How Do I Start A Consignment Shop?
By PAULETTE THOMAS
Question: I have wanted my own business for more than 15 years. I want a shop with consigned clothing and my own jewelry designs, a fun place. I know what my husband is going to say, but would like your opinion.-- Debi More, Mesa, Ariz.

Debi: We'd all love to hear your husband's view on this topic, right after he has thoroughly researched the industry, pawed through collections at a few rocking resale stores, and unearthed a pair of Kate Spade leopard-print shoes for me.

Consignment and resale stores are enterprises that can thrive. As you contemplate this industry, I suggest you take a peek at a lively Web site, www.tgtbt.com. It's the product of Kate Holmes, a doyenne of resale. The domain name refers to "too good to be threw," which gives you a sense of her worldview. Aside from her trenchant* advice, there are chat groups, and even a murder mystery she wrote that takes place, if I understand it correctly, at a thrift shop. * advice, there are chat groups, and even a murder mystery she wrote that takes place, if I understand it correctly, at a thrift shop. She speaks regularly to the industry.

Ms. Holmes, who ran her own resale store for a couple decades, is passionate about topics such as eye-catching seasonal displays, the importance of stuffing handbags with tissue, and whether to limit the number of articles you'll accept from consigners (in a word: no). The site offers a number of helpful links, advice about useful software to track consigners, and smart cash-flow tips.

Kate Holmes opened her first consignment shop in 1975 with an investment of $900. Because consignment shops do not own the merchandise they sell, Holmes avoided having to buy inventory--usually the single largest expense of a new retail business.

"You cannot do that today," said Holmes, from her home in Sarasota, Fla. Not only have costs gone up, but the burgeoning consignment business has become more professional. 

"It is no longer a garage-sale thing," she said. "There is more at stake."

A successful consignment shop may not require inventory investment, but it does require an investment in time, effort and knowledge, Holmes said.

In the Capital Region, the number of consignment shops has gone from two or three in the late 1980s to two dozen today, as people gradually have accepted them as a viable alternative to department stores for high-quality clothing.

Liz Carafano, who owns Liz's Closet, a consignment shop in Guilderland, said the business must overcome what is a stigma attached to second-hand clothing. "People buy second-hand houses and second-hand cars without thinking about it," said Carafano, who opened her store nearly 10 years ago. "Once they get past that, they are hooked. It's just getting them in there."

Women's clothing still forms the bulk of most of the business, although some shops, like Something Olde, Something New in Slingerlands, has expanded into furniture, housewares and gifts since it opened in September 1997.

Consignment shops take second-hand items from people and display them for an agreed-upon period, usually 60 days. Thrift stores they are not--if the shop owner doesn't think the merchandise will sell, he or she won't accept it from the consignor.

Women's clothing is priced according to quality and condition, generally about one-third of the retail price for a new item. If it sells, the shop and the consignor split the proceeds, usually 50-50 or 60-40. If it does not sell in 60 days, the shop returns the item to the owner or donates it to a local charity, depending on the contract with the consignor.

Start-up costs still are relatively low, said the owners of several local consignment shops. But resale shopkeeping is not as simple as the outside observer might think.

"It is surprising how labor-intensive it is," said Mikki Brassard, who this year opened Clotheshorse, a woman's resale boutique in Rotterdam. Brassard, who has no employees, sometimes gets help from her husband in keeping track of the thousands of consigned items in her tiny, 900-square-foot store at 1310 Curry Road.

Brassard and other consignment shop owners said there is a great demand for high-quality clothing at discount prices. At the same time, there is a large supply of unwanted but little-worn clothing sitting in people's homes. "Women don't need a specific reason to buy clothes," Brassard said. "They'll buy a new outfit every year." Another untapped market for consigned clothing are the women who worked in the professional world but now are working at home or raising families. "Now they have closets full of clothes," she said.

Brassard, who managed a bank branch and was controller of a local insurance agency before opening her own business, said she relied heavily on the advice of Louise Mills. Mills, who ran the Just A Second consignment shop in the Scotia-Glenville area for 15 years before closing it in January to pursue other interests, said she encourages people to open shops but emphasizes that it is not easy.

"It is absolutely more work than people realize," Mills said. She also points out that part of the job is to educate the consumer about the concept of the store.

When she began, "people didn't even know what consignment meant at first," Mills said. "But gradually people were impressed that they could buy high quality for very little money."

Brassard, a relative newcomer to the business, believes consignment "is just coming into its own." She attributed it to people's desire for a bargain, and the increased awareness in general in recycling and reuse.

According to the National Association of Resale & Thrift Shops, some 15,000 thrift shops and consignment shops operate in the country, and the number is growing. The trade association, based in St. Clair Shores, Mich., has seen its membership grow 40 percent since 1994.

Don’t toss aside an idea for improving your marketing when it doesn’t fit your business or customer base. Kate Holmes, editor and publisher of Too Good to be Threw, a newsletter for the consignment and retail business, remembers giving a man advice on how to attract more customers into his clothing shop located in a wealthy tourist town. Holmes suggested that the man send out some of his staffers to pass out brochures to the crowds of tourists on his street. His response? A burst of laughter.

The man said the idea was the stupidest one he had ever heard. "My staff is too sophisticated for that," he said. Then he added for good measure, "And my shop is much too elegant."

The shop owner was no doubt right about his staff and his shop, but he was wrong about the idea. And, indeed, a year later he had the good manners to call Holmes to tell her that he had begun passing out elegantly engraved invitations for wine tastings, gallery openings and other chic soirees— an adaptation of her original idea.

Be like that shop owner who (after he finished laughing) reconsidered Holmes’ suggestion and recognized that while the original marketing idea didn’t fit, its underlying premise did. His challenge: Figuring out a suitable adaptation that fit his unique situation. He rose to the challenge.

You can too.

Adapted from Kate Holmes, Leadership Strategies   from: Alliance for Manufacturing & Technology