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Used Merchandise Stores Prove They're as Good as New
by Jill Cuyler-Crook
Published Mar-17-2014

 
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 turned to used merchandise as an alternative to new, more expensive goods. This trend appears to be continuing during our current expansionary cycle.

Out With the New, and in With the Old
 
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.

Although it's not a heavyweight in the world of retail trade - in 2012, 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 19.5 percent between December 2007 and December 2013 (Graph 1), nearly six percentage points more than all non-auto retail.

Graph 1
National used merchandise sales growth outpaces all other retail excluding autos
Oregon's Resale Retail
 
Oregon's used merchandise sector follows national industry trends, as statewide employment in these establishments has risen alongside retail sales. Between 2001 and 2012, covered employment increased by nearly one-third. Job growth really took off between 2005 and 2006, when the industry grew nearly 11.2 percent. Notably, the industry also added about 200 jobs during the Great Recession (2008-2010), an employment increase of 10 percent. Year-over-year job growth was lowest in 2011 when the industry grew by only 0.1 percent. But in September 2013, there were over 2,440 jobs in the industry, an increase of almost 4 percent over the previous year.

The most common jobs in the industry are retail salespersons, cashiers, laborers and stock movers, and supervisors. These jobs tend to pay lower than average wages; statewide they averaged just under $30,000 in 2013. 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 overall pretty weak in the used merchandise sector, according to covered employment data. However, a noticeable build-up can be seen in the late summer to early fall season, perhaps reflecting increased sales around the back-to-school season.

Industry Trends and Recent Business News
 
According to unemployment insurance tax records, also known as "covered" employment data, the number of used merchandise establishments grew by almost 5 percent from 2008 to 2012, when there were 336 firms statewide. 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 876 establishments in the used merchandise industry in 2011, comprised mainly of individual proprietorships (829), a few partnerships, and a handful of corporations. These data also reveal that nonemployers had receipts of nearly $29 million in 2011, 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 over two-fifths of the covered establishments in 2012. However, as shown in Table 1, the Willamette Valley has slightly more than Portland in terms of employment; other metro areas around the state also have a resale presence.

Table 1
Oregon's Used Merchandise Industry
 2012 Geographic Employment Trends
Region Employment Number of Firms Average Annual Wage
Willamette Valley 965 85 $19,756
Portland Metro 928 163 $20,305
Central Oregon 142 40 $15,358
Southern Oregon 137 40 $17,114
Coast 114 30 $13,243
Eastern Oregon 47 13 $15,097
Source: Oregon Employment Department, Quarterly Census of Employment & Wages
An Industry for the Ages
 
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.