Genuinely Recession-Proof?

I've previously argued that there are few, if any, industries that could really be described as "recession-proof." That phrase is largely a Wall Street marketing concept designed to keep investors from completely abandoning equities as the outlook for share prices goes from bad to worse.

Still, there does appear to be one sector of the economy that may prove unusually resilient in the face of faltering growth and a structural change in consumer spending habits: resale and thrift shops. In fact, now that I think about it, these sorts of retailers could very well boom in the kind of environment I see ahead.

Think about it: the more difficult circumstances become, the more cheap inventory these resellers will have on hand. By the same token, they will also have more and more customers coming in who are short on cash and looking for bargains.

As it happens, the good news for this sector is already becoming apparent, if the following report by Christine Morente of the Bay Area News Group, "Consignment Stores See Boost," is anything to go by.

Sluggish economy good news for secondhand retail

As major retailers get pinched and see fewer shoppers, secondhand stores are reaping the benefits of a sluggish economy.

John Gjersoe of Pick of the Litter in Burlingame can attest to that.

"We do better because people are looking for bargains and want to save money," he said Thursday. "When the economy is good, our business does well. When times are tough, we still do well."

The store at 1127 Chula Vista Ave. is managed by the Peninsula Humane Society. The shop's proceeds support the humane society and help pay for the sheltering of animals.

As of June 30, sales at the store reached $290,000. Last fiscal year, the sales total was $273,000.

A new event at Pick of the Litter is Shop/Adopt Tuesdays. On the third Tuesday of each month, everything in the store is 50 percent off. On that day, adoptable animals are showcased in the store.

"This business has grown from just a location that really started with very little merchandise, and now the store is completely full," Gjersoe said. "It's a treasure trove of all kinds of merchandise from clothing to furniture to collectibles."

For months, major retailers have suffered as gas and food prices have soared.

According to retail sales figures released recently, consumers inclined to shop at stores such as Target and Gap have declined. Target saw a 1.2 percent sales decline in July, while Gap's sales dropped 11 percent.

Meanwhile, Linens-N-Things is shuttering stores, as are Sharper Image and Starbucks.

Adele Meyer, executive director of the National Association of Resale and Thrift Shops (NARTS), said the resale industry is one of the few recession-proof segments of retailing.

"People who previously gave away clothing, household goods and furniture are seeking other ways to dispose of unwanted items during an economic pinch," she said in a statement. "Some may donate merchandise to a not-for-profit thrift shop and take advantage of the tax deductions. Others may choose to sell or consign merchandise at a local resale shop ... turning their no longer needed articles into cash."

Holly Goodliffe, spokeswoman for Goodwill Industries of San Francisco, San Mateo and Marin counties, said sales at its five stores in San Mateo County went up 10 percent this past fiscal year. Revenues from its stores go to its job training program.

She attributes the sales increase both to the economy and to the growing concern about the environment. "It'll be interesting to see what happens when the economy turns back up," Goodliffe said.

Oscar Perez, store operations manager at the Society of St. Vincent DePaul of San Mateo County, said its four stores are doing well in sales and donations.

"People realize a lot of people are in need of help right now," he said Friday. "When people have lost their homes, they are walking away from everything. They are having to start completely fresh. They come to us for aid."

The top sellers are clothes. Parents are shopping for back-to-school items, as well as furniture.

His customers run the gamut in terms of household income.

"Everybody is greatly affected by this," Perez said, "even people in better financial shape."