Cottoning on to a New Reality

These pages have featured numerous reports highlighting the fact that Americans are not only cutting back on all types of purchases -- mainly out of necessity, but increasingly out of choice -- but they are also rethinking their whole attitude towards spending (and saving, for that matter).

Following an era of excessive splurging and aspirational shopping, frugality is suddenly back in fashion. People have figured out that there is a difference between needs and wants. And, finally, many have cottoned on to the Depression-era reality that old can be as good as new.

Given that, the following report from the Wall Street Journal, "Shoppers Turn to Consignment Stores," should come as no surprise to regular visitors to the Financial Armageddon blog.

The economic downturn is bad for the nearby mall but good for local consignment shops. Sales at these stores have soared since January as cash-strapped consumers look for bargains, income and tax deductions.

"This industry just keeps growing, but especially during slow times," says Adele R. Meyer, executive director of the 1,000-member National Association of Resale and Thrift Shops. "Once people find that great bargain, they're hooked."

A recent survey of NARTS members found that 66.2% of the stores saw sales climb from January through August 2008, compared with the same period of 2007. The average increase was 35%. The survey found that 85.8% of stores have seen an increase in new customers and 74.5% are seeing new suppliers or donors.

Chris Cowman, president of NARTS, says she has seen businesses at her two consignment stores in the Columbus, Ohio, area increase by about 15% to 20% this year. Ms. Cowman says shoppers typically pay about a third of what they would for clothes and about half for furniture at retail stores.

But consumers also are turning to consignment shops to find extra cash. People receive a payment either when they bring in the merchandise in or when it is sold. Ms. Cowman says she's seeing more designer brand clothes brought in. "I think people have found out that they could get rid of something they don't wear," she says.

Ms. Cowman also has noticed an uptick in the number of people taking the cash immediately rather than waiting for the typically larger amount they could receive by waiting for a consignment sale.

Not-for-profit thrift stores also have seen a jump in business, according to a separate survey by NARTS. Almost half -- 48% -- of these thrift stores saw the volume of donations increase this year, with one third of them reporting a jump of more than a third.

"It's not just a tax deduction," says Ms. Meyer. "It might be that people are supporting a charity that is near and dear to their hearts."

Comments

[Jesse]

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[Andrew Knight]

Hi Financial Armageddon,

I'm emailing you in regards to a followup email I sent you a month ago in response to a partnership, have you had a chance to think about it?

If you have any questions or would more information, please advise me and we can go from there.

Kind Regards,
Andrew Knight

[ho ho]

My wife and I are frightened for our freedoms and the future of the country under the new Prez. We agreed this evening to cut our discretionary spending by 50%.

[Al]

From a purely selfish standpoint, I'm not sure I like this trend. I have been a regular at second hand stores and have gotten great deals. If more people start shopping second hand the prices will most likely go up and selection go down as product gets picked over. Of course the prices of new stuff will most likely continue to drop so maybe I'll go counter trend and buy more new.