Thrifty nifty: Demand drives development of resale stores

Phil Castle, The Business Times

Pete First enjoys a good vantage point from which to observe trends in the resale market.

Pete First
Pete First

First works as director of franchise development for Winmark Corp., a Minneapolis-based corporation with a total of 900 resale stores in operation across the country. And trends in the resale market, he says, have been positive.

In the aftermath of a recession and slow economic recovery, consumers have become by necessity more thrifty. What’s more, the increased interest in recycling extends to used clothing and other merchandise. That makes shopping at resale stores more popular, he says. “It’s cool now.”

Winmark has opened 50 to 60 new franchise locations a year over the past five years, including a store that just opened in Grand Junction. First says he’d like to open another store here by the end of next year.

The Grand Valley constitutes a good opportunity, First says, because stores  draw not only on the base of customers living here, but also customers from a large geographic area who travel here specifically to shop. “The retail draw is so large,” he says. “It’s a great destination.”

Winmark operates four resale brands: Music Go Round, Plato’s Closet, Play It Again Sports and Once Upon a Child. Music Go Round buys and sells used musical instruments and equipment, while Plato’s Closet buys and sells used apparel, shoes and accessories for customers in their teens and 20s. Play It Again Sports buys and sells used sports equipment. Once Upon a Child buys and sells used clothing, toys and equipment for children up to 12 years old.

Debra Eichhorst sorts clothing at the new Once Upon a Child resale store in Grand Junction. The store is open to buy children’s apparel, toys and equipment. Eichhorst expects to purchase enough inventory to open the store for sales in November. Once Upon a Child is one of four resale brands franchised by Winmark Corp.

Debra and Steve Eichhorst opened a Once Upon a Child franchise in Grand Junction and are now in the processing of purchasing inventory. They expect to open the store to both purchases and sales in November.

First says he’d like to open another franchise in the Grand Valley, either a Plato’s Closet or Play it Again Sports Location. Music Go Round locations require a more urban setting with a larger population, he says.

Steve Eichhorst says he night be interested in a Plato’s Closet franchise, but has to wait to determine how his Once Upon a Child franchise fares.

First says Winmark franchises are different from other resale stores in that they’re not consignment operations. Rather, they pay cash on the spot for the merchandise they purchase.

Winmark provides franchisees with proprietary computer software that helps them price merchandise for purchase and sale, First says.

The business model offers a value proposition both for people who want to sell used wares and those who want to buy used wares at 30 percent to 50 percent the cost of new merchandise, he says.

The business model also has proved profitable for Winmark franchises, which generate on average $723,000 to $858,000 a year, First says.

The operations require a total investment of about $250,000 for franchising and inventory with about 30 percent  of that available in cash or liquid assets, First says. Winmark offers business plans, forms and other assistance to help franchisees obtain financing.

First also looks for potential franchisees who are excited about their stores and becoming involved in their local communities.

Winmark has enjoyed growth in each of the last 10 years through ups and downs in the economy, First says.

But the trends that have emerged in the resale market in the aftermath of a recession and slow recovery making the timing good for additional locations, he says. “Our brands are at the right place at the right time.”