How to Start a Consignment Store: Everything You Need to Know
When wondering how to start a consignment store, begin with a business plan that outlines your vision for the store. 3 min read
Develop a Business Plan
When wondering how to start a consignment store, begin with a business plan that outlines your vision for the store. Investing time to create a business plan will help you save money when you open the consignment store as well as help you stay on track with your vision. Entrepreneur.com reports that you will need between $3,000 and $10,000 at the start. After opening the store, it takes two years or more to get it up and going as well as to work out any issues.
As you create your business plan, focus on the policies for consignment, the structure of your business, and your future goals. It's important to create and establish your vision, and then make a plan so you can stick to it.
Kallenberg, an expert on consignment businesses, emphasizes the importance of having an idea of the location and how your store will fit in the marketplace. For example, options include low-price stores with higher rates of turnover, mid-priced stores set up similar to department stores, and high-priced stores with lower volumes of goods for sale set up more like boutiques. High-end stores require additional work and marketing to get the word out.
The business plan you create should also include information about the projected expenses and income. These estimates should be based on market research and any plans you have to develop a marketing strategy and business financing. The next step is deciding what your store will sell, where it will be located, and the ideal customer base.
Research the Neighborhood and Your Target Market
As you consider different neighborhoods for your consignment store, make sure to become familiar with each. In order to become more familiar with the neighborhoods, obtain information from the area's city hall about the age, marital status, and income of the residents.
The area should have a clear market for the type of store you want to open. Before you open a store, you should either talk to competitors in the area or at least browse local stores and learn more about their marketing efforts. You can also contact consignment store owners in other states or cities to learn more about the business. If the market you're considering already has a well-known shop or multiple other consignment stores, it's important to find ways to create a unique shopping experience in your location.
Find out what's popular and what doesn't work within the market of consignment stores in the area you've selected, and then start building your volume of items to sell. It is important to have inventory to get started. Kallenberg also expresses how important the location is for a successful consignment business, on more than one level. Even a low-priced consignment store will struggle if it's not easy to access or hard to find. When the store is just around the corner or on the main street in a specific area, it is more visible to shoppers.
Don't make the decision of where to open a consignment store based on low rent. Doing so could result in your store going out of business. If you can't find a good location for your consignment store, talk to a local real estate agent. Emphasize the importance of finding a location that's easy to see from the main road and has plenty of parking.
As you decide on the location for your store, do some research to figure out what similar stores already exist in the same area, as well as the pricing and types of items for sale in each. The existence of a consignment shop doesn't necessarily mean you can't or shouldn't open one in the same area. In fact, a shop that is doing well can indicate the need for another location.
It's smart to learn as much as possible about what types of items are highly sought in the area, such as:
- Baby items
Look at other businesses in the area to determine what people need. For example, an area with a lot of businesses and corporations may have a higher need for men's and women's business suits, while a location close to a hospital could thrive if the store sells health care uniforms.
If you need help with how to start a consignment store, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work on behalf of companies like Google, Menlo Ventures, and Airbnb.