Retail stores that sell secondhand merchandise are seeing an uptick of growth, perhaps because of economic uncertainties due to the fallout from COVID-19. The popularity of secondhand stores coincides with a quarantined populace that has had extra time to sort through and purge items in their own closets. There is also the allure of earning money at these secondhand stores in exchange for offering up gently-used pieces, such as furniture, purses, jewelry or clothing.
Gen-X and Gen-Y consumers, whom are paradoxically both luxury-brand enthusiasts, as well as budget-conscious spendthrifts, are especially interested in finding good deals, even if it means purchasing used products. The younger generation is also focused on sustainability, which is on trend with repurposing used clothing and goods rather than disposing of the items. With the economic and social upheaval occurring in 2020, a nostalgic longing for the fashions and products from the past also factor into the growing resale scene. Look for secondhand brands Once Upon A Child, Plato’s Closet, Play it Again Sports, Music Go Round, Style Encore, Clothes Mentor and Uptown Cheapskate to all expand their brick-and-mortar presence in the coming years.
Winmark Corporation owns the resale franchise brands Once Upon A Child, Plato’s Closet, Play it Again Sports, Music Go Round and Style Encore, which are expected to grow their retail footprints, especially in new markets throughout the U.S. All of the Winmark brands seek space that averages 3,500 s.f. in power strip centers or suburban centers near regional shopping malls.
Growth for Winmark’s Once Upon A Child brand, which sells used goods for children and babies, is expected to be between 10 and 15 new units per year for the next two years, with growth focused on lower-middle to upper-middle income markets in rural and suburban cities with a young family demographic. New territories that will be sought after include Moreno Valley, Palm Desert and Whittier, Calif., Aurora and Boulder, Colo., Salem and Eugene, Ore., Fort Lauderdale and Vero Beach, Fla., Houston, Fort Worth and Wichita Falls, Texas.
The Plato’s Closet brand, with clothing geared to the teen market, hopes to see between six and 10 new units per year until late 2021, in middle to upper-middle income markets in areas near junior high schools, high schools and colleges. Expansion is focused on cities in coastal states, such as Atlanta, Miami and Annapolis, Md., in addition to locations in Massachusetts, California and Arizona.
The remaining brands in the Winmark family, Play it Again Sports, Music Go Round and Style Encore, each expect to see five to eight new units per year over the next two to three years. These brands are looking for space within middle to upper-middle income markets. Both Play it Again Sports, which sells used active wear equipment, and Music Go Round, which sells used musical instruments, search for space in family-centric neighborhoods in suburban mid-sized markets. Style Encore, geared toward women in their late 20’s, is focusing its growth on more slightly upscale markets such as Palo Alto, Calif., Miami, Kansas City, Mo., Charlotte, N.C., Scottsdale and Phoenix, Ariz.
NTY Franchise Company, which oversees four different resale brands (Clothes Mentor, Children’s Orchard, Device Pitstop and NTY Clothing Exchange) is focusing most of its expansion energy onto its women’s upscale secondhand clothing brand, Clothes Mentor, which expects to see approximately eight to 10 new units per year over the next five years.
With a strong presence in the Northeast and the Southeast, Clothes Mentor is opening more units in the West, especially in mid-sized cities within California, Nevada, Arizona, Texas and Colorado. The Clothes Mentor brand looks for space that averages 3,000 s.f. in power centers with other discount-oriented co-tenants, such as 99 Cents Only Stores. Its demographic is brand-conscious women in their mid-30s to late 60s.
Uptown Cheapskate, managed by BaseCamp Franchising, expects to open eight to 10 new units per year over the next three years. The brand specializes in reselling upscale clothing and accessories geared toward teens and young adults in more rural and mid-sized markets. The brand looks for inline space that averages 4,000 s.f. in retail strip centers near major malls or universities with high-traffic big-box anchor tenants, such as Target. Upcoming growth will target Nevada, Oklahoma, Florida, Louisiana, West Virginia, Michigan and Kansas.
