#1558 1988 · Winmark Corporation · Resale franchising
Winmark's stores buy their inventory from the customers walking in the door
the problem
Used-goods retail needs stock nobody can order; every store's supply is different
background
Resale retail has a structural supply problem no purchase order solves: used sporting goods, children's clothing and teen apparel arrive only when locals bring them in, in conditions and quantities that vary by neighborhood and season. Independents survive on it; chains historically couldn't, because chain economics assume a standardized, centrally purchased assortment.
Winmark, incorporated in Minnesota in 1988, franchised its way around both problems: four value-oriented concepts — Play It Again Sports (franchised from 1988), Plato's Closet, Once Upon a Child and Style Encore — whose stores buy, sell, trade and consign used merchandise from their own customers, with new goods alongside to fill the gaps.
what everyone would do
Centralize buying and run corporate resale stores — standardized assortment for goods that are never standard, and salaried clerks pricing items their pay grade can't judge.
what they saw
A resale store's suppliers and customers are the same people. Buy at the counter, and every transaction restocks the shelf with exactly what this neighborhood uses next.
the move
The customer is the supply chain: each store's inventory is bought at its own counter from the families it serves, so stock arrives pre-matched to local demand — the town's actual hockey sizes, the neighborhood's actual teen brands. Franchising solves the second problem: local owner-operators price secondhand goods with the judgment standardized retail can't hire, and the franchisor earns royalties on system-wide sales ($241 million for Plato's Closet and $236 million for Play It Again Sports in fiscal 2010) rather than running inventory itself.
why it works
Local sourcing is demand information embodied in goods: the ski town's store buys ski boots, the suburb's buys cleats, automatically and without a planner. Trade-in credit keeps customers inside the loop (yesterday's outgrown jacket funds today's purchase), generating repeat visits that pure retail lacks. Franchising aligns incentives with the judgment problem — resale pricing rewards an owner's eye — while the franchisor's royalty on sales, not inventory, keeps its economics clean of secondhand margin volatility.
the payoff
Four resale brands franchised since 1988; fiscal 2010 system-wide sales of $241M (Plato's Closet) and $236M (Play It Again Sports)
where it breaks
Growth is bounded by foot traffic: a store can only buy what its customers carry in, so expansion means more locations, not bigger ones, and each shop's assortment quality depends on its owner's judgment — a weak franchisee buys badly forever. Trade-in pricing still invites the 'lowball' grievance that shadows resale, thin resale margins cap marketing, and e-commerce resale (thredUP, eBay) now contests the convenience the neighborhood store once owned alone.
what came after
Winmark proved resale could run on chain machinery, and its buy-from-your-customers franchising became the template for the resale-retail wave that followed.
references
- [1]Winmark Corporation Annual Report on Form 10-K, fiscal year 2010US Securities and Exchange Commission, 2011sec.gov