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Is a consignment clothing store a good idea for a business right now

Hello All. My wife and her friend want to open a consignment store that sells kids and teens clothing and furniture. They have found a small storefront in town with low rent and a good amount of traffic. They are trying to figure out whether or not they can make enough money to make it profitable. They have talked to several store owners and gotten various feedback, but I thought I'd post the question here and see if anyone has any ideas or experience with this. Thanks in advance.

Craig

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I've never owned a shop such as this but I have shopped at a couple. The ones that I have been in are very selective in what they take on consignment. One is a shop for babies and toddlers. They only take clothes that are in season and of very high quality. I know when I go in there, I will find great deals on very nice baby or toddler clothes. The other shop is for women and takes only designer type clothing and it is also extremely good quality. Both of these shops have things that I won't find at a garage or yard sale. I think if the ladies can establish a reputation as having great quality, people will come and shop. Everyone likes a deal and great quality.
My experience in this area is as a customer. In my home area of Southern California there is a chain of children-focused used/consignment stores that have done and continue to do well. This even in an area known for it's high dollar spending on appearance. The current economy probably only makes consignment selling and buying more attractive. The shops are called Children's Orchard, http://www.childorch.com/. It's a franchise and maybe you could see what they're doing right.
Thanks all for your input.
I'd agree with the encouragement to take things of quality. I shop second hand all the time. There is a huge difference when you go into a shop that has mediocre stuff and is kinda stale smelling. That smell is a big first impression. I know that was not really your question but IF they do this, keep it in mind.

Sharon
http://simplysharon.wordpress.com/
I am currently shutting down a gift shop that my wife and I owned. Our 4th quarter was terrible and in the last 6 months most of the tenants have either closed up or moved, mostly closed. That put a nail in our coffin and put us in a tail spin that we haven't been able to recover from. It also doesn't help that we are in Michigan and most of my customer work for the Big 3 or for suppliers.

So here is my assessment. Your concept is good, anything you have a passion for will likely work. I think a consignment shop will be very good if you are very good at selecting good merchandise and turning down what doesn't work for your neighborhood. Learn that fast, you only have so much space and you need it all to make money for you. You can't afford to be "nice" and have space not paying for itself.

Second, build a monthly plan for sales, expenses and calculate your cash flow. Then increase your expenses by about 25%, there will be things your aren't aware of yet. How much do you have to make, to make it. Can you do it.

Look at the retail around you, is it pulling in customers that will want to visit you, or not. If they aren't the right kind of stores, then you may find it difficult. Also, how many vacant, how much traffic...

Is it going to be all consignment or will you offer new items as well, how will that mix go?

So, let's run a hypothetical set of numbers.

Rent: 2000/month
Utilities: 600/month
Misc: 1000/month
Wages: will there be employees, how many hours? My costs for labor, 5,000/month, 7 days a week, 11 hours/day, 6 Sunday.
Cost of goods: 8000-12000
Sales Required: 17,000-20,000
Profit: Sales need to be higher
Don't forget to factor in State and local taxes on businesses.
You probably want to see about 280,000 in annual sales to make this a reasonable business.

Now you can factor your actual costs and estimates into this and see what you get.

Good luck, keep the faith. Running your own store is a lot of work, but can be extremely rewarding.

As we are running our Store Closing, we are talking with our long time customers, and getting hugs, crying, letters, emails, and candy, and a lot of we are going to miss you and wish you well comments. I was very surprised by the outpouring of support.
John,

Sorry to hear your store is closing. Best of luck to you in your next venture. This is great advice. I passed it to my wife and we are both very grateful.

Craig

John Greer said:
I am currently shutting down a gift shop that my wife and I owned. Our 4th quarter was terrible and in the last 6 months most of the tenants have either closed up or moved, mostly closed. That put a nail in our coffin and put us in a tail spin that we haven't been able to recover from. It also doesn't help that we are in Michigan and most of my customer work for the Big 3 or for suppliers.

So here is my assessment. Your concept is good, anything you have a passion for will likely work. I think a consignment shop will be very good if you are very good at selecting good merchandise and turning down what doesn't work for your neighborhood. Learn that fast, you only have so much space and you need it all to make money for you. You can't afford to be "nice" and have space not paying for itself.

Second, build a monthly plan for sales, expenses and calculate your cash flow. Then increase your expenses by about 25%, there will be things your aren't aware of yet. How much do you have to make, to make it. Can you do it.

Look at the retail around you, is it pulling in customers that will want to visit you, or not. If they aren't the right kind of stores, then you may find it difficult. Also, how many vacant, how much traffic...

Is it going to be all consignment or will you offer new items as well, how will that mix go?

So, let's run a hypothetical set of numbers.

Rent: 2000/month
Utilities: 600/month
Misc: 1000/month
Wages: will there be employees, how many hours? My costs for labor, 5,000/month, 7 days a week, 11 hours/day, 6 Sunday.
Cost of goods: 8000-12000
Sales Required: 17,000-20,000
Profit: Sales need to be higher
Don't forget to factor in State and local taxes on businesses.
You probably want to see about 280,000 in annual sales to make this a reasonable business.

Now you can factor your actual costs and estimates into this and see what you get.

Good luck, keep the faith. Running your own store is a lot of work, but can be extremely rewarding.

As we are running our Store Closing, we are talking with our long time customers, and getting hugs, crying, letters, emails, and candy, and a lot of we are going to miss you and wish you well comments. I was very surprised by the outpouring of support.
Hi,

don't feel too bad. I read somewhere that the most successful people have failed at 3 businesses before they hit it big. I figure I have 2 more attempts to get through before I get it right and find the right mix.

Craig Graves said:
John,

Sorry to hear your store is closing. Best of luck to you in your next venture. This is great advice. I passed it to my wife and we are both very grateful.

Craig

John Greer said:
I am currently shutting down a gift shop that my wife and I owned. Our 4th quarter was terrible and in the last 6 months most of the tenants have either closed up or moved, mostly closed. That put a nail in our coffin and put us in a tail spin that we haven't been able to recover from. It also doesn't help that we are in Michigan and most of my customer work for the Big 3 or for suppliers.

So here is my assessment. Your concept is good, anything you have a passion for will likely work. I think a consignment shop will be very good if you are very good at selecting good merchandise and turning down what doesn't work for your neighborhood. Learn that fast, you only have so much space and you need it all to make money for you. You can't afford to be "nice" and have space not paying for itself.

Second, build a monthly plan for sales, expenses and calculate your cash flow. Then increase your expenses by about 25%, there will be things your aren't aware of yet. How much do you have to make, to make it. Can you do it.

Look at the retail around you, is it pulling in customers that will want to visit you, or not. If they aren't the right kind of stores, then you may find it difficult. Also, how many vacant, how much traffic...

Is it going to be all consignment or will you offer new items as well, how will that mix go?

So, let's run a hypothetical set of numbers.

Rent: 2000/month
Utilities: 600/month
Misc: 1000/month
Wages: will there be employees, how many hours? My costs for labor, 5,000/month, 7 days a week, 11 hours/day, 6 Sunday.
Cost of goods: 8000-12000
Sales Required: 17,000-20,000
Profit: Sales need to be higher
Don't forget to factor in State and local taxes on businesses.
You probably want to see about 280,000 in annual sales to make this a reasonable business.

Now you can factor your actual costs and estimates into this and see what you get.

Good luck, keep the faith. Running your own store is a lot of work, but can be extremely rewarding.

As we are running our Store Closing, we are talking with our long time customers, and getting hugs, crying, letters, emails, and candy, and a lot of we are going to miss you and wish you well comments. I was very surprised by the outpouring of support.

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