The RealReal CEO Rati Sahi Levesque: Resale, Robots, and the New Luxury Consumer

Christine Anderson, Global Head of Corporate Affairs, Blackstone: Hello and welcome to Inside Blackstone, where we bring together data and insights from across our companies to offer you a fuller picture of what's happening in the real economy right now. I'm Christine Anderson, Global Head of Corporate Affairs, and here's the lineup. First, in the Monday Morning Meeting, I have Martin Brand, who oversees our flagship private equity funds to answer questions that we get from investors about software and AI. Next, the Economic Weather Report with Winfield Sickles. And then my feature interview with The RealReal CEO, Rati Levesque, on what consumer behavior and luxury spending are telling us about the economy. And finally, David Levine, Global Co-Head of Real Estate, joins us in The Debrief to talk about what those e-commerce trends mean for the future of retail and real estate.  
 
Christine Anderson: Martin, great to have you with us.  
 
Martin Brand, Head of Capital Partners, Blackstone: Christine, thanks for having me.  
 
Christine Anderson: Rumor has it you're just back from Oktoberfest. How was it?  
 
Martin Brand: Yes, it was a lot of fun, and I was donning my lederhosen, so… 
 
Christine Anderson: Really?  
 
Martin Brand: Yes.  
 
Christine Anderson: I'm gonna have to see a photo of that.  
 
Martin Brand: Oh my God.  
 
Christine Anderson: I can only imagine, Martin. All right, so you oversee a lot of our tech investing. So you get a lot of questions about software. What are you seeing? 
 
Martin Brand: It's really interesting because investors are questioning software because of SaaS apocalypse. At the same time, what we believe is there’s great future for many software companies. There'll be agentic use of software because agents just like humans need software. Software will split into winners and losers. Some of the old moats no longer work. It used to be that we thought code would be a great moat, it no longer is.  
 
Christine Anderson: So software companies having two types of users in the future: the humans and the AI agents.  
 
Martin Brand: Yes, and what matters a lot is that the CEO focuses on this. We are focused on that with our portfolio companies, and we have to build for what the AI can do in a few years because the progress is rapid. And if you build software with agent users as first-class users, the future is bright for software.  
 
Christine Anderson: So, some of these companies may end up actually with more users, right? As companies expand the agents that they have.  
 
Martin Brand: Yes, it’s actually interesting. Jensen Huang had a great quote, he said, these agents will need an awful lot of tools and it's a great time to be a software company. Now that won't be for every software company, but many of them that really make that transition to agents as first-class users will be very successful.  
 
Christine Anderson: What's going to separate the winners from the losers?  
 
Martin Brand: I think you need to have the management team willing to take some risks. Oftentimes, not being too focused on the old business model. You know, most software companies, SaaS companies, they price per user, per seat, per month. Obviously, an agentic user is not going to sit in the seat. So suddenly you have outcome-based pricing. Being willing to innovate and we do this with our companies in our portfolio.  
 
Christine Anderson: Fascinating.Thank you so much, Martin. I appreciate you being here.  
 
Martin Brand: Thank you.  
 
Christine Anderson: And now over to Winfield Sickles and the Economic Weather Report.  
 
Winfield Sickles, Co-Head of Global Private Wealth Investment Strategy, Blackstone: Thanks, Christine. It's Tuesday, October 6 and despite another wild few days in global bond markets, the economic data last week reinforced the resilience of the US economy, supported by strong investment and consumer activity, stable inflation, and signs of a balanced labor market. Second-quarter US GDP was revised higher driven by consumer and business spending with third-quarter GDP estimates tracking close to a well-above-trend 4%. And business investment rose at a nearly double-digit annual rate quarter-over-quarter, powered by record capital expenditures. Consumer momentum also continues to build, this is this flywheel we've talked about, with robust growth in household spending accelerating to the strongest in more than a year. Turning now to Friday's jobs number, it was below expectations, but when you couple it with dovish Fed speak, it actually prompted markets to sharply scale back expectations for an October Fed rate hike. The probability is now just 20% versus 70% at the beginning of last week. And then meanwhile, AI investment continues to ramp. Chipmaker AMD acquired physical AI startup, World Labs, for approximately $8 billion, and that was only less than three years after its founding. Results from Micron, another chipmaker, told a similar story. Third-quarter revenue up five times year-over-year, and management saying this is unbelievable that they quote, have no visibility into when memory chip supply will catch up with surging demand. As noted, the biggest news of the last week and the last month, for sure, has been the dramatic increase in the cost of capital. The 10-year US Treasury yield broke through 5.3% last week and touched its highest level in nearly a quarter of a century.¹ Similarly, across the pond, France's 10-year government bond yield top 5% for the first time since 2002. The usual suspect, inflation, is less of a factor, with inflation expectations stable. And, in fact, last week's US PCE data, this is the Fed's preferred measure, showed core inflation continuing to moderate, running at a 2% annualized pace over the last three months. The primary factor remains the same. It's strong economic growth catalyzed by the enormous investment required to build AI infrastructure, it's crowding out capital, and then couple that with ongoing concerns about government deficits around the world. The good news is that AI investment and productivity acceleration will continue. This higher cost of capital actually creates opportunities and we will adjust accordingly to factor it into our investment decisions. And while geopolitical conflicts remain a challenge, they will not last forever. And now over to Christine's conversation with The RealReal CEO, Rati Levesque.
 
