Secondhand success

4/6/2012 - The Boston Business Journal

Bill Soncini is president and CEO of the Boston-based upscale clothing reseller, Second Time Around. He's also a customer.

Soncini recently received a $424 check for unloading some designer shirts, coats and blazers from Barney's that had been languishing in his closet.

"It was like found money," says Soncini.

That sentiment is shared by a growing number of budget-conscious consumers, hoping to find extra cash hanging up in their closets or stuffed in their overflowing sweater drawers. Boston-area consignment shops have bucked the downward trend that has plagued many large retail brands in this economy, as many clothing resellers are actually expanding. The popularity of clothing resellers has also been boosted by the green movement, as more and more people look to reuse and recycle.

Second Time Around, which launched in 1973, is one such brand. Today, the chain has 29 stores, up from 11 in 2009, and is rapidly expanding, having opened seven new stores in the past 12 months, Soncini said.

Soncini, who joined the chain last year, says his 200-person company is on the cusp of opening four stores in the coming months.

Customers interested in selling their used threads for cash - stylish clothing is preferred - simply bring them in to a store and when they sell, Second Time Around will mail out a check every 60 days if it's over $100. If it's under that amount, customers get a store credit.

So how much are those secondhand duds worth? Pricing can be tricky. At Second Time Around, associates are trained on how to price fairly. Usually, items are tagged at one third of their retail value, according to Jeanne Nicholson, director of marketing.

Still, because selling clothes is so personal, some customers attempt to haggle or get upset when they find out their favorite 70's polyester shirt is only worth $5. At Second Time Around's flagship store on Newbury Street, roughly 20 percent of customers take issue with the pricing of some items, said Nicholson.

"We are doing very, very well," said Soncini, who attributes Second Time Around's success to an enhanced store experience, as well as the fact that consumers are more savvy about saving money.

Second Time Around's expansion has also been driven by Generation Equity, a private equity firm and majority stakeholder that invested an undisclosed sum in the chain last year.

Nationally, the resale industry generates $13 billion in revenue annually, and is currently growing at a yearly rate of 7 percent, according to the Association of Resale Professionals, in St. Clair Shores, Mich.

"It's a sign of the times. For our generation, there's been an unprecedented slowdown in the economy so that even if you've had a job and gotten through the recession relatively well, your income probably is not up significantly," said Jon Hurst, president of the Retailers Association of Massachusetts. "You're looking at anything to help yourself out, whether it's selling used goods or buying them."

Executives at Buffalo Exchange, a Tucson, Ariz.-based chain that has opened two locations in Massachusetts in Cambridge and Allston during the past two years, say they've seen the consumer mind-set shift to a more value-conscious way of thinking.

Buffalo Exchange, which sells used and vintage clothing, has 42 locations and more than 750 staffers nationally and is about to open a store in Washington, D.C. The chain, which brought in $72.9 million in revenue last year, caters to people who want instant cash. People bring in their used clothing and a store employee sifts through the clothes, prices them, and offers 30 percent of the total value in cash or 50 percent in store credit.

"The demand to open more locations is constant," said Alyson Hall, Northeast area manager for Buffalo Exchange. "People obviously know us from the West Coast, and now we're expanding in the North and Southern states."

Mike Tesler, a retail expert and strategist with Norwell-based Retail Concepts, says the popularity of clothing resellers has been fueled not only by the sluggish economy, but by the increased popularity of recycling and a need among consumers to feel good about what they're purchasing.

The popularity of clothing resellers has "taken hold ... since 2008," said Tesler. "There's a need to justify and validate purchases."

Still, clothing resellers are not immune to competition from bigger chains. In 2002 Meredith Byam opened her vintage consignment shop, Poor Little Rich Girl in Davis Square in Somerville. Business was so brisk, she opened a second location in 2009, on Hampshire Street in Cambridge. But Byam decided to close her first Davis Square location in 2010, which she says was due in large part to the opening of Buffalo Exchange across the street. She also wanted to spend more time with family.

Despite that, Byam says business is extremely good, with her core group of consigners and customers frequenting her store to score slightly used designer and quality contemporary clothing for cheap prices.

Her customers "are the sort of people who are interested in updating their wardrobe every season ... because the hemlines are an inch longer," said Byam.

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