Five Tips for a Successful Consignment Store

by

Analyst, Software Advice

Resale is one of the more unique industries within retail. Websites such as eBay and Craigslist have helped reshape the image of second-hand goods, and consignment and thrift shops have benefited greatly. Still, navigating around the peculiarities of managing a resale store can be tricky. In this guide, I present five strategies for running an effective resale business.

1. Run Your Store Like a Business

According to Kate Holmes, resale expert and owner of Too Good to Be Threw, one of the most common mistakes of resale business owners is focusing too much on “retail” and not enough on “business.”

“It’s amazing nowadays that shops can afford to treat the business like a hobby,” comments Holmes. “They decorate the store like a home, try to close early and on weekends.”

Cathy Yeomans, owner of the Turns consignment store and president of the Rochester Area Consignment Shops group, has seen a lack of business-sense doom many store owners in their first year. “If you don’t run a resale store like a business, it won’t last,” advises Yeomans.

Many first-time store owners are surprised at how difficult resale is. Some general advice: maintain regular hours; research how to effectively price items to keep consignors, customers and your bookkeeper happy; and market effectively to the community to ensure inventory comes in regularly–and is sold quickly, as well.

2. Align Your Brand with Your Community’s Values

Resale stores act as an extension of the community around it–after all, the inventory of these stores is composed of the community’s discarded goods. Resale store owners must align their store’s image and purpose with the locals they serve.

Holmes says that getting your resale store’s brand ingrained into your community is vital for success: “The more you can get your name into the community, the better.” But aligning your store with the community’s values is equally important. A store in a college community may push an ecological image; a store surrounded by young families may focus on an economical brand.

The goal: “Show that you’re a respected member of the community so you can overcome the stigma that your store is just used merchandise,” advises Holmes.

3. Market According to Your Customer Niche

Focusing your identity and brand is important for marketing, too. Adele Meyer, Executive Director of The Association of Resale Professionals (NARTS), notes that members participate in multiple forms of marketing–from email marketing to social media and Groupon. But it’s important to align marketing and events to the stores’ customer base.

“Holding special events is important, but they have to be catered to your demographic. For example, a store focusing on ladies’ clothing can hold a shopping party or a scarf demonstration,” says Meyer.

The marketing medium to use depends on your store’s customers, too. A store with a younger demographic may want to market more heavily via Twitter, whereas a store focusing on middle-aged women may want to stick to a printed newsletter or a blog. Regardless of the medium, the key is to engage your customers in the way that best resonates with them.

Panache Consignment Facebook Store

Panache, a vintage store in NY uses Facebook to engage with its customers.

4. Collaborate with Fellow Consignors

Because resale stores have their own niche and each store’s inventory is fluid and unique, other local resale stores really aren’t competitors. In fact, a healthy relationship with other store owners can benefit all parties.

“If a customer comes in and I don’t have what they’re looking for, I give them a brochure and tell them ‘these are the other stores in the area,’” says Yeomans.

Resale store owners can also host joint events for the community, such as bus tours. Yeomans notes that it’s all about making resale fun and at the forefront of shoppers’ minds. “If we can keep people shopping consignment, that’s good for all of us,” remarks Yeomans.

Many communities with a large collection of resale stores have launched organizations to provide resources and partnership opportunities; Rochester has RACS, south Texas has STARS, and Atlanta has Atlanta Consignment Shops, to name a few.

In addition to partnering with other resale stores, national groups such as NARTS provide store owners with member forums, industry statistics, chat rooms and helpful guides. Access to these materials can help resale store owners gain the skills needed for success, such as effective pricing. “In other retail businesses, you’re given the price,” says Meyer. “In resale, you have to learn how to price.” Learning from other store owners’ mistakes and successes is pivotal to resale prosperity.

5. Invest in Resale Software

Resale is a labor-intensive operation that requires tight accounting practices and efficiency. Doing so is aided by automating checkout and inventory management with retail software. “Managing the books isn’t going to make you money,” comments Holmes. “You need to invest in finding the right solution.”

SimpleConsign Consignment Software

SimpleConsign provides consignors a Web-portal to check on their items.

The needs of resale store owners require resale software solutions tailored to the industry. Constantly adding and pricing new inventory, analyzing reports on what’s selling (and what isn’t), as well as managing a multitude of suppliers means that general retail software often lacks the necessary functionality. So which solution is best?

