Let’s talk furniture consignment. In our quest to help downsizing clients find new homes for old things, we sometimes recommend consignment as an option. Recently we introduced the concept of online auctions as one option for selling items; this month we examine consignment as another viable alternative. We’ll give you the highlights here, and we also invite you to listen to our recent podcast on the topic. Listen below.
But what is consignment? How does it differ from typical retail sales and what can a consignor (you) expect from the transaction. Let’s start at the very beginning – a very good place to start (Julie Andrews – The Sound of Music).1
Consignment stores exist to sell ‘previously loved’ merchandise that is entrusted to them by the owner for the purpose of selling. No longer in need or want of an item, the consignor assigns it to the owner of the store (consignee) in the hopes that it will attract a buyer.
While well established as a selling model, the consignment or ‘resale’ industry is experiencing a literal metamorphosis. Once thought of as a sale’s channel of last resort for items that had lost their luster, the industry is experiencing unprecedented growth at a time when traditional retail is struggling. The resale segment has posted annual gains of 7% over the last two years and 12 – 15% of Americans will shop at a consignment store this year alone.2 The consignment store is no longer the dusty, musty cavern that you once sidestepped in horror. In a stunning turnabout, some resale stores have reemerged as sexy and chic. How the heck did that happen?
The reasons for the change are multi-faceted. The recession of the early 2000’s and the continued weak economic recovery, shocked many consumers into becoming more value conscious at the same time as recycling became rooted in public behaviour. The process of reselling used goods in order to extend their life at a bargain price is the ultimate expression of recycling. In a 3-way ‘Win, Win, Win’ equation everyone goes home happy. The seller divests themselves of unwanted things in return for $; the buyer enjoys a valued item at a bargain price and the environment is relieved of the need to add yet another item to an overburdened landfill site.
For the uninitiated, here’s a snap shot of how furniture consignment works. As the consignor, you retain title to and responsibility for the item even as it sits on the retailer’s floor. As the consignee, it is the retailer’s job to attract the right buyers, present the merchandise in a compelling fashion and complete the sale. Both parties are bound by a contract that outlines mutual rights, responsibilities and division of the sale proceeds. The most common method is the ‘decreasing ticket price model’ where the ticketed price of an item decreases at a predetermined % over a stated period of time. Generally, an initial price is assigned to the product when it hits the sales floor and is then held firm for 60 days. If not sold, it decreases by 15% each additional month that it remains on the floor. If not sold during the agreed on time period (i.e. 4 months) it is then donated or picked up by the original owner. Interested buyers have the option of purchasing it at its current price, or rolling the dice to see if it continues to be available as the price decreases.
Note that consignment works best for ‘in-demand’ furniture and the items in this category may not be what you expect. As more and more boomers downsize, the glut of dining room sets, china cabinets, full-size sofas and other large scale items have driven down the value of the very things that you might prize the most. We advise our clients to adjust their expectations about the ROI on such things and redefine their sense of value. In many cases, the real value of such items resides in the pleasure and utility they have given you over their lifetime and not in their current market value.
While there are several ways to divest yourself of used furniture, we advise our clients to consider consignment as one option. Be aware that you will be responsible for providing the consignee with good quality photos of items you wish to sell as well as any product information that is available. In most cases you will also be responsible for shipping the product to the store. And remember that not all consignment stores are created equal. Make sure they are capable of attracting the right type of buyers for your products and that the rest of their inventory is compatible with your collection.
Good luck with your adventure in consignment selling! And be advised, that it is best to wear blinders in the store. A good store will offer a host of things that you just might be tempted to take home with you!
2 http://www.narts.org/i4a/pages/index.cfm?pageid=3285 National Association of Resale Professionals