 - Wall Street Journal

A year ago, I hit on a fashion formula that makes getting dressed simple and easy: Just wear the same thing every day. It's a handy solution, but not very New York of me. For a certain swath of the city's population-let's call them the competitive dressers-the opposite rule applies. The guiding principle? Never be seen in the same outfit twice. And that makes New York a hot town for consignment. We're not just the world capital of fashion; we're the capital of used clothes.

I recently visited the home of Martha Guarino, a retail executive in her 50s who just moved into a swanky Upper East Side high-rise. She chose the apartment, in part, because it has four closets: "Now I can manage my clothes."

She had three tall stacks of used dresses, tops and shoes waiting for Erinn Einhauser, one of six "luxury managers" assigned to the New York office of the RealReal, an online consignment site with more than two million customers. The RealReal sources used designer duds from across the nation. More than half its merchandise-20,000 pieces a month-comes from the closets of NYC fashionistas.

Ms. Einhauser, dressed in strappy Manolos and a tulle skirt, sorted through the piles of Helmut Lang, Prada and Yves Saint Laurent, inspecting them for wear. She rejected several pieces that weren't on the RealReal's list of approved designers. "We're not taking Ralph Lauren," she said. "That's a no. And Marc by Marc we're not doing any more."

"Poor Marc Jacobs, " said Ms. Guarino.

Ms. Guarino, who was wearing her "dog-walking outfit" (quilted Prada jacket, Stuart Weitzman thigh-high boots), was getting rid of nearly 50 garments-about 5% of her wardrobe. The clothes still fit, but no longer felt quite right. "Right now, everything I like is black," she said.

Ms. Einhauser accepted 42 items, which she stuffed into an oversize bag and left with the doorman for pickup. When they sell online, her client will earn a 60% commission-about $2,000. Ms. Guarino says she earns about $8,000 a year selling her discards on the RealReal. Of course, she spends twice that much shopping on the site: "I'm a good customer!"

But she's not the biggest. Some of the RealReal's New York consignors spend half a million dollars on new clothes every year and routinely earn six figures selling last season's items online, says Ms. Einhauser. They have closets the size of apartments, and might purge 150 garments in a single visit. "Clients go through brand stages," said Ms. Einhauser. "One was loving Miu Miu, but now she's buying YSL."

The consignors are hedge fund managers, stay-at-home moms, fashion editors and entrepreneurs. Ms. Einhauser said she doesn't envy her clients' lavish lifestyles. "Good for them for being successful," she said. "Or marrying a man who is successful."

Our next stop: My apartment. I have a closet the size of a closet, and there's not much in it. Did I have anything the RealReal would accept for consignment? "I'm sure we'll find something," said Ms. Einhauser.

She was wrong-but very sweet about it. She flipped past my paint-spattered pleather jacket and canvas dog tote without comment. "We don't do Coach," she said, inspecting my nicest bag. "Unfortunately, it's one of those mass-market brands, and there's almost too much of it."

The hunt continued. "Lands' End is a nice brand," she said kindly, sorting through my dresses. "Wal-Mart's a good thing." She considered my store label hoodies from Target: "Mossimo we don't do."

It was the end of the line. "I feel bad," said Ms. Einhauser. "But if you start buying on the RealReal, then you can re-consign!"

I might have fared better at Second Time Around, a consignment chain that's opened 10 stores in Manhattan in the last five years. Like the RealReal, it specializes in high-end designer fashion, but also accepts items from the likes of J.Crew, Zara and French Connection, paying a 40% commission.

The inventory varies by store, based on what the locals bring from their closets, says        District Manager Ambria Mische. The smartest consignors divvy their clothes across several shops to suit neighborhood tastes.

The store at 75th and Lexington, for example, is packed with Chanel, Celine and Prada. It attracts bankers' wives and socialites, along with nannies and maids who stop by with their employers' cast-offs. Many consignors turn right around and spend their earnings on more clothes. On her last visit, Ms. Mische assisted a nanny who spent $600 on a Jimmy Choo wallet and a Gucci tote bag to send to her family in Malaysia.

The SoHo and NoLIta stores boast an "edgy, cool" inventory-think Helmut Lang and Phillip Lim-while the Murray Hill crowd brings in the Milly and Marc Jacobs. "It's more middle of the road, Connecticut," says Ms. Mische. An Upper West Side store stocks Theory, J.Crew and Ralph Lauren.

Showing me around the Chelsea store, Ms. Mische picked out some finds: a $1,200 Herve Leger bandage dress selling for $320; $700 Gucci studded sandals selling for $160. The clothes run small. "Two is the most common size coming in and going out in New York," she said. "We are the smallest!"

And the most competitive. New York is flooded with socialites who can't be Instagrammed twice in the same gown, and production assistants who earn $30k a year but need to dress like their bosses. There's no better town for the consignment business, says Ms. Mische.

Over coffee, she expanded on her theories. It's not just a matter of out-dressing the competition, she says. New York is all about what's next. Finance folks are looking for the next deal, real-estate moguls for the next site. "It's about constant movement," she said. "And consignment is the clothing part of the equation."

She pointed out her Dolce & Gabbana print mini. "This is a $900 skirt. It's a big piece. Everyone's going to see me in it. I'll make my money back and buy something else. That's the way the city works."

"It sounds fun and stressful at the same time," I offered.

She nodded cheerfully and replied without hesitation: "There wouldn't be any money in it if there wasn't stress!"

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