“I’m probably asked 10 times a week which solution I recommend. My answer is always that you need to evaluate them all and find the one that works for you,” suggests Holmes.

The features need to match how you’ll run your business. For example, if you want to number your inventory based on a consignor’s ID number, ensure that the system has the functionality to do so.

One of the things that makes resale so special is how unique each store is–every store and its road to success is different. If you’re a resale store owner, what strategies have you found to be the most successful in ensuring your resale business is successful? Please leave any additional tips or advice you may have in the comments section below.

Thumbnail image created by Steve Depolo.

 
  • Linda Perry

    Two comments from someone that has been in the consignment business for 14 years…

    1. Very surprising to hear someone from NARTS recommend Groupon for consignment stores.  If you do your research you’ll quickly discover that Groupon is not a good fit for consignment stores. There have been many horror stories about Groupon from consignment stores. My advice…be very careful before using Groupon and insist that Groupon give you CONSIGNMENT STORE references that you can talk with before you decide. Groupon can be VERY EXPENSIVE for the small business owner so do your homework.

    2. Your first point was to “run your store like a business”. I couldn’t agree more. But then in your forth point you say that “…other local resale stores really aren’t competitors.”  If you believe that then you are NOT running your store like a business.  Understand that I’m NOT saying that you shouldn’t talk with or visit other consignment stores, but what I am saying is that you should NEVER lose sight of the fact they they ARE a competitor!  You are “competing” for the consumers budget, especially if other stores are serving the same niche (women’s clothing, children’s, furniture, etc.)! My advice…do run your store like a business, that includes being a TOUGH competitor. Three consignment stores recently closed in my area. I knew each of the owners and each one never understood that they have to fight for market share.  Again, a consignment store is a BUSINESS, and BUSINESS is tough!

    • http://www.softwareadvice.com/ Michael Koploy

      Thanks for your response, Linda. Adele Meyer mentioned that she has seen instances of members that have been successful using Groupon, Living Social, and other promotional deal companies. Obviously, some businesses have had very bad experiences using Groupon–in all types of retail. Highly recommended that businesses do their homework and ask for feedback from others that have completed a promotion before choosing to participate.

      Also, thanks for adding your own experience on how you’ve been successful for the past 14 years.

    • Corey DeRoo

      Hi Linda! :-) Excellent tips!

      Nice to see so many familiar names here! We did successfully run a Groupon for our consignment stores, and I think the difference is how Groupon is viewed by small businesses.  Of course it was painful to watch so much merchandise head out the door for “free” but we gained more new customers and consignors than I could have ever hoped for.  My recommendation is this: View the Groupon as “advertising dollars” rather than in terms of merchandise and sales. When I place an ad in one of our higher end mags, the cost is approx $900 for a 1/4pg glossy for 2 months.  If we are lucky, we received feedback from approx 10-20 people, making my “cost per contact” about $45-$90 per person.  According to marketing gurus, that’s about an average return.With Groupon, we reached approx 500 people who purchased the Groupon – meaning that they actually wanted to be in our store (for marketing pros, you’ll agree, that’s about as targeted as you can get!) and of course there were those who walked in, bought their money’s worth and left.At one point (and forgive me for not remembering specifics as it’s been a while now) I calculated that with Groupon, our “price-per-contact” was actually only about  $5-$10 per customer which is much lower than with other types of advertising.We’ve received much more in the long run from participating in the Groupon in returning customers who “discovered” us, and in new high-quality consignors who needed a great place to bring their items.  This is the residual effects of Groupon which we are still receiving the benefits more than a year later.I hope that helps to add yet another perspective.  And yes, as mentioned above, please please do your homework and find out which method works best for you and your individual situation.  We are not made of cookies – no cookie cutter methods here! :-)Take care everyone – and can’t wait to see you all at conference – NARTS 2012!

  • Joan E. Lincoln

    Can’t tell you how grateful & thankful I am that you featured the Panache Vintage & Finer Consignmnet Facebook Page in your article…you just made my day!  I am living my dream!

  • Joan E. Lincoln

    “HUG THE CUSTOMER”…if there is a warm body in Panache then we are greeting and engaging in conversation to assist them with their  fashion mission!  We walk away from the inventory check-in process to make sure that our customer service is top notch!    I love it when a client says “Pinch me… Is this really a consignment store?”

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