Archive for September, 2012

Are Consignment/Used Clothing Stores Bad for the Fashion Industry?

Let’s start with first things first. Consignment means you take in merchandise from a designer to sell without payment upfront.  When the merchandise is sold, you pay the designer their portion of the proceeds. Consignment does not mean Used Clothing Store. Used clothing stores such as the Goodwill and Salvation Army have been around for a long time. They provide a great service to the less fortunate, but what happens when these type of stores become mainstream. In the past few years, the stores having been growing at an alarming pace. The wide spread popularity of used clothing stores under the guise of Consignment are having an adverse affect on the less fortunate, traditional retail, designers and manufacturers. The following are some very real factors that those in the fashion industry can’t afford to ignore.

You may ask, “How does the increase in used clothing stores affect the less fortunate?” For starters, people used top primarily donate their clothing to the Goodwill and Salvation Army.  These nonprofit organizations then turn around and sell the clothing for a few bucks to those who couldn’t purchase them otherwise. Now people take their used items to the so-called Consignment store to receive a few dollars. The clothing is then marked up and resold for a much higher price than the nonprofit would have sold them for. This makes it more challenging for the less fortunate to get the items for what they could normally afford.

Traditional retailers buy from the designer and place the items in their store to be sold. Before the stock market crash of 2008, retailers were better able to turn over their inventory so that they could make a profit. After the market crash, people naturally cut back on their spending, so a few retailers had the bright idea of buying used clothing from struggling families and reselling them. Sure this helped the shopper to save money and provided the family with a few needed dollars, but on a long-term macroeconomic level, this does more harm than good. Now that we are no longer in a recession and people do have more disposable income, many of them still choose to buy from used clothing stores. Seeing this, many used clothing stores are popping up all over America. This growing epidemic is putting a huge strain on traditional retailers. I recently heard a radio commercial urging shoppers not to buy at the malls, but to shop at used clothing stores. Quote on Quote saying that you’re crazy to buy from traditional retail. If shoppers on a large scale buy into this, many traditional retailers will have to close their doors or cut back on many of their expenses, which includes buying from designers.

I recently heard an aspiring designer boast about shopping at used clothing stores. All I could think was that she had no clue as to what she was really saying or doing. Make no mistake about it; this has an effect on designers both large and small. It’s challenging enough for a designer to build their business without this added strain. Retailers don’t have a choice but to cut back on how much product they order. After all, there is no point ordering new product if you can’t sell the product you already have Unfortunately it doesn’t stop there. If more people flock to used clothing stores, designers will not be able to provide enough work for manufacturers. The ultimate snowball effect means massive job loss across the entire fashion industry.

While shoppers are bragging about how much they saved on used clothing, they are ultimately putting their funds into a market that isn’t sustainable. The used clothing stores are crippling the very industry they depend on for survival. If retailers can’t afford to buy from the designers, designers can’t afford to pay manufacturers, which means manufacturers can’t stay in business. When it all comes full circle, the used clothing store will ultimately run out of merchandise to sell. It’s a lose/lose situation for all involved.

How do we combat this epidemic? Driving awareness is key. The next time someone brags about their savings, let them know how their savings may be causing job loss on a global scale. Another important factor is to note that they can receive a tax credit for items donated to nonprofits that amount to far more than you can receive in dollars from a for-profit used clothing store. Trust me, they’ll be much happier come tax time. You may be reading this and thinking that I’m being a little dramatic, but look around you and see what’s happening. It’s a very real thing. If we want to save the fashion industry, it is necessary to stun the growth of used clothing stores. They are bad for the fashion industry and bad for the economy.

The Business Guru

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