Rati Sahi Levesque, President and CEO, The RealReal: I love your, your necklace looks great too.  
 
Christine Anderson: Oh, thank you, this was my RealReal purchase.  
 
Rati Sahi Levesque: It looks great on you.  
 
Christine Anderson: Thank you! Alright, well, welcome to Inside Blackstone, Rati, we're so happy you're here. 
 
Rati Sahi Levesque: Yes, so happy to be here. Thanks for having me. 
 
Christine Anderson: I thought, for those less familiar, I'd give just a little touch of your background. You grew up in San Francisco, living above the restaurant that, I believe, your parents owned.  
 
Rati Sahi Levesque: Yes.  
 
Christine Anderson: You go into finance right after college. And after that, you decide that you're going to start a boutique. And you're doing that for a little bit. And then you become employee number one at The RealReal. Now today, more than 15 years later, as CEO, you lead the world's largest luxury resale marketplace. The number I keep thinking about is that 80% of Gen Z and Millennial consumers are now checking the resale market before they're buying a luxury good. 
 
Rati Sahi Levesque: When we first started now, 16 years ago, it was kind of this, there was a stigma associated with resale. And I watched it happen where people didn't want to tell others that they were shopping resale, and now we have celebrities and influencers coming to us and asking us if we would dress them for an event or… 
 
Christine Anderson: Lena Dunham, I saw that. Marisa Tomei. 
 
Rati Sahi Levesque: Lena Dunham’s been an awesome supporter. Marisa Tomei, we dressed her for the Olympics. And then now, when the press asks them what they're wearing, they don't say Givenchy, they say The RealReal.  
 
Christine Anderson: So, I wanna talk a little bit about the growth of The RealReal and your valuation. You are somewhere between an eBay and a Sotheby's.  
 
Rati Sahi Levesque: We always say we're taking the top off of eBay and the bottom off of Sotheby's and Christie's when we think about the value offering for the consigner. I'd say that, you know, one of the things is we've now, gosh, four quarters plus in double-digit growth, over 20% growth. Our EBITDA margins are expanding, we're doubling again this year.  
 
Christine Anderson: Congratulations.  
 
Rati Sahi Levesque: And I think that people are now starting to understand that resale is here to stay.  
 
Christine Anderson: Take me back. So you are working in your own store that you've launched, but kind of hard to scale that. And Julie Wainwright comes to you, and you become employee number one. Why did you have conviction in this concept?  
 
Rati Sahi Levesque: Yeah, so when I had my store, I had it in Russian Hill in San Francisco. I don’t know how well you know San Francisco.  
 
Christine Anderson: Little bit.  
 
Rati Sahi Levesque: And a few people would walk in every day. It was hard.The rent was going up, you know, the margins are low, like it's just a hard business. And so, what I did to kind of keep the rent going and the business going is I would look for vintage items and mark those up and sell those. And what I saw the customer do was go directly to the vintage rack versus buying the new pieces because they saw the value there. And so, when I met Julie, we hit it off right away, and we worked out of her house. And so, I had, you know, a few thousand customers that... 
 
Christine Anderson: You had the products in her garage?  
 
Rati Sahi Levesque: In her, yes, in her living room. So, like a true startup story.  
 
