Consignment clothing stores are an option for a business in fashion. With this form of selling resale clothes and used designer fashion there is no inventory costs.
Consignment clothing stores are springing up everywhere and with good reason. They're profitable. The overhead is low because the shop owners don't have to make any inventory purchases. They are actually selling for others.
Looking at Costs to the Store Owner
Research well before beginning. Develop a business plan and put it all on paper. Include start-up costs and monthly overhead. Consider rent, phone, hydro staff wages and business taxes. Start-up costs could include store fixtures, shelving, cash register, signage, repainting and decorating.
Consignment Clothing Store Location
The term "location, location, location," is not to be sneezed at. Pick a thriving or up-and-coming neighborhood. The busiest clothing consignment shops are on main streets where there are a lot of galleries, antique shops and funky coffee shops. These streets draw the young and hip who'll likely be patrons. A fast-food restaurant or a gas station on either side may not be the perfect spot. If there are other consignment stores or thrift shops nearby, this is a good thing as thrifty shoppers are already drawn to the area.
Consignment Clothing Store Policies
Every clothing consignment store owner has her own policies, but there are a number of things to consider.
Most shop owners take 30% to 40% of the retail cost of the item. (Please see comment below. The percentage the shop owner takes depends on her costs, primarily. Los Angeles or New York City may be costly to run a consignment shop. There are many variables. New shop owners should research demographics to find the percentage that will work within their budget.)
If the shop is in a hip and funky neighborhood, consider carrying only designer fashion or good quality resale clothing. Designer fashion will bring in a higher revenues than a store filled with $3 tee-shirts.
Consider a selling period for the item.
Record Keeping
An account book listing all consignees with their data is key or being organized. Assign a number to each consignee account. When they bring in new items to consign, list them in the account book and add the number to the price tags. When the item sells, add the details to consignee's account file. Consignment software will replace the hand-written system.
Offer payment once a month, perhaps the first or middle of each month for sales made the previous month.
Consignment Store Software
Consider purchasing consignment software to keep track of everything on the computer. Consignment store software will make the store owner's business hassle-free. Even the technically-challenged will find consignment software a valuable addition to their business. There are a huge number of companies selling their own versions of consignment store software and it's best to research them all to find one that suits the store owner's needs.
Tips for Running a Retail Outlet
Open the consignment store only with a full inventory, and when it's completely ready for the public. Make a good impression from the start. A store with boxes everywhere, and empty racks and shelves won't do that. Begin requesting inventory via "Opening Soon" ads in local papers well in advance of store opening and hold the goods until the decorating is finished.
Work together with consignees to come up with a fair retail price for every item they offer. Keep in mind, these items are resale clothing, so patrons will expect a fair price.
Treat consignees with the same respect you treat your customers. They are the life blood of the business.
Display the inventory sensibly. Give each item type its own section.
Change window displays weekly. There are two reasons for this. One is that items sitting in a sunny window too long will fade. The other reason is simply keeping it fresh, so passers-by can see there is always new stock.
Dust, sweep and clean the store regularly. Pick clothing up if it falls off its hanger. Keep the aisles clear of boxes. Major merchandising and re-organizing should be done when the store is closed. Housekeeping is as important in a retail outlet as it is at home.
Advertise the consignment store in print and on the internet. There are many ways to market the business.
Running a consignment clothing store can be fun and will offer a good living to the owner if the shop is managed with care. Build a reputation with quality items, fair prices and excellent service, and customers and consignees will return again and again. They'll also spread the word.
The copyright of the article How to Start a Consignment Clothing Store in Entrepreneurs is owned by Lorraine Syratt. Permission to republish How to Start a Consignment Clothing Store in print or online must be granted by the author in writing.
You can't make a profit taking only 30-40%. Most shops today take 50-60%.
Even at that rate, it's difficult to make a good return on your investment.
