The RealReal smells a fake Birkin
Hey Snackers,
Taco Bell is the latest fast-food chain to enter the fried chicken sandwich wars, but it's thinking outside the bun. Behold: a chicken sandwich taco.
Bitcoin had a rough few days, tumbling from its record highs. Meanwhile, tech stocks rebounded yesterday after Fed Chairman Jerome Powell eased concerns on rising interest rates. Speaking of...
New haircut?... Markets look a little different recently. The tech-stock heavy Nasdaq index is down nearly 5% for the week: strange, since Big Tech has been on a tear over the past year. Also: interest rates are rising from historic pandemic lows. The 10-year Treasury yield (basically: the interest rate the US government pays to borrow money) has risen to its highest level since February 2020. The average interest on a 30-year-fixed-rate mortgage also rose.
What's going on?... Falling tech stocks and rising interest rates are likely related to one thing: inflation fears. Investors are scared that the purchasing power of the dollar will decrease and prices will rise — or, that a $4 coffee today could cost $6 in a year. To help the economy, the Fed has added trillions to the money supply through stimulus packages and bond-buying sprees. And we could get another $1.9T stimulus package soon. That increases cash in circulation, which could boost inflation risk.
Inflation is the Godzilla of finance... But we might not have to fear it just yet. Yesterday morning, Jerome Powell said the Fed is committed to its current policy of keeping interest rates low. He’s not immediately concerned about inflation levels, which have stayed relatively low for a decade — he is concerned about getting the economy back on its feet. JP's announcement helped calm inflation worries, so tech shares mostly rebounded for the day.
Say it twice so it sounds cool... The RealReal is the online luxury consignment company that can smell a knockoff Birkin from a mile away. It verifies your fancy second-hand items, prices them, and sells them. But TRR isn't helping you pawn off those $900 Louboutins for free — it takes a big cut of the sale. Despite that...
Now TRR is doubling down... on brick-and-mortar stores. The exodus from cities has slashed rent prices, making physical locations more profit-friendly. Last quarter, TRR launched an "innovative neighborhood store format" in Palo Alto, Newport Beach, and Brooklyn. The luxurious locations look like WeWorks merged with airline lounges. TRR is aiming to launch 10 by this summer. But why is an unprofitable, online-focused company splurging on fancy stores?
Wear the trend, don’t let the trend wear you... With the rise of delivery-everything, it's easy to get sucked into pure ecommerce. But TRR knows its customers — and doesn’t think 100% online is their style. TRR is realizing that pairing digital with physical is better: Buyers who shop in stores and online spend 3X more compared to online-only shoppers. And consignors who step into stores bring in 1.5X more product value.
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