Rags To Riches

Consignment clothing shops used to be ragtag stores where sellers unloaded discarded garments on people who simply couldn't afford to buy brand-new clothing. But today's consignment shops are something new--attractive stores stocked with kindly worn designerwear that looks just like department store merchandise, except for the discount prices.

"[Consignment] stores have become very popular as our society has become more familiar with recycling," says Christine Jobes, vice president of member services for the National Retail Federation in Washington, DC. "[Consumers have also] become very practical about shopping, and [consignment] is just another form of value-oriented shopping."

Consignment stores differ from secondhand stores in that the garments actually belong to consignors--individuals who ask the shop to sell the clothing they no longer want, whether it's because they've grown a size or two or need to make room in their closets. When the garment sells, the consignor and the shop owner split the profit (typically 50-50). The beauty of this arrangement for start-up business owners is, there's no need to pay for inventory until it's sold. As a result, you can open a shop with very little start-up capital.

Most consignment shops sell women's suits and designer sportswear, but menswear and children's clothing can be found as well. Some shops also sell such accessories as hats, belts, costume jewelry and shoes.

Marcie Geffner is a freelance writer in Los Angeles.

This article was originally published in the May 1998 print edition of Entrepreneur with the headline: Rags To Riches.