STATUS LABELS — THE SECOND TIME AROUND
Byline: Anne D’Innocenzio / With contributions from Teena Hammond, Los Angeles
NEW YORK — It was a frigid Saturday morning at the end of January, but 60 brides-to-be had lined up outside Michael’s, a consignment shop on the Upper East Side here, most of them arriving at least two hours before the store opened.
Michael’s was holding its annual bridal sale, when each customer is allotted only 15 minutes to browse before making a choice or being shoved out into the cold, empty-handed. And the reason they were willing to stand out in the cold was the selection inside: wedding frocks from Vera Wang, Arnold Scaasi, Christian Dior and the like — most of them for the bargain price of $199.
“Some of these people have been waiting since 8:30 a.m.,” said Laura Fluhr, owner of the 45-year-old family business. “There are women here who have limited budgets; others can spend thousands of dollars, but just like the thrill of the hunt. It is fun, except when the mothers and daughters start to fight.”
What’s a cat fight or two if Michael’s can woo new customers? Michael’s, whose main business is selling used status day-into-evening clothing from such names as Prada, Hermes, Dolce & Gabanna, Armani and Chanel, expanded into the bridal business three years ago to keep the business fresh in an increasingly competitive climate. Michael’s is one of many consignment stores nationwide that are fine-tuning the way they do business. Many are tailoring their offerings to cater to a specific customer profile, replacing the dusty bland linoleum tiles with shiny hardwood floors, putting up mannequins and sprucing up their window displays. Many are also launching their own e-commerce sites to reach out to new shoppers and consignors.
The designer resale shop business, including consignment and thrift shops, which became chic in the late Eighties, is getting bigger.
With the frenzy surrounding such status brands as Prada, Gucci, Dolce & Gabanna and Chanel, more shops are cropping up here and in Chicago, Los Angeles and Dallas, ready to capitalize on a nearly cult following that ranges from young college students to women in their 60s. However, in the resale sector, consignment shopping is higher on the food chain, carrying a lot more cachet than thrift stores. Thrift stores depend on donations; consignment shops pay for the goods once they’re sold, so the standards are higher. Some designer consignment shops say they reject as much as 80 percent of the merchandise they see, and many owners say they are not interested in oversaturated brands.
Patrons of these consignment shops aren’t the run-of-the-mill bargain hunters. These are sophisticated women who can spot a Gucci logo belt in a bin of duds, or sniff out a real Pucci from a polyester version. And many can afford to pay regular prices for designer fashions, but have joined the game merely for the thrill of it all. Many of the consignors are also the stores’ loyal customers.
“You’d be surprised who shops here,” said a sales official at Encore, located on Manhattan’s Upper East Side. It stocks up on Chanel, Gucci and Prada. “A lot of our customers are royalty, celebrity types and Park Avenue socialites. They do the consignment circuit and then they have lunch at Bergdorf Goodman.”
Encore is one of the oldest consignment shops in the country and has served as a model for other stores.
Industry followers say the trend is partly a response to what they believe is sameness in retailing.
“Everyone is talking about entertainment retailing,” said David Wolfe, creative director at The Doneger Group, a buying office here. “The merchandise here is the entertainment. It has double status, because you were clever to be able to find it.”
The resale segment is one of the healthier categories in retailing. Adele Meyer, association manager of the National Association of Resale and Thrift Shops, based in St. Clair Shores, Mich., which has a mailing list of 9,000 resale shops, noted the category averages an annual growth rate of about 10 percent. About 10 percent of the 9,000 shops on her list are in the top-tier designer sector, she estimated, and their numbers are growing.
At first glance, getting into the consignment designer business looks simple. There’s not much overhead required since the owner doesn’t have to finance the inventory. And the profit margins are generally good. After an item is accepted, a selling price is established; once the item sells, the shop splits the money with the original owner, usually 50-50. If the item doesn’t sell right away, it’s usually marked down by 10-20 percent, and later, 50 percent. However, consignment shop owners warn that it is a tricky business.
“Anyone that runs a well-organized, professional store will be fine,” said Meyer. “But those that fail don’t keep to regular hours and lack customer service.” She added, “The secret is to be selective.”
Given the increased competition in the sector, constantly stocking the store with finds is becoming more of a challenge, and it requires a lot of networking and treasure hunting to get the clothes. Most designer consignment shops are not interested in carrying the same merchandise as an off-price retailer, and are very picky about what they want. They also emphasize the importance of focusing on a certain consumer niche, whether it’s an uptown customer or downtown customer.
“I don’t want things that were bought on sale. I am not competing with Loehmann’s,” sniffed Elizabeth Mason, owner of Paperbag Princess, a consignment shop in Los Angeles, who doesn’t buy anything lower-price than CK Calvin Klein. She does make a few exceptions, such as the Banana Republic twinset that was sold to her by model Vendela, she said.
She added, “I want pieces that flew off the rack and everyone freaked out, like something from Prada.”
About 65 percent of the merchandise at Mason’s 1,300-square-foot store is vintage — dating back at least 20 years — mostly from the Sixties and Seventies. Many of the clothes are from celebrities such as Demi Moore, Tori Spelling and Courtney Love, who are also customers, she said.
Mason admitted that stocking her store with gems required a lot of work that involved scouring flea markets here and in Paris and networking with celebrities and stylists.
“There is only a limited supply of goods out there. There is only a very small percentage of people who buy designer merchandise who want to sell it,” she added.
“People assume that the consignment business is easy, but it is not,” said Michael’s Fluhr, noting her store appeals to the conservative designer customer, not someone who wears avant-garde downtown designs.
