The future of fashion: How The RealReal and Revolve are reinventing retail

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Shares of Revolve (RVLV) were soaring on Tuesday. As the quiet period following the IPO has just ended, all but one analyst initiated a buy rating on the stock. After going public last month, the trend and millennial-focused e-tailer closed 89% higher on its first day as a public company.

Revolve’s success reflects a broader shift in women’s clothing, especially as e-commerce already accounts for 28% of all apparel sales.

“It doesn't surprise me that [Revolve] is doing so well. I think that so many interesting companies are cropping up right now with a really, really tight read on consumer desires and demands. Often, it's the consumer that's starting the company. Retail had become so stale. It became so expected, and I think that there's some really, really interesting entrepreneurs that are diving in,” Sali Christeson, founder and CEO of women’s workwear company Argent, said last week during an interview for Breakouts, Yahoo Finance’s live interview series.

Christeson first launched Argent three years ago as a fashion-forward, functional alternative to the often-drab options women have for workwear. Having raised $6.1 million to date, the San Francisco-based brand positions itself as accessible luxury, with bright-colored suits pricing at roughly $600.

The successful exits of digital-first retailers like Revolve and high-end consignment store The RealReal (REAL) bode well for entrepreneurs like Christeson as they try plot their profitable futures.

Just as Revolve has been buoyed by social and influencer culture, Argent has relied heavily on celebrity clientele to elevate the brand. Hillary Clinton, Kamala Harris, Gloria Steinem, Awkwafina, and Amy Poehler are among the many influential women who have sported the suits.

Female-founded fashion

U.S.-based fashion and beauty startups like Argent raised a total of $2.1 billion in funding in 2018. While it makes up less than 2% of the total $131 billion venture capital pie, it’s clear investors are on the hunt for innovative e-commerce players — and many of these companies were started by women.

While female founders merely raised 2.2% of all venture capital dollars last year, retail has more gender parity than nearly every other industry. Last year, female-founded retail businesses raised about half of the amount of VC funding given to male founders ($254.6 million compared to $439.9 million).

“I think for us, we've been overwhelmed by the response that we've gotten. Women’s workwear is a $34.9 billion industry in the U.S. alone. Prior to us launching Argent, women rated the experience of shopping for work clothes a 3.9 out of 10. We’re hoping to change that,” Christeson said.

NEW YORK, NEW YORK - MAY 20: Fashion on display during the 71st Annual Parsons Benefit honoring Pharrell, Everlane, StitchFix & The RealReal on May 20, 2019 in New York City. (Photo by Astrid Stawiarz/Getty Images for Parsons)
NEW YORK, NEW YORK - MAY 20: Fashion on display during the 71st Annual Parsons Benefit honoring Pharrell, Everlane, StitchFix & The RealReal on May 20, 2019 in New York City. (Photo by Astrid Stawiarz/Getty Images for Parsons)

When asked about her future exit strategy, Christeson said it would be foolish to be tunnel-visioned in her approach.

“I think advice for aspiring entrepreneurs is as you take on money, something to think about is just ensuring that you maximize the number of exit options that you have open to yourself. Because the more money that you take on, the smaller, you know, that window becomes. So generally speaking, if you take on tens of millions, your only option is to IPO.”

The future for Argent is wide-open, Christeson noted. “We're still in the sweet spot of being able to fall into being acquired or going public. My preference is to IPO, but we'll see. I think we'll continue to see direct-to-consumer brands just knock it out of the park. I do think that there are some companies that will continue to try and make acquisitions. Like, Walmart’s various acquisitions, including ELOQUII [a women’s plus-size brand]. I think that we'll have options and we're open,” she said.

Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm. She hosts Breakouts, a monthly interview series for Yahoo Finance featuring up-close and intimate conversations with today’s most innovative business leaders.

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