Why Resale Franchises Are a Truly Recession-Proof Business
The Great Recession showed us how quickly a flourishing economy can topple and plummet to new depths – in this case, leveling out at the lowest point of the post-World War II era.
Undoubtedly, small business owners were some of the hardest hit, and more than 170,000 small businesses closed in 2008 and 2009.
Yet, a decade later, small business owner confidence and nationwide employment rates have hit historic highs. By most measures, the stock market and corporate earnings appear to be fully recovered, and GDP growth is strong and sustainable.
Even in light of the current market, however, the not-so-distant shadow cast by the worst economy in recent history doesn’t fade as easily.
Staring prudently into the face of a potentially volatile economy, business owners continue to look for recession-proof and resistant concepts – especially as economists overwhelmingly forecast another recession coming in 2020.
The resale industry is one of very few truly recession-proof segments – and resale franchises not only withstood the recession, but they also continue to take the current market by storm.
With unsurpassed staying power and fast-growing demand in any climate, resale franchises are one of the strongest investments available for savvy entrepreneurs.
Resale Picked Up Where Others Fell Off
During the lowest point of the Great Recession of 2008, one in ten Americans was unemployed, and hundreds of thousands of businesses had closed their doors.
Just withstanding the recession was an impressive accomplishment for businesses across verticals. Yet, resale didn’t just survive the recession – it thrived.
Nearly two-thirds of U.S. resale store respondents reported an increase in sales, by an average 31 percent, according to a 2009 National Association of Resale & Thrift Shops (NARTS) survey. Even in a strong economy, that level of store-wide sales growth is impressive.
However, consumers increasingly turned toward resale stores during the recession, as they looked for easy ways to spend and earn money more efficiently. The resale segment’s unique business model, value proposition and essential inventory made it the ideal antidote for cost-efficient consumers.
Double-Barreled Benefits for Buyers and Sellers
Resale stores’ appeal is two-fold, as consumers look toward the value proposition they’re provided in both buying and selling gently used items. These collective benefits only become magnified when times are tough.
Understandably, during an economic downturn, consumers are constantly looking for ways to save money. When shopping at resale stores, consumers get the same brand names and quality they’re used to at traditional retailers but at a substantially slashed price. Shopping at resale stores presented the perfect solution for consumers unwilling to skimp on quality, but looking to cut back during the recession.
At the same time, resale franchises also brought in consumers who had cut out shopping almost entirely. Instead, these consumers visited these stores as suppliers, looking to sell their quality used items.
The recession brought with it a wave of cash and credit-strapped consumers, and they flooded resale stores for the unique opportunity to receive cash on the spot. More often than not, these consumers also then returned to the same stores as customers, in order to make that money go further.
Unchanging Demand for the Essentials
When the economy falls, so does consumer spending – but not necessarily in every area. Luxury goods are some of the first items to see sharp declines, followed by any other segments that consumers consider overpriced or non-essential.
Businesses that are need-based are much less affected during recessionary times because consumers require these goods in order to survive. Even if need-based spending tapers off slightly in a downturn, it will never disappear completely. That’s why resale franchises have been so successful.
Unlike many other industries, which rely heavily on consumers’ high discretionary spending and disposable income, resale franchises provide consumers with essentials like clothing – at a strong value.
The Bright Future of Recession-Proof Resale
Resale is one of the very few recession-proof industries – and the only retail segment that can ostensibly succeed during a severe downturn. It surpassed traditional retailers during the recession, and it continues to dominate the market today.
No matter the state of the economy or consumer spending habits, resale franchises – and the undeniable need they serve – will never disappear. Carving out a niche in retail, and serving essential consumer needs, resale franchises are only poised for future growth.
Ready to break into the recession-proof, fast-growing resale segment? Learn more about Winmark’s resale franchise brands today.