As second-hand retail sales soar during the recession, a chain of thrift stores is planning a major expansion in the state.
Minneapolis-based Winmark Corp., with 864 franchise locations across the country and 13 in Connecticut, will nearly triple its Connecticut presence by adding between 20 and 25 stores in-state within three to five years.
Winmark’s franchises include four major brands, including Music Go Round, Once Upon a Child, Plato’s Closet and Play It Again Sports. Winmark wants to open five or six stores per brand.
Franchisees will ultimately decide upon store locations, but Winmark is focusing on 15 to 20 territories in Connecticut, notably in Greater Hartford, New Haven, Milford and Waterbury.
Winmark has always favored the New England market, but prohibitive real estate costs had curtailed expansion plans in the region until recently as the commercial real estate prices have come down.
“It’s a very advantageous time for franchisees to look at real estate in New England,” said Winmark President of Franchising Steve Murphy. “Between the geographic expanse, population density and affluence of consumer groups there, we think it’s a good opportunity.”
In the past year, Winmark has seen sales increase 10 to 15 percent in Once Upon a Child stores, which sells children’s clothing, furniture, toys and accessories. Sales have been even healthier, jumping 15 to 20 percent at Plato’s Closet, which sells high-end brands — like Abercrombie & Fitch, Hollister and Gap — for teens at discounted prices. Jeans that typically sell for $60 to $70 off the rack go for $15 to $20 at Plato’s Closet.
“Even in these tough economic times, teens still want to keep up with the Joneses,” said Brian Gaer, who owns five Once Upon a Child and three Plato’s Closet stores, including one moving from Springfield to Enfield.
That sales increase looks even better in contrast to a declining retail industry, which reported a nationwide year-over-year drop of 10.7 percent in March.
Gaer, who graduated with a Master of Business Administration degree from the University of New Haven in 1992, bought his first Once Upon a Child location in 1994 after he had trouble landing a job during the early 1990s recession. According to Murphy, Gaer fits the profile of an ideal franchisee candidate.
“It’s the matter of finding the right opportunity. It might be someone who was displaced in the financial sector,” Murphy said.
The company typically looks for candidates with at least $200,000 in net worth who can put down 30 percent of the investment up front. Initial investment in Once Upon a Child stores ranges between $200,000 to $225,000, while Plato’s Closet ranges between $300,000 and $350,000.
Murphy said the company likes to group stores from different brands close together, preferably in the same shopping center if possible.
“You’ve got that Once Upon A Child time from infancy to 10 or 11 years old, and when they move into brand-name items, that’s a Plato’s Closet customer,” Murphy said.
And though thrift stores are popular these days, not all the Winmark brands have weathered the economic crisis equally. The company lost 24 Play It Again Sports locations last year while only adding 10. All other Winmark brands had positive franchise gains last year.
Murphy explained the sports brand posted a tough year, mostly because its inventory is roughly 75 percent new, marking a complete opposite operating philosophy of the three other brands. It makes sense that Play It Again Sports would experience similar troubles to other retailers, Murphy said.
“We’re seeing that same effect carry over to sports, when it’s 75 percent new,” he said.
Bill Tinsley, who owns a Play It Again Sports franchise in Brookfield, said he has noticed purchasing patterns shift over the past year. Some of the store’s big-ticket items, notably exercise machines, are moving at a much slower pace, but sales have been buoyed by an uptick in team sports and golf equipment.
“People seem to be much more diligent about bringing in used equipment,” Tinsley said.
As much as Tinsley would like to purchase another Winmark franchise, he said the thrift business requires a much more present owner.
“These stores are a big commitment in terms of time,” he said. “These are not cookie-cutter businesses.”
