ShareThisWhile economists and bargain-hunters focus on the state of national chain stores this holiday season, another retail segment -- part of what is often referred to as the "second-hand economy" -- is experiencing its own ups and downs.
Industry analysts note that some sellers of used goods, such as thrift and consignment stores, are enjoying a surge in popularity as customers look for ways to save money or raise their own cash.
But those who sell upscale items, like antiques and collectibles, must settle for fewer overall sales and less foot traffic as the economy affects consumers across all income levels.
Carol Dean estimates business is up 20 percent from a year ago at Resale Therapy, her consignment shop in downtown Palm Springs, Calif., that sells what she calls "previously enjoyed" or "gently used" clothing, shoes and accessories.
Prices can be 20 to 40 percent lower than comparable new items sold in a boutique. Dean splits the proceeds with clients and the original owner can arrange to have goods given to charities if they don't sell within 90 days.
Joni Skiles, owner of Brookleberry's Antiques in downtown Riverside, Calif., says that although the economy is suffering, business is still good at her store.
"We were swamped," Dean said of her post-Thanksgiving business on Black Friday. "Shoes have been a really big seller for us."
Many customers are taking in their boutique-quality clothing to earn some extra income and save for other purchases.
"I've got several regulars who've said they're cleaning out their closets and bringing their stuff down here."
Adele Meyer, executive director of the National Association of Resale and Thrift Shops, a Michigan-based trade group, called resale stores "one of the few recession-proof segments of retailing."
"They are doing very well right now," Meyer said.
She pointed to results of an association survey, released in late November, in which 74.2 percent of 1,000 respondents said their holiday sales have increased compared with last year, with an average increase of about 35 percent. Another study by the trade group found that 66.7 percent of members experienced an increase in holiday sales last year compared with the prior year.
But overall, the last few years have been tough.
According to the Los Angeles-based business intelligence firm IBISWorld Inc., economic changes during the past half-decade have brought mixed impacts for the used-goods industry, a broad segment that ranges from thrift and consignment stores to sellers of antiques and rare books.
George Van Horn, a senior analyst with IBISWorld, said used goods stores will generate a projected $10.4 billion in sales in 2008. But for the past five years, revenues are expected to have declined at an average annual rate of 1.6 percent, while those for the broader U.S. retail industry have been flat.
Van Horn said many resale stores nationwide closed down when the economy was thriving, in part because of relatively low demand but also because they weren't able to obtain large amounts of good inventory. Timing issues are still a challenge for those who sell used items, since most don't have the real-time technology, available to larger retailers, that matches merchandise to what's most in demand.
Consignment sellers generally face less overhead risk since they don't pay their merchandise suppliers until the items have been sold, Van Horn said. Non-consignment businesses must be more nimble about balancing inventory with demand because they've paid suppliers up front for their merchandise.
Sam Huang, owner of Sell it Now eBay Consignment Store in Rancho Cucamonga, Calif., has seen increased activity compared with last year from customers wanting to sell their used items. But overall sales have been flat, as auction buyers have kept selling prices down.
Huang said he has seen several similar Inland business fall by the wayside over the past two years, partly because the business model is labor intensive. In exchange for a 30 percent commission on items, plus whatever fees are charged by eBay, he and his employees do all the work involved in putting items up for auction, including writing descriptive copy, taking photos and shipping items to buyers.
He must keep volume high, since the average sale price on items his customers bring him these days -- such as old phones, computers and other electronics -- is between $50 and $60. He must also keep his sellers' expectations tied to market realities.
"I had someone who came in and they wanted to sell a collector Barbie doll, and they wanted to get $200 for it," Huang recalled. "We looked on eBay and it turned out the same doll had been selling at maybe $60 to $100. The customer decided they didn't want to sell and walked out."
Reach Lou Hirsh at lhirsh(at)PE.com. For more stories visit scrippsnews.com
Must credit The Press-Enterprise of Riverside, Calif.
