Since experiencing a revival after the 2008 economic downturn, the resale business has become a booming $70 billion industry with continued growth expected in the coming years. Spurred by consumer demand for savings, reducing waste and the opportunity to earn money, the resale industry consists of consignment shops, thrift stores, not for profit organizations and franchised retailers.
Within the sector, 50 of the largest U.S. companies, such as Goodwill, the Salvation Army and Winmark, account for about 30 percent of sales. As the franchisor for five key players in the resale category: Once Upon a Child, Play It Again Sports, Style Encore, Music Go Round and Plato’s Closet, Winmark’s combined system-wide revenue in 2016 reached $1.048 billion, up from $401 million in 2001. On par with some of the biggest players in the resale industry, such as Goodwill Industries, which generated retail sales of $2.69 billion in 2011, Winmark is the only franchisor to exceed the $1 billion mark.
According to IBIS World, the industry has experienced an average growth of seven percent a year for the past two years, and is expected to increase at an annualized rate of nearly three percent until the year 2021.
Of the current 25,000 resale locations throughout the United States, Winmark accounted for 1,186 stores in 2016, up from 877 in 2010. For more than 10 years Winmark has shown consistent growth alongside industry expansion, with a strong franchisee renewal rate of more than 95 percent year after year.
The clothing industry alone sees an average net profit of 7.98 percent, according to financial-projections.com, with Winmark’s clothing brands, Once Upon a Child®, Plato’s Closet® and Style Encore®, each experiencing remarkable unit growth within the last decade:
- Once Upon a Child had 348 locations in 2016, up from 214 in 2006
- Plato’s Closet had 468 locations in 2016, up from 45 in 2001
- Style Encore had 52 locations in 2016, up from 2 in 2013
By comparison, Once Upon a Child’s top competitors — Kid to Kid® and Children’s Orchard® — have grown from 84 locations to 91 between 2013 and 2015, and lost unit count from 32 stores in 2013 to 28 stores in 2015, respectively. Similarly, Plato’s Closet competitor Uptown Cheapskate® grew from 22 stores in 2012 to 45 stores in 2015, while competitor Hut No. 8® lost growth with just 13 stores open in 2015 compared to 19 stores in 2012.
With appeal to a variety of consumers through offering savings, reducing waste and providing an opportunity for earning money and reducing clutter by selling back gently used items, the resale industry remains an attractive alternative to traditional retail stores. Millennials, especially, are environmentally conscious, value a good bargain and look for the ability to personalize their style with unique finds. More importantly, millennials are now the largest generation in U.S. history, and as they reach their prime spending years, they will continue to influence and shape consumer habits, poising the resale industry for continued growth as it appeals to this demographic in a variety of key ways.
With Winmark’s market reach in clothing, sporting goods and musical equipment, it is on track to continue growing alongside the industry and remain the top franchise player as it has steadily done for the last decade.
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