Business

Thrift shops in SLO County find success in resale

The San Luis Obispo Goodwill thrift store.
The San Luis Obispo Goodwill thrift store. jjohnston@thetribunenews.com

“One man’s trash, that’s another man’s come-up,” asserts hip-hop artist Macklemore in the 2013 hit song, “Thrift Shop,” an ode to the thrill of secondhand bargain hunting.

Perhaps no other sampling of popular culture better illustrates how the resale industry has reinvented its image and redefined its customer base. Resale shops around the nation — and in our own backyard — are reaping the benefits.

The number of U.S. resale stores has grown 7 percent annually over the past two years, according to statistics from the National Association of Resale Professionals, known as NARTS. Resale, explained NARTS executive director Adele Meyer, is a broad umbrella term that includes not-for-profit thrift, for-profit thrift and consignment stores. Under that umbrella exists a wide range of goods, including clothing, furniture, sporting goods and housewares. Resale does not typically include vintage and antique stores.

In San Luis Obispo County, resale stores are reporting brisk sales for the most part, taking advantage of momentum created during the cost-conscious days of the recession. Popular culture has reinforced the trend, with television shows like American Pickers drawing audiences in the millions. Vintage clothing and home décor are still fashionably mainstream. Repairing and repurposing items is at the core of both the “maker” culture, and of today’s eco conscious lifestyles.

The value of the resale industry goes beyond these benefits to the consumer. Michael Manchak, president and CEO of the San Luis Obispo County Economic Vitality Corp., believes thrift and consignment shops play an important role in the community, “preventing waste of unwanted goods, providing cost-conscious people with options, creating more sales and thus sales tax to a community for vital services, filling sometimes vacant commercial stores and often supporting excellent nonprofit causes.”

Changing habits, steady growth

Resale is widely considered a “recession-proof” industry because it offers an attractive option for shoppers during tough economic times.

“As (consumers) run out of purchasing power, they cut back on discretionary spending and change the way they shop — but don’t be mistaken, people will still shop,” according to one NARTS news release.

So is the reverse true — that people will drift away from secondhand shopping now that the recovery is underway? Many local resale professionals don’t believe so.

“Because it took so long for the economy to turn around, people started to change their shopping habits for good,” said Jim Burke, vice president of retail and operations for the nonprofit Goodwill Central Coast. Goodwill operates four thrift stores and an outlet store in the county. Stores experienced a surge in sales during the recession, and that growth remains steady, he said. County Goodwill stores pulled in $5.7 million in revenue last year. That’s up 2 percent over the previous year, even with a five-week closure of the Atascadero store for remodeling.

Ivy Lizsow has experienced similarly strong sales since she took over Back on the Racks Consignment Boutique in Atascadero last summer. Unlike thrift stores that resell items that are either donated or purchased from various sources, consignment shops sell goods on behalf of individuals, then take a percentage of the profits. Lizsow previously owned a consignment store in Missoula, Mont., and was “surprised that it’s just as busy here as at my other store where there’s a larger population,” she said.

Lizsow believes San Luis Obispo County resale shops fare particularly well because of the scarcity of malls and major department stores in the area. Since she opened her business, she has noticed at least two other resale businesses open in Atascadero, which she says is “known for its thrift stores.”

Not every resale shop is on an upward track. Roman Salvador, owner of for-profit thrift store Castaways in Morro Bay, said that business was slow last year — a sentiment echoed by several other thrift store operators in Morro Bay, an area with numerous thrift and consignment shops.

Theories on the cause of this slowdown are wide-ranging.

But what Salvador knows for sure is that his profitability is tied primarily to the ups and downs of tourism in Morro Bay. Business slowed when the recession began, presumably because people were cutting back on leisure activities. After the economy started to recover, “we ran out like a racehorse,” he said, adding that the surge in business persuaded him to open a second location in Morro Bay, Castaways 2. After the most recent slowdown, he began to reorganize his business, concentrating on safer categories like the bread and butter of resale: women’s clothing.

For some shop owners, the economic downturn was a time to redefine their image and reach new markets.

Finders Keepers Consignment Boutique in San Luis Obispo used the opportunity to find a niche as a high-end women’s clothing and accessories store. Today, it carries brands like Prada and Fendi, all in mint condition, said owner Debra Fogg, and priced 60 percent to 70 percent less than their new counterparts.

“When the recession hit, people who had money were letting go lots of luxury items, so we started getting really high-end things, designer labels,” she said. “Others wanted a better deal on a good quality piece, and that drove them to us.”

During the recession, Fogg said, the store experienced a “drastic increase in sales and customer foot traffic. It took our business to an amazing new level that we’re still experiencing.”

Luring young shoppers

Just past noon on a recent Tuesday, the aisles at San Luis Obispo nonprofit thrift store Fred & Betty’s were bustling with workers on their lunch breaks, mothers toting babies, retirees and college students.

Among them was Susan Cemo, a 28-year-old San Luis Obispo resident who was shopping for vintage housewares on her day off from work. She is among the numerous younger customers that the store has attracted since it opened in October 2013.

Cemo has many positive memories of shopping at thrift stores with her family in her hometown of Porterville. As a high schooler, she bypassed the mall and frequented thrift shops for clothing and accessories, preferring items that were “well-traveled in and had some history,” she said. “I bragged to my schoolmates how cool (thrift shopping) was. Thrifting has been my way of individualizing myself.”

