News & Observer | newsobserver.com | Used stuff sells in tough times

Published: May 03, 2008 12:30 AM
Modified: May 03, 2008 09:38 AM

Used stuff sells in tough times

Secondhand stores watch sales jump as many customers' budgets shrink

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SECONDHAND, BUT THERE ARE DIFFERENCES

There are about 25,000 consignment, thrift and resale shops in the United States, but knowing the difference between the three can be key.

CONSIGNMENT SHOPS: These shops help people sell their items and take a percentage of the sale price. Until an item sells, the seller retains ownership of it.

THRIFT SHOPS: These shops sell used goods. Typically the items are given to the store as a charitable donation.

RESALE SHOPS: These stores operate in a similar fashion to consignment shops, but they pay you up front for the goods you bring in. When the store sells an item, the profit belongs exclusively to the store.

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A downturn in the economy is bad for consumers, but it has helped merchants who sell used stuff.

Proprietors of consignment, thrift and resale shops enjoy big sales as consumers tighten their spending and search for sources of extra income.

"We really do well when times are bad, because people try to trim corners," said Suzanne Wells, who owns CD Warehouse in Fuquay-Varina with her husband, Stuart.

"A lot of people don't even want to sell what they're selling," she said, "but they need gas and they need groceries."

The 18-month-old CD Warehouse store, which buys and sells used CDs and DVDs, started offering store credit instead of cash.

"We'd go out of business," Wells said. "A lot of people are coming in with these huge bags."

Like CD Warehouse, many businesses that sell used goods are seeing a double increase, said the National Association of Resale and Thrift Shops' executive director, Adele Meyer.

That demand comes from customers looking to unload unwanted items for cash and those shopping for cheaper used goods.

At ARound Again Consignments in Raleigh, customers wanting to sell things need an appointment. The store is booked into June, owner Rick King said.

"It says to me that people are looking for money," he said. "Typically, we see this kind of thing in September and October as we approach the year-end."

Still, King was hesitant to celebrate the uptick in business. His shop has been open for 17 years, and during some previous economic slowdowns, there was a slowdown in sales.

In 2001, "it slowed down some even in the resale industry because people were gun-shy," he said. "I expect that while we're doing well now, we may see some of that."

Already, some shops have seen a downturn.

Sandra Horton closed her Cary consignment shop, Genevieve's Closet, about a month ago. In the year or so that the store was open, sales were never enough for Horton to cover costs, and in the end, she was paying half of the $1,600 monthly rent out of her own pocket.

"We were having $25 days, $15 days," she said. "I just could not afford the rent."

Hang tough to thrive

Store owners might be tempted to cut back on spending during times of economic crisis, but that's exactly what they shouldn't do, said Meyer of the Resale and Thrift Shops Association.

"A recession is an opportunity for this industry," she said. "But like anything else in business, it depends on how people approach it.

"We can help consumers during bad economic times, but you have to let them know."

Getting the word out has been the toughest challenge for mother and daughter Lina and Marcia Lee, who opened a home-furnishings consignment store, Home Again in Raleigh, about a year and a half ago.

Business was slightly up in April, Lina Lee said. She didn't know whether to attribute that to the economy, the nice spring weather or the fact that word is getting out about their store.

"My thinking is that people get up in the mornings and say, 'Today I have to go buy groceries,' " she said. "They don't get up in the morning and say, 'Today I have to go buy three or four antiques.' These are not things that people have to have."

Recession opportunity

If the economy continues to slump, consumers could make a definitive shift toward stores such as Home Again and used items, Meyer said.

"I remember the recession of the early '80s," she said. "I had just purchased a building to move my store into so that I didn't have to pay rent anymore. I purchased the building, and then I applied for a loan to redo the building. Within six weeks, I didn't need the loan. I had the money to redo the building on my own."

That kind of boom is hitting at least some area consignment and thrift shops already.

Maria Lowe was shopping Friday at Raleigh's ReTails Thrift Shop, which sells donated items to benefit $20 Fix, a program that helps people get their pets spayed and neutered.

Lowe said she has been shopping at consignment and thrift stores for a decade, because she likes the low prices and she feels reusing items is helpful to the environment. But she said she has noticed a change lately.

"There's a Goodwill [store] off of Six Forks Road," she said. "There's BMWs and Mercedes outside now. It's affecting this whole economy and trickling down."

More shoppers also have flocked to My Girlfriend's Closet in Apex, where sales have doubled this year. Owner Lois Cozart expanded her consignment shop for women's clothing in September.

Shop through the drop

But Cozart offered a less scientific reason for her success.

"I think women are really going to shop no matter what," she said. "They will find a way to buy something new, because it's an emotional thing. It has nothing to do with the economy."

Still, Cozart is hedging her bets, offering parties in which she teaches women how to dress properly for their body types and goodies such as in-store refreshments. "You should give people as much incentive as you can," she said. "Sometimes it could be the weather, you know?"

sue.stock@newsobserver.com or (919) 829-4649
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