Christine Anderson: Right.  
 
Rati Sahi Levesque: And we were, you processing items one by one. I was driving around in my car. Calling my friends, asking if they had any vintage luxury pieces. We really wanted to go after well-made items and go after luxury, and that was really important to us to take possession, to build the trust with the consumer, be transparent with them, and you know to this day that moat runs really deep. And now we process, you now, what six, seven hundred thousand plus units, unique units, a month.  
 
Christine Anderson: So, what was it like building credibility back in those early days?  
 
Rati Sahi Levesque: We spent a lot of time on market research of what the customer wanted. Obviously, value was really important, but what we found, too, is that it became the smart thing to do, and the uniqueness. So, I think the thing that people don't quite understand is most items you can't find anywhere else. They're unique to The RealReal. Even when they were produced the first time, they were limited runs…
 
Christine Anderson: Editions.
 
Rati Sahi Levesque: And editions. And so really what happened was a shift in behavior. Like the number one thing people say to me now is you've changed the way I've shopped. 
 
Christine Anderson: Fundraising.  
 
Rati Sahi Levesque: Yeah.  
 
Christine Anderson: You must have spent a lot of time going around and trying to get investors to believe in this concept as well. What were those early conversations like? 
 
Rati Sahi Levesque: Early days people didn't quite understand that this concept or why women would buy something to consign it. Aren't they just gonna have it forever? Or, you know, why is someone gonna buy dirty clothes? And I think that they were kind of overlooking that this is not a trend and this is how women shop. Our bodies change, we change.  
 
Christine Anderson: Taste change.  
 
Rati Sahi Levesque: Our tastes change. And trends change and all the things, most customers now are checking The RealReal for the resale price before they're even buying it in the primary market. And I think that's what's misunderstood is that this is not a trend. Resale is not trend, but it's really become cemented in the fashion, you know, ecosystem and here to stay. We really are seeing people change the way they shop.  
 
Christine Anderson: So, let's fast forward to today. Not everyone is aware of the secondary market. What is it and what should investors understand about it?  
 
Rati Sahi Levesque: A few things. I think it's the smart way to shop. We're getting something at a value, that's great.  
 
Christine Anderson: Love a bargain.  
 
Rati Sahi Levesque: Love a bargain, who doesn't? Number two, the authenticity of the item. You wanna look different. And I think even, you know, that younger demographic, they really do wanna be authentic to who they are, and they don't wanna look like everyone else.  
 
Christine Anderson: What are other trends you're seeing with younger consumers now?  
 
Rati Sahi Levesque: Yeah, so, our fastest growing segments are actually Gen Z, mostly, and Millennials, especially the Gen Z demographic. And I think this is second nature to them. They’re checking the resale price before they're buying it in the primary market. But think about what they value. They value community. They value authenticity. They value trust. I really believe, like not a lot of retailers are set up to capitalize on that because they don't have some of those things in their... 
 
Christine Anderson: Those features. 
 
Rati Sahi Levesque: ...brand, right.  
 
Christine Anderson: What's some of the data in there on the consumer that you're seeing?  
 
Rati Sahi Levesque: Vintage is one, big one. Since 2020, the demand for vintage went up something like 430%.  
 
Christine Anderson: Really? Are they going up in value from their original purchase price?  
 
Rati Sahi Levesque: A lot of the times, yes. 
 
Christine Anderson: Wow. So, you almost start to think about these items as investment pieces.  
 
Rati Sahi Levesque: Yes, for sure. And that's how we think about the future is we are launching something called My Closet, which is a fashion portfolio. So, think about it like the stock market and it'll say you have so much value in your closet. Here's what it's worth right now. Here's what to trade up. Here's what to hold on to. Here’s what to sell. But just really empowering you with all that data. Having so many members, 45 million members, now selling almost 50 million items, we have so much data. And so, to be able to give that data back to the consumer so they can make better decisions in the primary market is what they're asking for.  
 
Christine Anderson: A lot of our listeners, they have a closet, but they may also have a jewelry box or a watch drawer full of valuable things they've never sold. You estimate that roughly $200 billion of luxury sits in US closets. What would you be recommending they think about doing?  
 
Rati Sahi Levesque: Well, call up a luxury manager, or bring it into a store. We have 20 locations right now. But I think just getting yourself educated… 
 
Christine Anderson: On what these items are worth. 
 
