OLMIS

by Katharine Williams
Published Nov-19-2012

Out With the New, and in With the Old Oregon's Resale Retail Industry Trends and Recent Business News An Industry for the Ages

If you've ever sold anything on Craigslist or eBay, especially in the past several years, you'll know how quickly most used goods fly off the virtual shelves. The second-hand market has always been pretty large: garage sales, estate sales, antique stores, thrift shops, and flea markets continue to grow in popularity among collectors and bargain-hunters alike.

As the economy went south in 2007, second-hand stores began attracting more customers. As consumers cut back on spending, many have turned to used merchandise as an alternative to new, more expensive goods.

The used merchandise industry covers most resale-oriented stores, with the exception of auto parts, motor vehicles, and boats. By all accounts, the market for second-hand goods is growing. Customers are looking for a great deal, while others may sell used goods to earn a few extra bucks.

Thrift stores run by non-profit organizations such as Goodwill and St. Vincent DePaul have seen sales rise over the recession, likely due to an increase in purchases, and partly made possible by a rise in donated goods.The Salvation Army saw national sales at its thrift stores rise from $499 to $532 million between 2007 and 2009. Goodwill's retail revenue at its U.S. and Canadian stores rose 10 percent between 2009 and 2010, while donations jumped by almost 12 percent over the year.

Although it's not a heavyweight in the world of retail trade - in 2011, used merchandise made up 0.3 percent of all retail trade sales nationwide - the industry is growing rapidly. National sales at these stores have steadily increased over the past two decades, and there's been a significant rise in recent years.

Total retail sales, excluding vehicles, grew at a considerably slower pace since the industry's pre-recession peak in December 2007. Resale spending increased by 21.2 percent between the end of 2007 and August 2012, as shown in Graph 1, whereas all non-auto retail dropped 7.1 percent.

Oregon's used merchandise sector follows national industry trends, as statewide employment in these establishments has risen alongside retail sales. Between 2005 and 2011, covered employment increased by nearly one-third. Job growth really took off in 2006, when the industry grew nearly 11.7 percent over the previous year. Year-over-year growth fluctuated during the recession, falling to 0.4 percent in 2007 but rising again every even year afterwards. In 2011 there were 2,239 jobs in the industry.

Most jobs in the used merchandise industry fall into sales, administrative, transportation, and management positions. In Oregon, the average annual wage for all these jobs combined is low: $18,821 in 2011. As with most retailers, employees are likely hired on a part-time schedule, and it's also possible that there may be higher turnover, both of which would result in lower earnings.

Although retail spending rises during the holidays, Oregon's seasonal hiring pattern is pretty weak in the used merchandise sector, according to covered employment data. A small but noticeable build-up can be seen in the late summer to early fall season, perhaps reflecting increased sales around the back-to-school season and Halloween. In every year since the recession, however, a slightly higher number of jobs have shown up in November and December, which could indicate that more people are holiday shopping at used merchandise stores, or alternatively, selling to these shops to get some cash for gifts.

According to unemployment insurance tax records, also known as "covered" employment data, the number of used merchandise establishments has remained relatively constant over the past five years, fluctuating right around 320. However, this figure doesn't capture all firms. Some types of businesses are not required to pay unemployment insurance, and thus would not be in this data set.

Given the nature of this industry, there are likely many Internet and home-based ventures: think e-Bay sellers, estate sale organizers, or antique dealers. These companies are called nonemployers, and include the self-employed, businesses without employees, independent contractors, and others.

A measure of this group, published by the Census Bureau's nonemployer statistics program, shows that Oregon had 818 establishments in the used merchandise industry in 2010, comprised mainly of individual proprietorships (772), a few partnerships, and a handful of corporations. These data also reveal that nonemployers had receipts of nearly $28 million in 2010, which include sales, commissions, and other income reported on annual business income tax returns.

Although many nonemployers may not advertise, there are plenty of new companies throughout the state. Looking over the dozens of resale business opening announcements in Oregon over the past year reveals a couple of themes in their wares: used household goods, like sporting equipment and furniture; and antique collectibles, such as dishware and jewelry.

Portland in particular has a reputation for stylizing thrift and emphasizing the recycled aspect of used goods. Many recently opened second-hand shops in the Portland metro area have been upscale clothing businesses. According to America's Research Group, this trend may be due to young shoppers. Consumer research companies like the Zandl Group say that today's teens and young adults value unique and original styles, which often leads them to favor vintage and retro clothing or décor. With one of the youngest populations in the state, it's no surprise that Portland has a large market for thrift stores.

As a result, one might consider the Portland metro area the resale capital of the state, as the region was home to nearly half of covered resale establishments in 2011. However, as shown in Table 1, the Willamette Valley can boast the largest regional workforce: 45 percent of the resale industry was employed in that area last year.

Although consumer spending remains weak, the demand for used goods continues to grow. In the current economic environment, Oregon's resale market appears to be flourishing: new businesses are opening, and sales are rising. There's no telling how well the used merchandise industry will do in the future, but one thing is for certain: the past will always supply them with plenty of great products.