March 1, 2011

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What’s Old is New

The Resale Industry Thrives in a Rocky Economy

Peri Kinder

March 1, 2011

Brent Sloan wants to do for the resale industry what Walt Disney did for the carnival industry. As the CEO of BaseCamp Franchising, Sloan has found a way to create a viable model for franchising consignment stores while overcoming the stigma associated with the resale business. “Disney has done very well in the carnival industry. It’s just they’ve packaged it so different that you don’t equate Disney with the carnival business,” Sloan says. “We’ve created an environment that is similar to what [customers] are accustomed to at the mall. It overcomes the negative.” Bargain Hunters Sloan and his wife, Shauna, opened the first Kid to Kid children’s resale shop in Sandy in 1992 and their second store a year later in West Valley City. Today, after franchising the model, they have 83 units in almost 20 states, as well as 10 units in Portugal. The economic downturn has proved a boon for Kid to Kid, as customers are increasingly eager to resell used items and just as willing to purchase used clothing for their children. In fact, Kid to Kid saw its greatest increase in sales in 2009, creating a record year for the company. Back in 1992, when the Sloans first decided to become entrepreneurs, they took a long look at Utah’s business climate, searching for areas of opportunity. Sloan says there were three main components they looked at when deciding what industry to go into. First, there had to be a presence of successful mom-and-pop businesses to ensure there was a demand for their product or service. Second, a lack of recognizable industry standards would ensure there was room for growth. And third, there had to be no 800-pound gorilla already monopolizing the industry. “With these three tests, we looked at the children’s resale industry,” Sloan says. “We were starving students and my wife was a garage sale queen. There were people who still shopped resale and enjoyed the excitement of finding a bargain.” But Sloan wasn’t completely sold on the idea until he started looking at the numbers. He realized that within a 10-minute drive of the store location in Sandy, there were nearly 100,000 residents, and 20,000-40,000 of those residents were children. “The amount spent on toys, equipment and clothes for kids is a big number,” he says. “All we needed was a small percentage of that number to be successful.” At Kid to Kid, clothing is sold for approximately one-third of the original cost. This number varies depending on the availability of items and the condition of the product. With clean, attractive stores that are designed to imitate upscale retail stores, more people are stopping in to buy and sell, especially during the last two years of economic instability. Teenage Cheapskates The Sloans’ entrepreneurial fervor has infected their children: son and daughter Scott and Chelsea Sloan have brought the resale concept to sophisticated and fashion-conscious teenagers and young adults with Uptown Cheapskate. The first store opened near The Gateway shopping complex two years ago. Scott Sloan is the president of Uptown Cheapskate, which he operates with his sister Chelsea. The duo will open their eighth franchise in 2011. Scott says 25 million customers fit their demographic across the country, and research shows that 80 percent of all household apparel purchases are made by young adults in this age group. “They don’t have a lot of money to spend on the brands they love,” Scott says. “They’re forced to be value minded. We provide an arena for those customers to come in and buy their brands at affordable prices.” Uptown Cheapskate resale shops are designed with trendy fixtures and a teen-friendly vibe. Instead of denying the stigma attached to resale, Scott says they embrace the concept by catering to the environmentally conscious customer who recycles, says “no” to plastic bags and is willing to help charitable organizations like Susan G. Komen and Primary Children’s Medical Center. While 70 percent of the items at Uptown Cheapskate are used, the other 30 percent are new products purchased in close-out sales from high-quality vendors like The Gap, Urban Outfitters and American Eagle. Top of the Heap In this economy, the challenge for Kid to Kid and Uptown Cheapskate is finding franchisees willing to invest. Scott says franchise leads are down 60 to 70 percent across the board as compared to two years ago. But with record sales, real estate prices dropping and the labor market flush with willing workers, Sloan says it’s never been a better time to get a resale store going. BaseCamp Franchising, the parent company of both Kid to Kid and Uptown Cheapskate, provides franchisees with inventory management and appraisal program software that allows the owners to track inventory, and decide a resale or purchase price that will minimize mistakes while maximizing sales. The IMAP software system is adjusted to each market and modified according to location and regional situations. BaseCamp provides resources to help stores across the country adapt to challenges and grow in popularity. “Everybody’s trying to climb their own mountain,” Sloan says. “The base camp at Everest is in touch with all the climbers on Everest. You as a climber can’t see from your perspective. We’ve been to the top of the mountain. We won’t be Sherpas, carrying your load up the mountain, but we provide a base camp to help put you in the best position to succeed.” Sloan says the company constantly re-thinks and re-evaluates products, services and procedures. He knows his store owners have their fingers on the pulse of what’s happening in their communities, and he counts on them to create the best ideas that can be applied to stores across the country. As Kid to Kid and Uptown Cheapskate slowly become the “Disneyland” of the resale industry—and tough economic times have consumers scrambling for bargains—plan to see more used clothing stores coming to a shopping center near you. “There aren’t too many models that are good in an up market and even better in a down market,” Scott says.
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