Kids' Resale Chain Aims To Gain From $200 Billion Market

Ann Arbor-based Children's Orchard hopes to create a niche in used goods

ANN ARBOR (Thursday, May 26, 2005) - Revenues are up and the number of stores is climbing for Children's Orchard, a retail chain that sells used clothing, toys and other assorted goods for children under 7, as it capitalizes on the nation's growing appetite for thrift shopping and resale.

Company officials of the Ann Arbor-based chain are launching new marketing initiatives aimed at capturing a larger share of the nation's $200 billion children's market.

"We're not even scratching the surface," said Taylor Bond, Children's Orchard president, CEO and principal investor. "Consumers are spending an average of $100 a month on child clothing. Our goal is to get a bigger chunk of the $100."

Bond said low consumer confidence and the perception of an ailing economy might be stoking the growing appetite for used products, including children's goods. He said he believes the fact that Americans are more conscientious about recycling and less likely to engage in the conspicuous consumption has been good for business.

These might indeed be heady times for those in the resale business. The National Association of Resale and Thrift Shops, a St. Clair Shores-based association that represents the interests of more than 1,000 thrift, resale and consignment shops, says industry business has been growing at an average of 5 percent annually.

Adele Meyer, the association's executive director, said in a statement that the image of the resale industry has changed radically in recent decades, particularly as people become more "value conscious" and as consumers from higher economic levels gradually become less reticent about shopping for bargains.

Children's Orchard officials say their stores attract between 1.5 million and 2 million customers each year. Most of these customers -- sellers and buyers -- are middle-income earners and tend to be fairly well educated, Bond said.

Bond, who acquired the company in January 2004, hopes to triple the number of stores within the next five years. The company has nearly 85 stores scattered around the country, including six in Michigan. Bond said at least a dozen more stores will open before the end of the year in California, Arizona and Colorado. He added that Children's Orchard has seen some growth in Wisconsin, where it recently opened near Madison, and Texas, where it now operates two stores in Austin.

The retailer is moving aggressively to carve out a niche as the nation's leading upscale retailer for used children's clothing and toys.

Playing off the theme that its items are priced 40 to 80 percent less than traditional retail outlets, Children's Orchard has rolled out a new ad drive with the slogan "Find a treasure, save a fortune."

The company's new computer technology has helped it put in place a database of about 100,000 customers who regularly get information about new products and sales at Children's Orchard stores. The retailer also has revamped its Web site and now attracts "100,000 unique customers each month," Bond said.

Trish Thompson, proprietor of a Children's Orchard franchise in Sterling Heights, said Bond's emphasis on technology has been good for specific franchises and for the company as a whole.

"We have been brought into the computer world," said Thompson, 45.

Bond is bullish about the future. He projects revenues will climb to $22 million this year, up from about $20 million last year.

"We are looking to get to 300 stores by 2010," Bond said. "At the same time, we see the volume in our stores growing."

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