First choice: secondhand Used: Franchises of a Minneapolis company are sprouting up in Maryland, appealing to the universal desire for a bargain.

Retailing

May 04, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

In the value-conscious '90s, consumers have no problem buying other people's stuff, retailer Ronald G. Olson has found. Only, they want used goods to look new, feel new, smell new, work like new -- and cost a lot less.

As head of a growing Minneapolis-based retail franchise

company with stores expanding in Maryland and elsewhere, Olson has managed to apply his second-hand format to everything from tubas, tennis rackets and computer discs to children's clothing, Nintendo games and compact discs.

Olson's company, Grow Biz International Inc., got its start more than a decade ago as a consulting firm and now franchises 1,300 stores that buy, sell and trade used and new merchandise.

Since developing Play It Again Sports, which sells sporting goods, Olson and partner K. Jeffrey Dahlberg, company chairman, have created five more concepts: Music-Go-Round, for musical instruments; Computer Renaissance, for computers; Once Upon A Child, for children's clothing and toys; Disc Go Round, for music CDs; and It's About Games, for video games.

"We were surprised at the success of Play It Again Sports and the acceptance by the consumer, and we thought this must be adaptable to other concepts," said Olson, president and chief executive officer, who has created each new concept by acquiring existing retailers and converting them into franchises.

The stores buy used goods from consumers, typically name-brand merchandise in good condition, and re-sell them at up to 50 percent off retail price. Often, they target parents looking to save money on instruments, equipment, games or clothing they know their children will inevitably lose interest in or outgrow.

In part because of recycling, Olson said, "that stigma of yesterday, where used products weren't acceptable, has disappeared."

The company, with 1997 comparable-store sales of $510 million, saw its net income jump 25 percent last year to $3.2 million, or 52 cents per share. Shares, which closed at $13.12 Friday, have nearly doubled since trading at $7 in August 1996.

Grow Biz has franchise agreements for 300 stores to open within the next few months -- two in Maryland -- and envisions as many as 7,000 stores nationally. The Baltimore region, home to 14 of the state's 23 Grow Biz stores, could support as many as 12 stores of each type, Olson said.

Two weeks ago, the third Music-Go-Round store in Maryland opened in Cockeysville, right across York Road from a Play It Again Sports store. Other Music-Go-Rounds are in Glen Burnie and Ellicott City. James Ritz, owner of the Cockeysville Music-Go-Round with his wife, Sheri, previously owned a Pretzel Time franchise of nine shops and sold off all but one store to open the new music store, a 2,600-square-foot space where saxophones and trumpets share wall space with dozens of guitars.

A saxophone that would cost from $900 to $1,200 new sells for $399 to $499 at his store, while drums that retail for $900 to $1,300 sell for $499 to $699 used. About 60 percent of his instruments are used.

Ritz, who plays guitar and drums and used to play in a rock band in New Jersey, spent more than two months traveling the East Coast to purchase instruments, which he sanitizes and reconditions before selling.

He expects to supply many of the area's school band members && with instruments -- and to have more than a few resold to him or traded in for something else.

Across the street on York Road in Cockeysville, Jim Hench has run a Play It Again Sports store with his son-in-law, Steve Graves, since 1992.

It's one of 15 in the state, with other Baltimore-area stores in Westminster, Gambrills, Annapolis, Ellicott City, Reisterstown, Bel Air, Glen Burnie and Laurel.

In the York Road store, golf, ice hockey and in-line skating equipment -- new and used -- fills half the store, which also sells baseball gear in the spring, ski equipment in the fall, and treadmills, lacrosse sticks and cleats.

About 65 percent of the equipment is new. Customers selling used equipment can put it on consignment or sell it for cash.

Sales have risen each year for the past five years, and in 1994 the store doubled in size, taking over space from a retailer that closed next door, Hench said.

"Our biggest customers are families, kids trying sports for the first time and parents not sure if they'll stay with it," Hench said.

"Rather than spend a fortune, they'll buy it used and know they can bring it back to us."

Other Grow Biz stores in Maryland include Once Upon A Child in Ellicott City, Computer Renaissance in Annapolis and Rockville, and Disc Go Round in Frederick.

Grow Biz recently acquired Video Game Exchange Inc., which sells used video games, and plans to convert those stores to It's About Games, including seven in Maryland.

Such stores are part of the growth of retailers specializing in good-quality used merchandise, as consumers have become more value-conscious, said Tom Saquella, president of the Maryland Retailers Association.

"It's become socially acceptable to get a bargain," Saquella said.

Pub Date: 5/04/98

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