Since moving to the area last summer, Fred & Betty’s has become her favorite thrift store because of its fresh look and creative merchandising. She shops there about once a week.

Cemo is only vaguely aware that, a generation ago, thrift store shopping came with a stigma.

“I actually feel like it’s very trendy now,” she said. Her reasons for thrifting are numerous and include environmental and social responsibility, unwillingness to spend lavishly on most material goods and a preference for unique items over those that are available in mass quantities.

These inclinations are typical of the generation commonly referred to as “millennials,” making them particularly receptive to resale shopping, said Mary Verdin, president and chief strategy officer of Verdin, the firm that handles marketing and public relations for county Goodwill stores.

Millennials are those born roughly between the early 1980s and the late 1990s. According to Verdin, there are three primary demographics among today’s thrift shoppers: low-income families, women 35 to 64, and young people in their teens and early twenties. Men are also thrift shoppers, but “to a lesser extent,” she said. Burke noted that, lately, Goodwill customer demographics are skewing younger overall.

Young shoppers grew up in a culture where recycling is habitual, and where resale sites like eBay and Craigslist are considered mainstream. They are partly responsible for the current resale renaissance, and may be the key to the industry’s future success. The generation carries serious buying power, which will only increase over time. Millennials in the U.S. are expected to spend more than $200 billion annually starting in 2017.

Luring younger patrons has meant using new marketing channels — namely social media, which Goodwill uses, along with other traditional types of advertisement.

When San Luis Obispo private school SLO Classical Academy opened Fred & Betty’s, the location had already been a thrift store for about 12 years. Its new owners set out to court a wider demographic than the traditional resale audience that store supervisor Lindsey Cheney described as “people 30 to 60.”

The shop has a Facebook page that store manager Sara Lock posts to daily. Also, about seven times each day, she will post photos of select products to Instagram. The Instagram feed has nearly 2,000 followers, including a large number of Cal Poly students. Verdin noted that, while Facebook is still the “number one social media platform,” Instagram appeals to younger demographics because of its quick, wordless delivery of information.

Fred & Betty’s hosts a crafting group and regularly participates in events such as KCPR’s Open Mic Night at Cal Poly. Interacting with customers in this way is important to Millennials, who “don’t like to be talked to in a salesy way,” said Verdin, but respond positively when a brand “engages with them and builds a relationship.”

Cheney considers the store’s efforts a success, noting that Fred & Betty’s became profitable after just one year, and continues to grow.

A fresh image

For some, the thought of a thrift store may conjure images of overflowing bins, outdated merchandise and musty odors. But many of today’s resale shops are challenging this stereotype by using sales and merchandising methods common to mainstream retailers.

Jim Burke said that Goodwill stores in San Luis Obispo County have been undergoing a transformation in recent years.

“Our goal is that if you close your eyes and walk into one of our stores, when you open them, you’d think you were in a store like Marshalls or Ross — the only difference being there are secondhand goods on the shelves,” he said.

The Atascadero Goodwill underwent a nearly half million-dollar renovation last year with new flooring, paint and improved display fixtures. The store now offers shopping carts. Staff sorts clothing by size and is trained to offer assistance to customers — a level of service “people don’t necessarily expect … in thrift stores,” said Burke. There are more new goods, sold alongside complementary secondhand items — such as Halloween makeup kits displayed next to racks of donated costumes in October.

Other Goodwill stores have undergone similar changes, Burke said. This includes the San Luis Obispo store which long ago outgrew its location. Goodwill has been actively looking for a larger site for several years.

When Fred & Betty’s remodeled, it took cues from trendy downtown boutiques. The shop has a vintage-industrial look with walls clad in rustic reclaimed pallet wood and corrugated metal. It sports a cheery, on-trend palette of turquoise and mustard yellow. Instead of goods jumbled on shelves, there are ever-changing, themed vignettes, as well as artful window displays.

As for the dreaded thrift store smell — some stores, such as Castaways, launder each piece of clothing to keep the shop smelling fresh. Fred & Betty’s has implemented a routine that involves daily cleaning of the facility and strategically placed air fresheners.

Thrift stores that rely heavily on donated goods — primarily nonprofit shops — are able to offer higher quality merchandise by taking a greater volume of donations, then diverting unusable goods into new recycle streams. Last year, Goodwill stores in the county diverted 2,611,000 pounds of unsellable items away from the landfill by salvaging textiles, electronics, cardboard, metals, plastics and other materials. Other shops donate unsellable goods to agencies that serve the underprivileged.

Like mainstream retailers, successful resale shops keep merchandise fresh by maintaining a high turnover of inventory. Shops often move items with clearance sales, bag sales and prices that decline gradually over time. Goodwill reduces the prices of items by a timetable that is “designed to completely turn (all inventory) in three and a half weeks,” Burke said.

Customers have responded positively to the changes at Goodwill stores, Burke said, adding that more improvements are on the way.

“We feel like the recession was a great opportunity to engage and retain new customers,” he said. “There’s no stigma attached to thrift shopping anymore, like there was 15 or 20 years ago. There’s a broader appeal, and we want that to continue.”

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