​

Combing the Closet

​

Search for rental treasures is secret to success in consignment formal wear

 

By Celene Adams

 

"I was introduced to resale 25 years ago by my Aunt Gloria, who took me shopping at a resale shop here in Albuquerque," recalls Rebecca Montoya, 49, owner of Formal Rentals by My Best Friend's Closet, a new Albuquerque consignment store that rents and sells used formal wear for women.

Back then, the young Montoya was in need of an affordable business wardrobe for her burgeoning sales and marketing career.

"I was hooked! I’ve shopped resale ever since," Montoya says.

It's "the search," that's key, because resale shopping attracts a certain type of customer.

"My target is not the masses," Montoya says. Instead, Formal Rentals is for women who seek a "shopping experience."

Indeed, shopping at the 1,895-square-foot store in the Hoffmantown Plaza, at Menaul and Wyoming boulevards, is something of a treasure hunt.

The store's interior is draped with 250 evening gowns, and an array of 75 pairs of shoes -- satin pumps, leather mules, and strappy sandals -- that are centrally displayed, while in two glass cases at the front of the store lie all manner of glittering trinkets -- vintage rhinestone pins, necklaces and earrings, along with funky silver rings and bracelets.

The piéce de resistance, however, is the fact that all of these items can either be rented or purchased at a fraction of the price it would cost to buy them new. For example, a spaghetti-strap sheath that would sell for $125 at the mall rents for about $25 to $40 or sells for $49 to $59 at Formal Rentals.

And all of the items are relatively new.

"Dresses last half-a-dozen rentals or two seasons," Monotoya says. After that, she donates them to various organizations.

Recalling how she formed the idea to open the now six-month-old store, (her sister business is five years old) Montoya says, "My customers would come in looking for that special occasion dress for a prom or a cruise, holiday party or wedding, but were reluctant to buy because they knew they would wear that dress only once. There is not a woman who wants to be seen in a dress a second time."

Her customers, at that time, were the 2,000 consigners who brought in their "name brand only," "new-to-gently-used" clothing in "immaculate condition," (as per Montoya's criteria) to her first store -- My Best Friend's Closet, which Montoya opened five years ago, and which is located just a few doors down from what is now Formal Rentals.

The consigners receive 40 percent of the purchase price of the garment on formal attire/accessories and 50 percent on wedding attire/accessories. Or, if a customer wants to rent the item, the store buys it from the consigner beforehand.

There's a 20 percent overlap in consigners and buyers -- women who bring in clothes but also make purchases or rent items, Montoya says, adding that her customer base spans a range of "students, young professionals, attorneys, doctors, executives and stay-at-home moms."

The market, in other words, is not a particular demographic niche, but represents women across all walks of life who look for name brands at a good price point, Montoya says. About 50 to 75 women visit her stores per day, half of whom are repeat customers.

"They are people who come in from Farmington, Gallup and other cities in New Mexico. ... I get consigners that live here in Albuquerque, but travel the world and shop all over the world and ... that's how come I can have unique items that no one else can find in Albuquerque."

Some of these include: furs, authentic vintage jewelry and fine appraised jewelry.

Such luxury items could be part of the reason that Montoya's stores are thriving while other Albuquerque consignment stores have not. In 2000, for example, she says there were six resale shops in Albuquerque. Now, she says, there are only two.

Other reasons she cites include her attention to customer service and personalized wardrobe consultations; the presentation of clothes in her store -- which "looks like an upscale clothing boutique" -- and the fact that she's computerized her data system, enabling her to offer itemized lists and projected payouts to consigners.

"I average 10 percent growth each year for [my] first store. The others haven't been established [long enough to know]," Montoya says.

By her use of the plural "others," Montoya is referring not only to Formal Rentals, but to the two adjoining boutiques she's recently opened on the same premises -- a wedding boutique she opened on Formal Rental's second floor in February 2005 and The Closeout Closet, located in the store's back room.

"Closet" is an apt way to describe both spaces. Upstairs, the wedding boutique is a mere 400 square feet, which Montoya reserves for clients to try on wedding gowns.

"Sometimes they bring family members, so there's a room just for the mother and father to sit down. You can spend as many hours as you want trying on dresses and you don't need to have an appointment," Montoya says.

The Closeout Closet is similarly informal. It offers "casual, youthful clothing for the 16 to 30 crowd. ... I wanted to tap into the daughters of the women who shop at My Best Friend's Closet, where the clothing is more traditional," Montoya says.

At My Best Friend's Closet, for instance, you might find professional business attire or a designer leather handbag, while at the Closeout Closet, a pair of designer jeans and an inexpensive beaded purse would be a more typical find.

If price is a pivotal part of the resale shopper's purchasing decision, Montoya is just as prudent about market research. Before opening her first store, she spent her vacations from her 20-year sales and marketing career to thoroughly assess the resale market in three cities: Phoenix, Los Angeles and Albuquerque.

"After studying the local consignment shops, I tried to define their market niches and then defined how my shop would be different. I looked at the locations, what was their inventory mix based on square footage, what were their price points, hours of operation, what was their process of accepting and returning unsold inventory," she recalls.

She also joined the National Association of Resale and Thrift Shops, attending their five-day national conference, asking "a million and one questions of business owners across the country," and returning home to begin writing her business plan on weekends -- a plan she wrote not to acquire financing, as Montoya's businesses are self-financed, but to be sure she had a viable idea.

And Montoya is meticulous about monitoring sales.

"Every night, I review items sold and at what price point. Each month, I run reports on which inventory items sold the highest, what sizes sold the best and at what price points. I do the same at year end so I can make decisions on inventory mix, and prices for the following seasons," she says.

For example, after her first year in business, she saw that shoes weren't selling well. Yet they took time to inventory, to clean and repair and they took up sales production floor space.

So Montoya put her foot down on shoes, deciding to consign only the new or gently worn. Now, she sells shoes that would cost $150 new in a department store for $49.99.

If that kind of pricing isn't sufficient incentive, Montoya also offers a "Birthday Card Club," -- a database that mails out a 25 percent discount card prior to a customer's birthday; a "Customer Loyalty Club" -- a punch card that culminates in a gift certificate; and a "Wish List" so that she can contact customers when a favorite item arrives.

Unless, that is, she just can't resist buying it for herself.

​