Skip Navigation

Shop Resale Instead of Retail

May 2015

Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

In this tough economy with high unemployment rates, flat wages, and rising prices for household expenses, many people are looking for “deals.” Frugality is “in” and people at all income levels are seeking ways to lower their expenses so they can save more and/or repay debt. A good way to save money is to “step down” by finding ways to buy things inexpensively to get more for your money.

Like the smoking cessation product where nicotine is reduced gradually in a series of steps, “stepping down” financially reduces household spending in gradual stages instead of eliminating spending on an item completely. To visualize stepping down, imagine a staircase with four steps. On the top step is the most expensive way to buy an item and on the bottom step is the least expensive purchasing method.

Here’s an example of buying pancakes for breakfast. The most expensive method (top step of the staircase) would be going to a “sit-down” restaurant like IHOP, Denny’s, or Friendly’s and paying about $5, excluding a tip. The next step down would be to buy prepared pancakes at a fast food outlet for around $3.

Go down two steps on the staircase and you might pay about $1 a serving for frozen pancakes at a supermarket and maybe 25 cents for pancakes prepared with a mix. At the “floor” of the staircase would be the cheapest method still: pancakes prepared “from scratch” (i.e., dry ingredients). Bottom line: “stepping down” provides a variety of purchase options ranging from the most costly to the most frugal.

“Stepping down” works especially well with “discretionary” expenses including clothing, shoes, gifts, home furnishings, toys, and housewares. Steps of spending, from top to bottom of an imaginary staircase, might include department stores, discount stores, factory outlets, consignment stores, and thrift shops/flea markets/garage sales. Again, the more steps one goes down, the greater the realized savings.

Thrift stores are typically operated by non-profit organizations as fund-raising enterprises. Donors get receipts for a tax deduction, shoppers get great bargains, and a non-profit agency gets some badly-needed cash; a real “win-win-win” for all involved. Many thrift shops also hold seasonal “bag sales” where shoppers can purchase a large bag of clothing for a nominal amount such as $5.

Consignment stores are operated as both for-profit businesses or as fundraisers for non-profit organizations. Consignment stores split the profit on items for sale with their previous owner, thus affording people an opportunity to both make money on unneeded items and find great bargains. Both thrift shops and consignment stores are considered part of America’s multi- billion dollar a year resale industry.

According to NARTS: The Association of Resale Professionals, U.S. resale stores have annual revenues of about $13 billion. They estimate that about 16-18% of Americans will shop at thrift stores during a given year and about 12-15% in consignment shops. These percentages compare to 11.4% of Americans who shop in factory outlet malls, 19.6% in apparel stores, and 21.3% in major department stores. Online shopping, discount department stores, and dollar stores are other popular shopping venues for those seeking bargains.

Resale shopping offers an additional benefit that traditional retail stores can’t match: it keeps previously used items out of landfills and gives them a good second home. One person’s cast-away item is another person’s treasure. The next time you need to buy something, consider “stepping down” by visiting a local thrift or consignment store. This small step could save thousands of dollars over time. The money you save-versus retail prices-can be redirected for everything from family vacations to retirement accounts. Not only will you likely find great deals, but you’ll be helping to support a local small business or non-profit agency.