Conventional wisdom says that during times of economic recession, consumers exhibit more frugal behavior. They change their buying habits--delay big purchases, restrict unneeded purchases and look for ways to reduce spending. As a result, the secondary retail market often sees booms where other retailers are seeing bust.
But local consignment shops, comprising only a small segment of the secondhand market, are learning that hard truths can outweigh conventional wisdom.
The secondary market hypeIn late 2008, publications ran headlines such as “Secondhand stores reap the benefits of recession” (USA Today, Dec. 9, 2008) and “Cash is the new black: The rich discover consignment stores” (Newsweek, Oct. 24, 2008).
Supported by data provided by the trade organization National Association of Resale and Thrift Shops (NARTS), these stories painted a rosy picture of a booming secondary market of secondhand shops, consignment stores and thrift stores.
The most recent survey of NARTS members shows similar results, with almost two-thirds of those surveyed having experienced an average increase in sales of 32 percent in Q1 2009 over Q1 2008. Eighty-three percent of members also experienced an increase in new customers in the same period.
While a trend can certainly be drawn from these numbers, it is difficult to determine whether the growth was confined to specific sectors of the NARTS membership.
Additionally, more than one-third of member stores surveyed either experienced no increase in sales or a decrease. Whatever the survey results, anecdotal evidence from La Jolla and area consignment retailers suggests that the boom depicted in the national media has yet to reach local cash registers.
Village lifeKaren and Sherman Jenkins opened Village Consignment in Del Mar Village in 1991. Consignment was a new and burgeoning industry. Interest in interior design and antiquing was on the rise, and eBay and craigslist did not even exist.
The consignors were locals who were moving, retiring, going through a divorce or merely redecorating their own homes. Furniture, crystal and art found new homes, and Village Consignment split the agreed sale price. Business was, for the most part, good.
In 2006, a second location was opened in the North Cedros Design District in Solana Beach. Unfortunately, by mid-2008, a combination of factors led to the shuttering of the original Del Mar shop and consolidation at the Solana Beach location.
Increasing rent and faltering foot and drive-by traffic, coupled with the broad economic slowdown and the housing crash, simply overwhelmed the already overworked couple.
The recession itself made matters worse. The Jenkinses fought to bring costs under control, even having to resort to layoffs. They hope they won’t have to take more drastic actions to avoid going out of business altogether.
“Things have been going downhill for some time,” said Karen Jenkins, “but in the last two to three months, they seem to be improving--but not improving fast enough.”
Though they declined to give specifics, Village Consignment experienced a decline in sales in 2009 over 2008. Surviving, yes, but not exactly thriving.
Life on the RanchLike Village Consignment, The Country Friends consignment shop in Rancho Santa Fe takes on furniture, china, silver and objets d’art from relocating or downsizing residents. But unlike the Jenkinses’ business, The Country Friends is a nonprofit organization that generates charitable funding to be distributed county-wide.
With the consignment shop as the single largest source of revenue, any decline in sales affects the amount of charitable giving the organization can undertake. While declining to comment on specific figures, sales in 2009 have suffered only a slight decrease since the onset of the recession, thanks in part to a loyal customer base.
Though sales may be relatively steady, it is the significant drop in item donations, a sure sign of tougher economic times, that has Newman concerned.
“We aren’t really feeling the recession (in sales), but it is hard to say how the trend will go,” said Jean Newman, consignor manager. “We are not likely to meet our numbers from last year.”
The upsideEven if business isn’t booming, some consignment retailers are looking for the silver lining. Second Act West is a La Jolla consignment shop specializing in clothing, costume jewelry and curiosities. First opened in 1982, Second Act West moved shop in late 2008 to its new location on Fay Avenue and saw a rise in sales for April--an encouraging sign for owner Patti Alksne, whether the bump comes from cash-strapped bargain hunters or from new advertising.
“Overall, we’re doing fine,” Alksne said, “though not as well as the media seems to think consignment stores are doing.”
And while demand may have slackened, the supply of consignors knocking on the doors has increased dramatically.
“There are a lot of households in transition,” Karen Jenkins said. “We turn away four to five consignors every day. We just don’t have the space.”
Newman and Alksne agree that this is a bright spot for their little corner of the secondary market, as a larger and improved inventory has the potential to lift sales and bring more customers through the doors.
So for as long as the recession continues, it appears that local consignment shops will continue to offer unique, well-cared-for treasures to buyers looking for quality items at reasonable prices.
Consignment shopping etiquette-Insulting the merchandise in an attempt to get a deal is a surefire way to ensure that the item is sold to anyone other than you.
-Ask if the shop is taking offers on items. Most times, they will--especially on aged inventory.
-Collectible items normally hold their value well, but can see greater price movement during times of economic turmoil, when customers are focused on the functional, not the decorative.
-Ask about the item. Many consignment items come with an interesting and unique story that, for some buyers, can increase the value of the piece.
-Build a relationship with the consignment store. If they know what you’re after, you might get a call when something new comes in.