A bedraggled Union Square in San Francisco has lost one more flagship tenant: The RealReal.
After laying off more than 200 workers, the San Francisco-based luxury resale firm is closing its first hometown brick-and-mortar store at 253 Post Street, the San Francisco Business Times reported.
The company will shutter the 8,000-square-foot store as it lays off 230 employees, or 7 percent of its workforce, to cut operating costs, according to a regulatory filing. The closure and cuts will take place through March.
The RealReal said it was closing six stores or consignment offices, while reducing offices in San Francisco and New York.
Included in the closures are its 12,000-square-foot flagship in Chicago’s Magnificent Mile retail district, which opened in late 2020; two stores in Atlanta and Austin; and luxury consignment offices in Miami and Washington, D.C.
The RealReal will also reduce office space in San Francisco, according to the filing, reported by SFGate. The company’s corporate headquarters are in Telegraph Hill.
“The company will continue to evaluate its real estate presence as it deems appropriate to create efficiencies and to address trends in the marketplace and macroeconomic factors,” The RealReal said in the filing.
The used apparel firm expects to incur some charges related to exiting and subleasing or leaving some facilities, and between about $1.7 million and $2.2 million in costs related to employee terminations.
The RealReal opened its two-story Union Square store in March 2020, the first in its headquarters town of San Francisco, and the fourth to open in the U.S.
It still has two Bay Area stores in Palo Alto’s Stanford Shopping Center and Larkspur’s Marin Country Mart.
Declining foot traffic at Union Square has resulted in retailers pulling out from the city’s expensive downtown. Many tentpole stores in the area have closed in recent years, including Crate & Barrel, CB2, Disney, Gap, Abercrombie & Fitch, Uniqlo, DSW, H&M, Marshall’s and Nordstrom Rack. In December, The Container Store signaled it will move out of its 30,000-square-foot location.
The consignment company launched in 2011, originally serving as an online-only platform to buy and sell luxury goods. By paying authenticators to inspect handbags, jewelry and designer clothing, the firm aimed to stand out as a reputable oasis in an internet economy of knockoffs and fast-fashion dupes, according to SFGate.
The RealReal raised more than $300 million in 10 rounds before its 2019 IPO, but the firm is still unprofitable. Authentication costs reportedly run high, critics have cast aspersions on its ability to verify authentic wares and executives refused to cut costs.
Departures of major retail chains from San Francisco’s luxury shopping district have drawn attention from City Hall.
The slump in business around Union Square led Mayor London Breed and local businesses to promote zoning reform to revitalize the upscale shopping district. The plan calls for lifting zoning restrictions to draw more tenants, while adding housing and offices on upper floors.
— Dana Bartholomew
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