SECOND TIME AROUND: Resale/ Consignment/ Thrift Stores Thriving in Recession
CoStar Tenant Research Shows at Least 500 New Consignment / Resale / Thrift Stores Have Opened at Retail Properties Across the Country Since the Start of this Recession
By Sasha M Pardy
August 19, 2009
There's nothing quite like a recession to spur growth in the consignment/resale/thrift store category. In fact, 2009 marked the first year that the National Retail Federation recognized resale shops as a bonafide category in its industry statistics and surveys. In NRF's most recent survey, which polled consumers on their back-to-school shopping plans, 18.2% of people said they plan to shop in resale and thrift stores this season.
Not only does the resale category fulfill consumers' need to stretch their dollars during this downturn, consignment shops in particular pay consumers for the quality goods they deliver to these stores, often affecting a "trade." Additionally, with the nation's emphasis on sustainable living, store owners in this category promote that consumers shopping at their stores are benefitting the environment by putting into practice the "reduce, reuse, recycle" guideline for sustainable living.
Adele Meyer, executive director of the National Association of Resale & Thrift Shops (NARTS) said in an August 3rd press release that the resale shops are thriving and the size of the industry has grown significantly during this downturn. Specifically, NARTS said the opening rate of new resale shops has increased to 7% annually - previously the growth rate was about 5%. Not only has the category gained new shoppers across all income categories in search of a "good deal," but its inventory has also benefiting from a larger pool of suppliers (people selling their goods to these shops instead of just disposing of them or giving them to friends as they did before), which has improved the selection and brands resale shops carry.
NARTS recently surveyed their membership to determine how second quarter 2009 sales figures compared to those of the same time period last year (when resale was just starting to take off early in the recession) -- 64.1% said their sales had increased; of those, the average increase was a solid 31%; which is partially the result of 77.9% of respondents reporting an increase in new customers. Additionally, the survey revealed that 62.3% are seeing a higher volume of inventory brought to them and 28.2% are receiving higher quality items.
Historically, as members of the deep discount retail category, shops in the consignment/resale/thrift category have not exactly been welcomed with open arms by retail landlords. However, the shear number of leases completed with tenants in this category since this recession started speaks volumes to a shift in this paradigm. According to CoStar Tenant, at least 500 businesses leasing space at retail properties across the country have opened new consignment, resale or thrift stores (ranging from lower-end stores that accept goods in nearly any condition to shops selling only used designer clothing and accessories) since the beginning of 2008, backfilling about 3.5 million square feet of vacant retail space. While the majority of these stores lease smaller spaces, several are candidates to backfill vacant junior anchor or anchor spaces -- of these 500 new retail leases CoStar recorded, 120 (24%) have taken spaces between 10,000 to 75,000 square feet.
Kelli Trujillo recently represented a Children's Orchard franchisee (a major player in the children's resale industry) in their lease of a 2,251-square-foot space at Highland Crossing -- a grocery-anchored community center in the Sacramento suburb of Roseville, CA. According to CoStar Property, within a one mile radius of Highland Crossing, the average household income is nearly $88,000 -- higher than one might expect to make sense for a resale store.
Trujillo said that the landlords of the retail centers Children's Orchard was interested in were all happy to consider the children's consignment franchisee as a future tenant. In addition, while one might think consignment shops would be focused on very low rental rates and short lease terms, Trujillo disputed that notion. "Contrary to what most might think, this user has a standard rental rate and could pay a fair amount for the space and also signs on for a typical retailer's lease term," said Trujillo. "This transaction went smoothly," she added. According to CoStar Property, the asking lease rate at Highland Crossing is $21.00 per square foot, triple net.
Trujillo added that like any other typical franchise business, Children's Orchard has a solid corporate structure in place. "We were referred by someone in the corporate office of Children's Orchard to find space for this franchisee. Corporate was very hands on and drove the sites with us, provided opinions and approval." Trujillo said the company accepts sites for consideration from real estate agents, as long as they have a franchisee candidate in that area.
Women's apparel/accessories and children's clothing/goods have long been the mainstay of the consignment /resale/thrift category; but within this segment, NARTS said stores that cater to plus-size women, men, and teens are growing at a quick pace. Following, we will cover the concepts, expansion pace and site criteria for some of the major chains in these resale segments, as well as others.


Watch STA Video

Follow Me On Twitter