Rati Sahi Levesque: You know, checking the site. I think people are always surprised at what is, what their items are worth. There could be a certain style that people are looking for right now, and people are always surprised even with the unbranded piece.  
 
Christine Anderson: So how do you think about what to buy, sell, hold?  
 
Rati Sahi Levesque: So, that's where the luxury resale report really comes in and all of our data comes in. So we've got a sales team out in the field. They're always looking for the right items, but how they are compensated is based on what the merchants are seeing and how the consumer behavior has shifted. But something like Phoebe Philo, really great right now.  
 
Christine Anderson: Having a moment.  
 
Rati Sahi Levesque: Having a moment. And so, our sales team knows that those are the items that are holding their value. So we don’t have to wait months to bring in Phoebe Philo.
 
Christine Anderson: Are you spotting things like that? Those trends before they're out really in the public?  
 
Rati Sahi Levesque: Yes, 100%. But really what's interesting is how much discovery is having on the site, like the Kallmeyers or The Colleen Allens or even The Row, you know, kind of…
 
Christine Anderson: Anything The Row.
 
Rati Sahi Levesque: …now become much bigger. But now we're coming into the top 10, and the playing field has leveled in that way.  
 
Christine Anderson: It's amazing. I mean, what kind of impact do you think that's having on the fashion industry?  
 
Rati Sahi Levesque: What we’re seeing in the data is that the consumer is taking the money that they're earning with us, and they're actually going back to the primary market. Retailers are starting to see this too. And so, it's not cannibalizing retail, which I think people don't quite understand, but it's giving the consumer another reason to shop the primary market, because hey, I can resell it afterwards. And what they're doing is just, they're just becoming smarter and doing their homework before they're making that purchase.  
 
Christine Anderson: Give me the definition of this circular economy.  
 
Rati Sahi Levesque: Yeah, so we call them 'RealReal-ers' and that's when they're engaging on both sides of the marketplace. They're buying and consigning. Almost half of our consigners were buyers first, and we call that the flywheel. So, they are engaging on both sides, and this is what I mean by changing the way people shop. We have a great relationship with many of the brands in the primary market. Their consumer is now checking our price before they're buying in the primary market. 
 
Christine Anderson: It's kind of great to see that, right? That you can both co-exist if there's going to be this circular economy?  
 
Rati Sahi Levesque: 100%. 100%.
 
Christine Anderson: So, what's the most expensive item that you've ever sourced?  
 
Rati Sahi Levesque: Oh, we just sold, we've had a few, we just sold a $2.5 million F.P. Journe watch. It was so fun and everyone that got to be a part of it… 
 
Christine Anderson: You ring a bell.  
 
Rati Sahi Levesque: …everyone that got to be a part of it, to like the watchmaker authenticating it,
 
Christine Anderson: Right.
 
Rati Sahi Levesque: …you know, to the person sourcing it. But I think the coolest thing was the consigner experience. She actually didn't know the value of the watch either.  
 
Christine Anderson: Right, not until it's authenticated.  
 
Rati Sahi Levesque: Yeah, and it was a family member's. And so, she was able to kind of take that money as well and reinvest it in however she needed it.  
 
Christine Anderson: That's incredible.  
 
Rati Sahi Levesque: Yeah.  
 
Christine Anderson: Let's take a little pivot and talk about e-commerce, right. We have major investments in logistics or warehouses. And so, it's something we think a lot about. And you obviously manage a ton of inventory. You have a slightly different model, though, in that, unlike most retailers, each one of your items comes in individually. Comes in individually, and it leaves individually. That has to be a massive challenge for you from a warehousing standpoint.  
 
Rati Sahi Levesque: Really early on, just having a single-SKU business could be quite complicated. And you can see how it could be not as cost efficient. And so, what we did really early on is we invested a lot of dollars into, it was called ML before, but tech and the AI into processing single-SKU items. Hundreds of thousands we’ll see every single month, single-SKU. But really, we have to authenticate it. We’ve patented technology with the University of Arizona, which is the biggest gemological lab, to authenticate and measure the diamonds of a stone, for example, and making our gemologists more productive. The way we have open a watch and authenticate it because many times there is aftermarket parts in the watch. So, you have to open it up. You have to take possession. You have to open it up to know if it's authentic. You have to feel the handbag. You have to test the metal on the handbag. 
 
