This category includes establishments primarily engaged in the retail sale of used merchandise, antiques, and secondhand goods, such as clothing and shoes, furniture, books and rare manuscripts, musical instruments, office furniture, phonographs and phonograph records, and store fixtures and equipment. This industry also includes pawnshops. Dealers primarily engaged in selling used motor vehicles, trailers, and boats are classified in the Automotive Dealers and Gasoline Service Stations industries, and those selling used mobile homes are classified in SIC 5271: Mobile Home Dealers. Establishments primarily selling used automobile parts and accessories are classified in SIC 5015: Motor Vehicle Parts, Used, and scrap and waste dealers are classified in SIC 5093: Scrap and Waste Materials. Establishments primarily engaged in automotive repair are classified under Automotive Repair Shops industries.
Used Merchandise Stores
The used merchandise business, a branch of the retail industry, was continuing its growth spurt begun in the early 2000s, when consumers spent approximately $17 billion in this retail sector. New resale shops were opening rapidly in the United States with industry growth estimated at 5 percent per year. By 2005, according to the National Association of Resale and Thrift Shops, there were more than 20,000 resale stores across the country.
Enjoying recent success, the industry thrived in the status-conscience 1980s, as people constantly upgraded their little-used possessions and consigned or donated their older items. In the 1990s, the ecologically minded turned to recycling, which boosted purchases of recycled or used merchandise. Vintage clothing also became trendy, with more and more people who could easily afford new clothing now purchasing used clothing for style purposes. In the volatile 2000s, the outlook was similar. In times of economic expansion, more people donate, whereas in times of recession, more people make used purchases. Either way, resale is one of the few recession-proof segments of retail, enjoying success in good times and bad.
In the late 1990s, the vast majority of used merchandise businesses were privately owned and family run. The industry is attractive to small-business people because of its relatively low capital investment and relatively high returns. Consumers like used merchandise stores because they can obtain 50 to 85 percent savings off the cost of new goods. Still, the profit margin for the retailer is often higher than that realized with new goods. The cost of purchasing merchandise to sell in such operations is extremely low, and operators typically sell used products for double their cost. Used merchandise sellers buy their inventory from the public, offer goods on consignment, or receive goods for free, or at very low cost, from charities. Both not-for-profit and for-profit used merchandise stores buy their inventory from charities, which collect door-to-door for as little as $8 per three cubic feet of goods. "Thanks to the low cost of goods, pretax profits are around 10 percent, roughly double Wal-Mart's," wrote Lisa Gubernick in Forbes.
Women especially were attracted to the used merchandise business, particularly for clothing. Many owned and operated used merchandise stores out of their homes. Nation's Business reporter Sharon Nelton profiled two women who typified the kind of entrepreneur who is attracted to the used merchandise business. Karen Lynch, a former flight attendant, founded Children's Orchard in 1980. The store specialized in quality used children's clothing, which it sold for 50 to 80 percent less than new clothing. The store paid cash for its stock, which had to be clean and in mint condition. By...