“It is difficult to sustain a flow of merchandise,” she continued. “It’s the most compelling challenge. I am always advertising in magazines such as Avenue.” She was referring to a local publication that targets the Upper East Side resident.
Fluhr said she had been able to sustain her network of 2,000 consignors, mostly from the tri-state area, simply because of the way the store treats them.
“We send them flowers and gifts,” said Fluhr. “We offer her a high level of service. She is the one who keeps us in business.”
Alessandro Mitrotti, owner of Transfer International, located in SoHo here, said he did a lot of “hobnobbing” with fashion editors, photographers and socialites. Sometimes, it takes a bit of arm twisting to convince women to give up their “St. John Knits collecting dust in their closets,” he said.
Some of the treasures found recently at Transfer were a one-year-old Gucci belt for $60, a Romeo Gigli evening coat for $250 and a Pucci dress circa 1967 at $60. Mitrotti is reaching out to new customers through his e-commerce site, established two years ago. Now, about 30 percent of his business is done on the Web. The site gets about 250 hits per day, and Mitrotti said about 90 percent of them were from Japan. He noted that the site had enabled him to find new consignors.
Unlike some other shop owners, Mitrotti said, “There is so much [designer merchandise] out there.”
Allison Furman Norris, owner of Sunrise Ruby, located in TriBeCa here, uses her movie connections to get wardrobes from shoots. She is a part-time actress and the wife of Poeme Rumi, a writer for the Howard Stern Show.
The 500-square-foot store is stocked with such labels as Prada, Anna Sui and Comme Hearts. On a recent weekend, the store had a gray Kate Spade bag for $85, Diesel jeans for $60 and a nylon bomber jacket by John Paul Gaultier for $165. The store also had white leather pants, at $135, and leopard print pants, at $168, both custom-made for a model.
“I travel all over, and go even to flea markets in Paris,” she said.
At the top of consignment store owners’ wish list is getting their hands on a single major donation from a well-heeled consignor. The clothes are usually barely worn, and they can be easily merchandised since they are all the same size. That usually happens every couple of months.
Take Encore, which got lucky three months ago when a New York socialite called and said she wanted to sell about a million dollars worth of clothing. “There were literally hundreds of items from Chanel, Armani, Richard Tyler, Versace, Escada and Donna Karan. We were so ecstatic,” said Arlene Bender, managing director at Encore, who is putting out the last rack of clothing in the next month. “She sent samples from her wardrobe with an inventory list of the exact dates when she bought it. We have been having fun ever since.”
Paperbag Princess’s Mason, who usually gets big supplies every three months, struck gold when a 30-year-old woman, who found out about the store through her Web site — http://www.paperbagp.com — called about a collection of Yves St. Laurent designs she inherited from her aunt.
“There are about 1,000 pieces,” said Mason, who plans to check them out at a warehouse. “These are the best things. It hasn’t made the auction houses, and the clothes are usually gently worn.”
Last month, Faye Dunaway called Mason about consigning 500 pieces of her wardrobe with such designer names as Black Label Armani, Mary McFadden and Thierry Mugler gowns.
“I went to her house to collect them,” she said.
Staying on top of the merchandise isn’t the only challenge.
Consignment and thrift shops are learning to operate as specialty stores, jazzing up window displays, improving the interior and stepping up customer service.
“We are trying to spruce up our windows, changing them every two weeks,” said Jan Kennedy, co-owner of Clothes Horse Anonymous, which had cornered the consignment market in the northern section of Dallas since opening 25 years ago.
Recently, however, the store began facing competition from an increasing number of consignment shops cropping up in the area, and that is why it has been forced to become more creative about marketing. In the past year, it created better signs in the store to spotlight its top designer names. For St. Patrick’s Day, it had a “green promotion,” offering special prices on green clothes. It is also changing its ad strategy. It used to run ads that targeted potential consignors, asking for consignment goods; now, the ads are aimed at customers, highlighting some of the best names Clothes Horse Anonymous has in stock. The company also just launched its e-commerce Web site, clotheshorseanonymous.com.
“We are trying to convey a sense of urgency,” said a store spokeswoman. “Neiman Marcus does it.” She added that getting consignment goods isn’t a problem; it is just that the store needs to increase the turnover of merchandise and to attract the young customer moving into the area.
New York’s Transfer, after three years in an East Side location, moved to a much bigger site in SoHo. The original store, at 1,900 square feet, was on 60th Street, between Second and Third Avenue. It was small and cramped, Mitrotti said. The new store, which is about 7,280 square feet, is much more upscale, featuring hardwood floors and mannequins. Being downtown has enabled Mitrotti to attract a younger customer, someone in high school, college or in her early 20s, he said.
Sunrise Ruby in TriBeCa resembles a specialty store with its hardwood floors, mannequins and two shiny red guitars for customers to play with.
“I try to merchandise the looks, not just show pants in one area and tops in another,” said Norris. “I didn’t want people to think they were walking into a second-hand clothing store.”
Customer service is key, and many stores take notes on their customers’ preferences. Once the customer finds a perfect fit, Michael’s, for example, will show the shopper the rest of that consignor’s clothing.
Paperbag Princess stocks her store with 5,000 items, and keeps an additional 1,000 items for private requests. However, those who are timid need not apply.
“I have my customers scratching and clawing one another for those Prada bags,” Mason said. “Some people call me once in a while, but I can’t accommodate them. If you want it, you have to be aggressive. You have to call me every day. You have to establish yourself as a serious buyer.”