Christine Anderson: Right. 
 
Rati Sahi Levesque: To know if it's real or not. And you'd be surprised to know... 
 
Christine Anderson: Complicated process.  
 
Rati Sahi Levesque: ...how good the fakes can be out there. And we've confiscated many, hundreds of thousands of fakes as well.  
 
Christine Anderson: What do you do with those?  
 
Rati Sahi Levesque: When we first started, we got a lot more fakes than we do now. I think people understand that we confiscate them now. Sometimes we'll even call the local authorities.  
 
Christine Anderson: From a warehousing strategy how much is being in the right place even more important in this era of two-hour delivery and rapid fire? 
 
Rati Sahi Levesque: Yeah, so logistics matter for sure. Whether it’s last-mile and how we're thinking about getting the items to the consumer even faster and more efficiently is really important and because we have single-SKU items, we can't have depth in multiple warehouses so you're adding a different level, another level of complexity that we worked through and it really just required us to be even more disciplined in how we're thinking about our transportation strategy, but even in our last-mile strategy. But I was just there testing it out and it’s pretty phenomenal how many less touches is required and how quickly the item can now go into one of these kind of systems or tech and then go straight to auto-pack and then out to the consumer. So now the technician, they're still involved but what they're looking at is really QC’ing the process at this point.  
 
Christine Anderson: So compare that to a couple of years ago, how many touches on a product from maybe two years ago to today.  
 
Rati Sahi Levesque: Yeah, a couple of years ago, you're getting someone who would go in, take the item after it's been photographed, put it into a bin to put a process and put away. Someone else coming to pick it for the order once it's being ordered and then packing it up.  
 
Christine Anderson: Not to mention photographing it, all of this, right?  
 
Rati Sahi Levesque: Yes, and that all happens in the inbound process, but then after that, they're picking, they're packing. They're putting the item on the UPS truck or on the truck and so all the things happening in between.  
 
Christine Anderson: That's a lot of touches. And now today, much, much less.  
 
Rati Sahi Levesque: Today it goes directly into a tech system or a big box, which we'll have to get you to come see because it's crazy.  
 
Christine Anderson: I'd love that.  
 
Rati Sahi Levesque: And then once the order comes through, the robot pulls the order, puts it through the auto-packer, and then onto the truck. 
 
Christine Anderson: It's incredible.  
 
Rati Sahi Levesque: Yeah.  
 
Christine Anderson: That, I mean, that's a real change in your whole business.  
 
Rati Sahi Levesque: That's right. I think we have now 50, 60 robots that are going out and pick-packing and shipping. It's pretty cool what these systems can do right now. 
 
Christine Anderson: So let's talk about agent-based shopping or agentic shopping. How do you think the agentic experience kind of impacts that part of the business? How do you maintain the thing that's special?  
 
Rati Sahi Levesque: Special.Yeah, I think this is why retail is so fascinating. We're all busy, and to be able to get exactly what we want but also make the discoverability more fun. People are spending 42 hours a year on our app, scrolling.  
 
Christine Anderson: 42 hours a year? 
 
Rati Sahi Levesque: 42 hours a year. We just launched conversational search. We partnered with Google around a lot of our experiences on the website, on the e-commerce website. And we're finding that we're able to get the right item to the right customer even faster. Or with agentic commerce, you know, what is shopping going to look like in the next 10 to 15 years? We actually spend a lot of time talking about that. It's agent-based shopping, so now you'll be able to come to the site and it's really like, what do you want? What are you looking for? I'm going to a wedding in the Hamptons in, you know, October. What should I wear? And we serve them up based on everything that you've bought and liked and obsessed over in the past. We, and based on like what is trending right now. We can serve you up exactly what you want. And we're starting to test that, and we're seeing like awesome conversion results based on that.   
 
Christine Anderson: What is your data telling you about consumer sentiment generally right now?  
 
Rati Sahi Levesque: Our consumer data is showing us that the consumer is actually quite resilient. They're seeing both value in buying and consigning on the site. They're actually spending more on buying jewelry and watches and handbags. They're just much more educated than they have been in the past.  
 
Christine Anderson: So your data really points to a healthy consumer.  
 