What many shop owners discover is that they've done nothing more than
"buy themselves a job". When you divide the gross profit buy the
number of hours most owners work (typically 50-60 per week) you end up with
an hourly wage that they could make at the local Walmart (and without the
benefits that Walmart gives their employees). Also, most shops are not
profitable for at least 2-3 years after opening. It's hard work running a
consignment store and most give up after 1-2 years. I know, I own a
"successful" clothing consignment store in California
Oct 24, 2009 10:06 PM
sbevis :
Thank you for mentioning consignment software Lorraine. Actually the wrong
consignment software (and there are several of them) can be a nightmare.
There are only 2 programs that I know of that are not backed by one
individual (the programmer) - Liberty and Best Consignment Shop Software.
All other programs were written and are maintained by one person per
program. Of course the risk is that after paying several hundreds of
dollars for a program (and in most cases yearly service fees), the
individual supporting the software dies, becomes disabled, fails, or just
goes on to the next opportunity. This has happened a half dozen times or
more over the past few years. Another consideration is program reliability.
There's little chance that the average store operator will know of this
underlying risk until after purchase when hundreds or thousands of records
have been created and the software is then put to a stringent test. Here
again many who have purchased these garage-built programs find out after
the money-back period that an individual programmer is often less capable
of producing a reliable product than a true software development company.
(Programs and programmers can just as easily get worse as get better over
time because they don't keep up with the increasing demands of Windows
software and hardware technology. Another lurking issue is software
ownership. When you purchase software from a major vendor like Microsoft,
you own the software and can resell it. Some consignment software vendors
charge a big fee up front and ongoing service fees, but their software is
only 'for rent'. Ownership does not pass to the purchaser upon the first
payment and in some cases, reselling the software is prohibited (or made
extremely difficult). Those vendors are only allowing for the use of their
software (called a 'software license). Just ask, "Are you selling the
software to me or just a license to use the software.? Another
important consideration of course is cost. Programs range from under $100
for a simple application to well over $1,000. One way of suspecting
high-priced software is to observe those vendors who advertise under Google
Ads and other sponsored advertising so as to appear at the top of search
results for 'consignment software'. That isn't cheap and it's the end user
who pays for the advertising.
Oct 24, 2009 10:08 PM
sbevis :
Be very suspicious of vendors who claim "We won't be undersold!"
or who exhort that their expensive software is worth the high price. It has
been clearly demonstrated time and time again that paying more for
consignment software does not yield a better program, better support or a
more profitable experience. In this industry, as a matter of fact, the more
you pay, the less profitable you will be because those many extra dollars
could have been spent on income-producing ventures. It's unfortunate that
fees after the first year don't get the same promotion on websites as the
sales slogans and the attempts to white wash high prices. It is necessary
to dig (and to know where to dig) on vendors' websites to uncover the true
cost of owning the software over the period of time you expect to be in
business. Most stores only need consignor and inventory records, sales and
settlements processing, check writing, copious reports, bar-code reading
and printing, price labels and hang tags printing, consignment agreements,
aged inventory discounting, a cash drawer, receipt printer and bar-code
scanner. Here's an example: one software is advertised at $995 as the
first-year cost. Right off the bat that's not the entire cost. There's $125
in service fees so the software cost alone is around $1,100. Add the
above-mentioned hardware, tack on shipping costs and suddenly the
first-year outlay is not $995 but almost $2,000 - a far cry from that
come-on representation made on the home page. In contrast, search Google
for BCSS Software and observe that a program offering all features listed
herein goes for $879 - hardware and shipping included. That's a savings of
about $1,100 with the assurance that you're partnering with a software
provider who was fair and honest up front, suggesting fairness and honesty
in the future. Do you really want to enter into a long-term relationship
with a software provider who tried to deceive you about cost and policies
before you ever got started? How long do you intend to be in business? 20
years? Paying $200 per year for 'service' adds another $4,000 to your
software cost. Are there other fees? You bet! Thousands more in hard-earned
dollars over time. Best to do business with a software provider who doesn't
believe in ongoing annual service fees and service fees for this and that.
Oct 14, 2009
