How to Open a Clothing Consignment Store


For many people, opening their own business is a dream come true. Having the ability to create their own hours, manage their staff and essentially control their lives appears in the list of perks for small business owners. However, before opening a business, many factors must be considered. Clothing consignment stores are a great small business that can be opened with significantly less overhead than regular retail shops.

Create a business plan. This plan can be relatively simple in a clothing consignment business. However, if outside loans or funding are needed, then a more complex plan may be necessary. The business plan should include a company overview, services provided, market analysis, sales strategies, management breakdown, financial information and any requests for exterior funding (such as a small business loan).

Set up a clear consignment strategy. Consignment shops can work a few ways. The owner can enter into a contract with people who consign their clothes. An individual brings in her used clothes for the owner to sell, then the owner pays her a percentage of the sale amount. Many consignment shops set this between 30 percent and 50 percent of the total sale. Other consignment stores may pay cash for clothes immediately. In that case, the consignment staff estimates how much the clothing will sell for and pays the clothing owner a fraction of this amount.

Pick a location. As in any business, location is imperative to success. Most consignment stores will be frequented by women, so choose a location near other women-oriented businesses such as salons, cafes and clothing stores. Other areas to consider are near college campuses, at large subdivisions and in downtown city areas.

Set up shop. Ensure that the store is user-friendly with plenty of racks to display clothing. Remember, women are the main customers, so display items that appeal to them like purses, jewelry and dressier items in easily observable areas. Tidy dressing rooms with full-length mirrors are also helpful.

Accumulate clothing and other items. Begin gathering clothing and other items prior to opening the store. Distribute flyers about consigning clothes a month before opening the business, allowing people to bring their items in advance to be sold when the store opens. To increase the quantity of items, purchasing from garage sales and other thrift stores may help boost inventory prior to opening the store.

Make sure to market. Advertising is important for new businesses. A few weeks before the store opens begin passing out coupons for the opening day. Consider posting an ad in the local newspaper. Coupons may offer as little as 10 percent off, but will let the public know the day that your business opens and what you are selling.

Tips & Warnings

  • Consider a franchise. Clothing consignment franchises (such as Plato's Closet) may make the business planning aspect much easier. They also provide more widely known name recognition.

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