Rati Sahi Levesque: That’s right.  
 
Christine Anderson: Which is what we're seeing in our data as well... 
 
Rati Sahi Levesque: That’s right. 
 
Christine Anderson: ...which is really interesting. Despite some of the choppiness of the last year, as it seems like the consumer is really at the high end of that market is really still spending.  
 
Rati Sahi Levesque: What we're also seeing is that they wanna monetize their closet, as well. So, we're seen both sides play out.  
 
Christine Anderson: Are your younger generation customers, are they buying and selling faster?  
 
Rati Sahi Levesque: They, it is second nature to them, for sure. They are being much more thoughtful about where they're putting their dollar. They understand, kind of, the state of the world right now and want to be a part of that change. We're able to use the data, empower the consumer, sell the items so quickly where the consigner sees that it's real money that they're earning. Because that first paycheck that they get of $4,000 or $7,000, that's real money.
 
Christine Anderson: Right.
 
Rati Sahi Levesque: And now they're completely thinking about things differently, and the ROI is there. And that's why we sell the $2.5 million watch. That's why we sell the half-a-million-dollar Birkin. 
 
Christine Anderson: And now as you think about implementing AI and really optimizing that to improve your business, huge investment.  
 
Rati Sahi Levesque: Yes.  
 
Christine Anderson: But yet, are you starting to see the return on investment from that?  
 
Rati Sahi Levesque: 100%. Yes, those were big investments for us. And we're starting to see dollars come out of the unit economics of processing time. So it's really exciting to see like the double-digit growth. We have pretty big financial goals and visions ahead of us getting to the Rule of 40, double-digit growth, continuing to expand our margin. And the path is very clear, so the executive team and I are very excited about our strategy.  
 
Christine Anderson: I wanted to ask you a little bit about you becoming CEO. You came in at a moment where the company was not necessarily thriving, and you've really built this company out into something that is worth noting and a substantial part of the industry today. So, what was it like in those early days as CEO?  
 
Rati Sahi Levesque: Yeah, it's been almost two years now. I think, I reflect on this sometimes. You know, really early on, my parents owned a restaurant. They were entrepreneurs. So, since I was seven years old, I was working in the restaurant with them. They had a small business in San Francisco. And I observed, I spent a lot of time observing, and I think I'm surprised in reflecting now how much that experience got me ready…
 
Christine Anderson: Shaped you.  
 
Rati Sahi Levesque: …for where I am now. Because at the end of the day, a restaurant experience, yes, there's so much systems and processes and you're dealing with low-margin food, stressful environments. 
 
Christine Anderson: Seems like such a hard business to run.  
 
Rati Sahi Levesque: Hot food. I saw my dad and the way he worked so hard from morning to night, you know, and to provide for us as an immigrant. And you know, how he, kind of, handled employee issues and things. And I saw my mom fight for what she believed in with the customer sometimes.  
 
Christine Anderson: Right.  
 
Rati Sahi Levesque: And how much empathy and love and community is being built into this system as well that is highly efficient and disciplined but also kind of authentic.  
 
Christine Anderson: Any takeaways from watching them that you still leverage or use in your experience as CEO?  
 
Rati Sahi Levesque: I think some of it is courage. Taking big risks, you know, for them, that it was a big risk.
 
Christine Anderson: Right.  
 
Rati Sahi Levesque: To put all their money into a restaurant. And it was pretty cool to watch, and I think as CEO, as any leader, you know, you have to make sure you're taking those risks, those calculated risks, as well.  
 
Christine Anderson: Okay, well, it has been so fun having you on.  
 
Rati Sahi Levesque: Yes. 
 
Christine Anderson: Really nice to get to know you and to hear the story of The RealReal, so, thank you so much.  
 
Rati Sahi Levesque: Thank you for having me. Thank you.  
 
Christine Anderson: It’s so fun to do this. 
 
Rati Sahi Levesque: So fun! Yes! 
 
Christine Anderson: I'm joined today by David Levine. David was recently named the Global Co-Head of Real Estate. He's been at the firm 17 years, almost as long as I have.  And he's a key leader behind one of our most successful investment themes, which is warehouses or what we call logistics assets. David, I'm so happy you're here.
 
David Levine, Global Co-Head of Real Estate, Blackstone: Ready to talk about fashion.
 
