business

Motivated by tighter budgets and the joys of recycling, a new breed of shopper is taking the stigma out of buying secondhand. As many retailers are reporting slower traffic and sinking sales, secondhand stores are thriving.

The number of resale shops has grown 7 percent in the past year, according to the National Association of Resale and Thrift Shops. Nearly three-quarters said sales spiked 35 percent during 2009's crucial fourth-quarter holiday season.

"It's not your grandmother's Goodwill anymore," said Jim Thalhuber, of Goodwill/Easter Seals Minnesota, which plans to open a store in the prosperous suburb of Minnetonka in December.

Goodwill's typical customer these days is a 35- to 54-year-old woman, with higher-than average income and education, who is married and owns a home.

"Many times, it's the bargain or treasure hunter," Thalhuber said.

With online sites such as eBay and Craigslist leading the way, entrepreneurs, thrift stores and national chains are battling over the growing market for used goods. Small boutiques such as Bibelot in St. Paul now offer secondhand clothes. Ragstock will expand into Michigan this fall. Even Best Buy is getting into the resale act, announcing that it will start selling used video games later this summer.

"It's all a part of the umbrella of smart shopping," said Candace Corlett, president of New York marketing and consulting firm WSL Strategic Retail. In the company's "How America Shops" surveys, a third of shoppers say they now buy pre-owned products.

"Nothing is off limits," Corlett said. "It used to be cars. Now it's baby equipment, computer games, prom dresses, designer jeans and handbags, home decor. It's like a giant swap meet."

But with the nation relying on consumers to power as much as 70 percent of the economy, buying used goods doesn't keep factories humming and workers working.

"Does it hurt the retail world? A little bit," said Marshal Cohen, an analyst with NPD Group. "It keeps people out of traditional stores, and it prevents some of the impulse shopping and momentum that drives the traditional shopping dollar. But the impact is small."

But aside from tracking trends, national chains don't view used stores as competition.

"It's not on retailers' radar," Cohen said. "Should it be? Yes. But just as they didn't look at the Internet as a threat, now they're all over it."

For Gina Meier, second-hand shopping is about avoiding malls and saving money. She wound up at the Clothes Mentor in Edina last week for the first time, hoping to update her work wardrobe with higher-quality brands.

The chain pays cash on the spot for clothes and accessories and resells labels from Target, Kohl's and J.C. Penney. But it is better known for carrying Coach, Prada or Fendi handbags plus designer clothing labels at 60 to 70 percent off retail.

"It doesn't feel like second-hand," said Meier, 42, of Richfield. "They've got Ann Taylor Loft, Chicos and all the places I can't normally afford to go to."

While designer-stocked resale shops have always been around, chains like the Minnetonka-based Clothes Mentor are planning rapid expansions, banking that thriftiness is more than a recessionary fad.

The concept was started by the same Ohio couple who founded second-hand stores Once Upon a Child and the teen-focused Plato's Closet. Clothes Mentor opened its first Minnesota store in Maple Grove in 2008, and the eighth will open in the coming weeks in Eden Prairie.

With 35 stores around the country, Clothes Mentor expects to expand to double within two years, said Jim Wollman, vice president of sales and marketing.

"There might have been a market for resale 10 years ago, but it's not at all what you're seeing today," said Steve Bonello, who owns the Edina Clothes Mentor. "I'm getting very sophisticated shoppers in the store. They're doing OK, their husbands haven't lost jobs, but they're buying because the merchandise is clean and it's in good shape."

One customer comes in every week to check out new Eileen Fisher offerings, he said. Another wants a phone call the second the store gets a Chanel handbag. "She says, 'I don't care if it's going to cost $200 or $250,'" said Bonello, a former CEO of a 500-store maternity retail chain.

The surge in second-hand hasn't been a boon for all, however. Nonprofit thrift stores say donations sank during the recession, as more people sold their items or held onto them longer.

The number of people donating goods at Arc Value Village was clipping along at 6 percent a year during pre-recession boom times, said Arc spokeswoman Pam Carlson. Between 2007 and 2009, the numbers "flattened out completely," she said.

The organization, which serves people with intellectual and developmental disabilities, is encouraged that the number of donors is up about 5 percent so far in 2010, but the size of the average donation at its four stores remains down by about 14 percent.

Donations also have been flat in recent years at Goodwill Minnesota, which operates 21 stores in the Twin Cities and much of the state.

Goodwill is making an aggressive push to stake its claim in the growing resale market, as retail profits fund 75 percent of its workforce development programs. With a new store coming online in Hudson, Wis., in August, the organization will have opened 10 new stores in five years, a 43 percent increase. Among those are two boutiques that sell high-end women's clothing.

"We're 90 years old," said Thalhuber, who is vice president of development and marketing. "Years ago, we provided a place to shop for people with limited resources. That has changed significantly. Thrift has grown into its own retail segment."

Furniture and teens are among the fastest growing segments in resale.

In its annual "back-to-college" survey, BIGresearch last year found about 19 percent of students planned to shop at thrift stores or resale shops, a 30 percent jump.

Plato's Closet, which caters to 12- to 24-year-old females, has seen double-digit sales growth this last year, said Steve Murphy, president of franchising at owner Golden Valley-based Winmark Corp. Winmark's other brands are up, too. Sales at Play It Again Sports are up 10 percent, and Music Go Round has seen a 6 percent year-to-date bump.

The competition for the youth resale market is particularly strong. Finicky teens with limited budgets want to have the latest fashions plus get cash back for selling last year's garb. With about 235 stores, market leader Plato's Closet plans to add more than 30 stores a year, Murphy said.

"It's not just a question of being forced by the economy to rethink budgets and spending habits," he said. "We're becoming a much more accepted alternative as a retail shopping destination."

At Just Between Friends, a twice-a-year consignment sale of kids, teens and maternity items, one local franchisee said sales at its Maple Grove sale are up 60 percent over last year, and about 40 percent higher in Eagan.

"For mom's now, it's totally an 'in' thing to shop second-hand," said Kris Bishop, whose Maple Grove sale fills the Golf Center practice dome in Brooklyn Park with rows of pink dresses and toddler toys. "Because of the economy, we're seeing an increase in the number of people who want to shop, but also people who want to earn some extra money by reselling things they already have. They already have toys sitting around unplayed and they've already got clothes that don't fit."

For Meier, who spent about $75 on six new items to rejuvenate her closet, shopping second-hand is a no brainer:

"Not only is it better for the environment, it's better for my personal economy."

Jackie Crosby • 612-673-7335