Resale goods franchisor gets second wind after Winmark

As Sarah Buzzell perused items at the new NTY Clothing Exchange in Minnetonka, she couldn't help but notice the pristine quality of the used merchandise, rock-bottom prices — and that lulling fragrance.

"This place smells amazing," said the Ramsey resident, as the aroma of coconut lime verbena wafted from the store's ScentAir machine. "The stuff looks new, and the store is nice and clean."

Ron Olson, president of NTY Franchise Co., says it's his meticulous attention to detail that has made him a resounding success in the resale business. Sure, updated signage and fixtures are important, but so is preventing secondhand shops from smelling like attics. "NTY is about looking and smelling like a store that sells new merchandise," Olson said.

The NTY (New to You) Clothing Exchange, which buys and sells used clothing for teens and young adults, builds on five other resale concepts Olson oversees through his franchise company. His latest, NTY Kids, also recently opened in Minnetonka and will start selling clothes in September. Other NTY entities include New Uses, which sells used furniture, Way to Go Sports, Clothes Mentor and Device Pitstop, which specializes in secondhand electronics.

Olson has been a resale pioneer, making a name for himself at Grow Biz, a company that sold franchises for secondhand stores and was later renamed Winmark under new ownership. The company launched well-known resale names such as Play It Again Sports, Once Upon a Child and Plato's Closet, which sells teen merchandise.

Olson left the company in 2000 and retired, but returned to the resale business in 2006, buying three Clothes Mentor stores and the naming rights in 2007. He has grown the business to more than 100 stores.

Now at 73, he's still selling franchises that buy and sell used goods. And his timing couldn't be better. Nationally, the number of used-goods stores has grown 7 percent each year since 2010, making it a $13 billion industry in 2012, reports the National Association of Resale and Thrift Shops. Franchising is also heating up, with the number of U.S. franchises expected to grow 1.7 percent this year, the highest growth rate since before the recession.

Clothes Mentor has 110 locations nationally, including eight in the Twin Cities area, with more than 60 to open soon. Winmark, now Olson's competitor, is copying the success of Clothes Mentor by opening similar stores called Style Encore that cater to the same demographic — women in their late 20s to mid-50s. Locations in Eagan and Maple Grove opened recently.

Olson's advantage is his history of experience in the resale franchise business, said Gaylen Knack, a franchise attorney at Gray Plant Mooty in Minneapolis. "Others have come in and had average to medium success, but Ron stays on top of trends and can offer plenty of guidance to franchisees who may not have a retail background," he said.

Olson and NTY have also branched out into areas untested by competitors. New Uses, which has 10 locations, including one in Minnetonka and one in Maple Grove, sells used household goods and furniture. The growth in New Uses stores has been slower than at Clothes Mentor. "It's more challenging than selling clothes," Olson said. "We've got plenty of customers who want to buy. Our same-store sales were up 18 percent last year, but it's harder to get people to bring in their furniture to sell."

Earlier this year, the company opened Device Pitstop in Minnetonka, a store that buys, sells and services used laptops, tablets and cellphones. Olson projects 300 more stores within five years. With seven stores open nationwide, the average store had revenues of $800,000 last year on a 60 percent margin, Olson said.

While the resale market seems to have unlimited potential as consumers seek value, not everything has worked for Olson. Categories such as ReTool had a wrench thrown at them when men didn't want to sell their used tools. "We could never get enough used product to sell," Olson said. "It's the same thing with adult men and their clothes. After their 20s, they wear them out to a point that they're not re-sellable. But in their teens and 20s, they grow out of them before they can wear them out."

John Ewoldt • 612-673-7633