Christine Anderson: Exactly, I would love that. When I invited you on though, I had no idea that you were actually a big RealReal customer.
 
David Levine: My wife is, absolutely. I'd say after Amazon boxes and diapers for our kids, I'd say The RealReal is probably the thing that shows up the most.
 
Christine Anderson: Okay, you saw the e-commerce rise back in 2010, and then you leaned into the major physical infrastructure build-out that was required to sort of fuel that. What were you seeing back then?
 
David Levine: Yeah, e-commerce penetration was 4 or 5%, and total global e-commerce sales were about $500 billion. Today, those are 24% penetration and about $7 trillion. So, we saw that shift coming, and the best way to play that, that move from retail being on shelves to being in warehouses, was to effectively buy distribution centers or logistics.
 
Christine Anderson: Take me back, how did you spot that?
 
David Levine: Look, we're the largest owner of real estate around the world. And as a result, you can spot these trends early. We spotted this in the US, we then saw it moving to Canada, into Europe, into Asia.
 
Christine Anderson: Through our leasing data?
 
David Levine: Through leasing data, through, honestly, we were a big owner of traditional retail pre-GFC. And when we saw this little company called Amazon start taking share, we thought about how to play that.
 
Christine Anderson: So interesting. And now we're living in a world where we just want that thing faster. I know I do. How has this shift to expedited shipping really changed the e-commerce landscape?
 
David Levine: Yeah, this is last-mile. I mean, this is exactly.
 
Christine Anderson: So, wait, what is last-mile?
 
David Levine: Yeah, last-mile, so go back in time. 10 years ago, me, you, everyone else, we were all fine to wait several days for that package to arrive. And as a result, you could have your warehouse be on the outskirts of town because no one needed that jacket to come in two hours. But today, we all want that jacket to come.
 
Christine Anderson: Want that jacket in two hours.
 
David Levine: We need it to come in two hours. And the only way to make that happen is you need to move your warehouse much closer to the population. It's hard to find that warehouse space. I'm sure that's a challenge that…
 
Christine Anderson: Yeah, close to cities.
 
David Levine: …Rati's facing. That's why we want to own those warehouses, cause there's this massive supply-demand imbalance, but that is the last-mile trend.
 
Christine Anderson: So,Rati talked a lot about the consumer behavior. Curious if that syncs with what we're seeing across our portfolio.
 
David Levine: Yeah, the consumer is strong. I mean, unemployment is 4.2%, which is low. We own a bunch of high-street retail down in SoHo. Foot traffic in SoHo is over 20% higher than what it was pre-COVID. We own a lot of hotels around the country. On the high-end luxury segment, in particular, those revenues are up 9% this year, so the consumer's strong.
 
Christine Anderson: Okay, I have to ask you about one trend that I keep reading about, agentic shopping, right? Is this something that's coming soon, the idea that agents are gonna do your shopping for you?
 
David Levine: Yeah, it's here. It's here today. It's still, I'd say, pretty nascent. But if you look at Amazon, Amazon has Alexa for shopping.
Christine Anderson: Right.
 
David Levine: And if you're looking at the data, it would tell you that, on average, you're spending 20% more if you’re using Alexa, and you're 50% more likely to buy. So, as you think about what that means for other e-retailers and rolling out agentic e-commerce, it’s definitely coming.
 
Christine Anderson: So definitely still some shifts to come in the space.
 
David Levine: Yes.
 
Christine Anderson: Robotics, she talked a little bit about how robotics are transforming warehouses. Is this something we're seeing as well?
 
David Levine: Yeah, what’s funny is a few years ago, everyone focused on clear height, or basically a fancy word for just like how high the ceilings were, because you wanted to jam as much as you could in. Today, you're talking about power, because everyone's talking about robotics and automation. The only way to make that happen in her warehouses, as well is you need a certain amount of power, that's also becoming really rare.
 
Christine Anderson: Wow, so shifting landscape there as well.
 
David Levine: Everywhere.
 
Christine Anderson: Okay, well, thank you so much for joining us. I really appreciate it. Hope you'll come back.
 
David Levine: I will.
 
Christine Anderson: And thank you for joining us on this week's episode of Inside Blackstone. Follow us wherever you get your podcasts.
 
Notes:
1. Bloomberg as of 10/5/2026.
 
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