New Resale Retail Concepts
Although the rise of popularity in online resale platforms, such as Poshmark and ThredUp, has helped spur the secondhand trend, other digitally-native resale brands, such as Rebag and The RealReal, understand that consumers prefer to see, touch and feel these products before making a purchase. This is especially true for higher-priced used luxury brand merchandise. Even well-known retail brands, including REI and Levi’s, are introducing their own versions of resale stores. In October, IKEA opened its first 800-s.f. test pilot version of a secondhand merchandise store in Eskilstuna, Sweden, and plans to eventually open additional similar stores throughout the world, possibly even in the U.S., over the next three years.
Rebag, with six brick-and-mortar stores, expects to open approximately eight to 10 new stores per year until late 2022 or early 2023. Rebag is currently eyeing spaces that average 3,500 s.f. in luxury malls and design district neighborhoods with strong foot traffic and premium brand co-tenants, such as Nordstrom and Swarovski, in urban and suburban markets with heavy tourism. The Rebag demographic customer is the female professional between ages of 25 and 50 whom aspires to own luxury goods. The brand selects its new expansion regions based on its online popularity in particular markets, and Rebag is eyeing further growth in California, New York, Texas and potentially Chicago.
Rebag is focused on retail expansion after receiving $15M in Series D funding in May from investors such as the Novator Partners LLP and General Catalyst Partners LLC, and after hiring a VP of Retail last year. Rebag, unlike consignment stores, allows a customer to sell used merchandise directly in its stores without an appointment, a process that takes less than an hour. Having gotten its start as a resale brand primarily focused on purses, as of this year Rebag is also reselling luxury accessories such as fine jewelry, watches, scarves, hats and even home accessories. Each of its stores features a Hermes Birkin Wall that displays an array of the status-symbol purses.
The RealReal, a popular online consignment brand, is continuing to broaden its brick-and-mortar footprint. After opening two stores this year, giving the brand five stores since it began opening units in 2017, The RealReal is using the $30M raised from its IPO last year to continue to expand throughout the country, and hopes to open up to five to 10 new units per year over the next two years. Sites in high-end shopping districts with heavy foot traffic, urban street-front retail centers and open-air suburban centers with luxury brand co-tenants, such as Fendi and Chanel, will be targeted.
The RealReal prefers open spaces in cities where it already has a consignment office presence. Its current offices where clients can make appointments to get their items appraised are in Dallas, Miami, New York City, San Francisco and Washington, D.C. New areas scouted include Boston, Orlando, Fla., Palm Springs and Huntington Beach, Calif. Expect to see a new consignment office and a new retail unit in Newport Beach, Calif., and a potential new unit in Scottsdale, Ariz., as The RealReal recently announced that it plans to open a distribution center in nearby Phoenix. The RealReal will also be opening a mini-concept store before the end of the year in Palo Alto, Calif. The RealReal most recently opened its first Midwest unit in October, also its largest unit with two stories at 12,000 s.f. within a mixed-use building, near Cartier, Gucci and Louis Vuitton stores. The RealReal stores include assessment experts, alteration and tailoring services, access to online ordering and cafés.
REI opened two standalone pop-up shops in October that will solely sell its used gear. The stores, which will be called “REI Garage Sale” stores, will be testing sites for REI’s gently-used apparel/gear retail concept. This was as a result of REI’s online used-gear business, which debuted two years ago and whose sales increased by almost 100% compared to last year. One REI Garage Sale store will be in the former 93,783-s.f. Pier 1 Imports unit in Manhattan Beach, Calif., in the same neighborhood power center as its regular REI store. It will remain open until late January 2021. The other will be in a 28,885-s.f. former Five Below store in Conshohocken, Pa., located directly next door to a regular REI store in a regional center that also houses a Marshalls, and it will remain open until Dec. 31 of this year. Both stores allow shoppers to turn in gently-used REI gear for store credit.
Levi’s is also dipping into the resale industry and expects by 2021 to have an in-store version of its “Levi’s Secondhand” online buyback concept that was unveiled in October. Levi’s is still determining whether the brick-and-mortar Levi’s Secondhand concept will be separate storefronts or a shop-in-shop set up. For now, Levi’s is accepting in-store drop-offs of its gently-used Levi’s jeans, which will then be sold on its website in return for gift cards.
