Posted 11:59 pm Sunday, May 13, 2012
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New To Tyler Plato's Closet Already Poised To Set Sales Records
By CASEY MURPHY
Business Editor
Business Editor
With the downed economy the last few years, resell shops such as Plato's Closet have been doing better than ever.
Julii Baack, who along with her husband Ryan, opened a Plato's Closet in Tyler, said the store had a very strong opening day of sales on Thursday.
They opened the store to buy clothing and accessories April 1.
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"This has been the fastest buying store out of all (333) stores ever, which we thought was shocking," Mrs. Baack said. "Usually the way sales come in is indicative of how sales are going to be."
She said on Friday that Plato's Closet in Tyler had 70 people waiting outside when it opened for the first time at 10 a.m. Thursday. The store did $32,000 in sales on its first day, averaging about $50 per person with 550 transactions, Mrs. Baack said.
"It was pretty awesome," she said.
Mrs. Baack said another Plato's Closet opened Thursday in Denver and did only about half of the sales Tyler saw.
Plato's Closet buys teen and young adults apparel and accessories and resells them at 70 percent off of retail. She said the merchandise has to be stuff that was in the store within the past 18 months and doesn't have to be name brand.
"Style trumps brand," Mrs. Baack said. "Some clothes might have a torn out tag but if it's trendy, that's what we want."
Mrs. Baack said the quality of items people are bringing in to sell to her have been the best she has ever seen. They already had 300 pairs of Miss Me items, 300 LA Idol and about 100 Rock Revival and they were still steadily collecting merchandise.
Plato's Closet also carries such brands as J. Crew, Juicy Couture, BCBG, Lucky Brand and Abercrombie & Fitch.
She said Plato's Closet buys all seasons all year long, which she believes is the secret to their success.
"If you're limiting what you're buying, you're limiting what you're selling," she added.
STRETCHING THE DOLLAR
Pete First, director of franchise development for Winmark Corp., parent company of Plato's Closet, said with things in the economy as they have been in the last several years, the company has been doing better than ever.
"Everybody is looking to stretch that dollar a little bit more and these stores do that," he said.
First said the company has been franchising for about 25 years, starting with Play It Again Sports and followed by Plato's Closet, Once Upon a Child and Music Go Round. Each of the franchises focus primarily on gently used and some new items -- a buy, sell, trade inventory.
The company acquired and started offering Plato's Closets franchises in 1999 and had 333 stores open at the end of the first quarter this year, he said. In 2001, Plato's Closet had 45 stores that averaged about $586,000 a piece in annual sales. In 2011, there were more than 300 Plato's Closets that averaged about $960,000 in sales annually, he added.
"We're on a steady growth pattern," First said.
Winmark has more than 900 locations across all four brands and is averaging 40 to 50 stores a year for the past six to seven years, he said. The company is very controlled and steady with its growth, selecting franchisees carefully to ensure long-term viable businesses.
He said under the franchise agreement, Tyler could not have more than one Plato's Closet but the company is interested in locating its other brands here and is looking for franchisees.
"These stores are generating a lot of revenue, generating a lot of tax sales for the cities and are employing a lot of people," he said. With customers going to them to shop and to sell their items, "it's a destination location."
FRANCHISEES
Mrs. Baack grew up in Tulsa, Okla., and met her 31-year-old husband Ryan, who is from Minneapolis, while they were living in the same apartment complex. They have been married for seven years and have three daughters who are 12, 6 and 1.
Mrs. Baack, 33, of Allen, grew up singing R&B until she had to get a career. She never thought she would own a business but now loves it, she said, adding that there is nothing else that would give her as much freedom financially and as much time with her children. She also likes that she makes the business what it is -- whether it succeeds or fails -- it's what she puts into it.
Mrs. Baack and her husband were both working in the mortgage business when it took a downturn in 2007 and they needed to figure out a way to subsidize their income. Mrs. Baack's niece took her to a Plato's Closet in Plano and she couldn't believe how crowded it was, she said. She went home and researched the franchise and within a month had signed a franchise agreement. The Baacks opened their first store in McKinney in October 2008.
"It's done super well," Mrs. Baack said, adding that the store does more than $1 million in sales every year. Three years later, they were ready to take on another store.
Since there were already 13 stores in the Dallas/Fort Worth area, the Baacks decided to bring a franchise to Tyler.
"We were excited because we knew it (Tyler) was a college town," she said.
Mrs. Baack said she has never seen an intersection as busy as Loop 323 and South Broadway Avenue. She said they also chose the location because it is right across the street from Robert E. Lee High School and close to Broadway Square Mall.
She said every major city around Tyler has Plato's Closets and most people here have heard of it or shopped there before. "They know us," she said. "It's not like you come into the market brand new."
She said people here are also probably tired of driving 100 miles to Dallas to shop for discounted clothing.
Plato's Closet pays 35 percent to 40 percent of what it will resell the merchandise for and pay in cash. "It's cash and we take on all the risk on if it's going to sell," she said. "It's instant gratification." If a customer sells and purchases items on the same day, they don't pay sales tax on the trade.
She said people of any age can shop at Plato's Closet.
"It's hard to put an age on stuff," she said. "I wear the stuff and I'm not in my 20s."
Plato's Closet carries womens' sizes 00 to 15/16 juniors in bottoms and XS to XL in tops; and 26 to 40 waist in guys' pants and XS to XXL in shirts. Mrs. Baack said the 5,000-square-foot space is larger than most Plato's Closet stores, which usually run about 3,000 square feet. She said the Tyler store also has eight fitting rooms and about 23 employees.
