Retail store opportunity ? the terms- advice please

[amillion3147]

I was contacted recently from a woman who owns a gallery type retail store in the arts district of my city. It features handmade items from many different artists from my local area. It is more on the vibe of the store Anthropologie at least that is what it reminded me of when I got there and looked around. She is not looking to do wholesale but what sounds a lot like consignment to me. Vendor places product and displays it in store and the owner of the store recieves a 12% comission on all sales. They cut you a check and so on each month with weeklys report on sales etc.

She claims she gets a lot of foot traffic and does monthly gallery crawls twice a month which draws a large crowd. The only downside is that there is a montly rental space of at least $75.00 from up to $615.00 depending on your space. From some reason this just doesn't sound feasible to me even after crunching some numbers quickly. I can understand the commision but the rental space sounds a bit too much on top of that.

The only good side is that it has the potential to really get my name out some more and could lead to other opportunities. I don't have any exisisting wholesale accounts now and was thinking since I had time off from school this summer to work on obtaining an account with someone.

[OverSoyed]

I'd pass.... its like double consignment to me. :tiptoe::tiptoe::tiptoe:

The 12% is good... but you'd be better off going to a flea market or something like that to pay so much for space rental.

[beekeeper_sd]

I agree, the rental fee on top of a commission seems a bit much. Especially if, just when you get things going really good and have to increase your space in the shop, she's going to charge you more rent.

I personally have never had very good luck with consignment so I'm not a very good judge.

[amillion3147]

Thank you. I wanted to be sure someone else besides me thought this was a bit out there.

[Nanasnecessities]

Some of those have other rules, I have a frined that paints beutiful paintings and her local artists gallery specified where she could show her art other than at their place. I forget what her rent was but they took commission also. She stayed at the gallery because it brought her so much business and she was allowed to take web and orders, just couldn't sell or have a gallery anywhere close.

she rented a cute little shop and was actually open and painting there and they said no way.

[Candybee]

I'd definitely pass on that. Consignment can be risky at best but putting a rental fee on top of a commission is too pricey.

Check out local city chamber of commerces for farmers markets. Many include crafts and the fees are very minimal and you can definitely build a regular customer base that way.

[adillenal]

I have a space similar. I pay $40 a month plus 10% commission and I do quite well. I just stock my booth very well every 3 months and they take care of everything else. Works for me. I sell soap and lotion in my space.

[southern.scents]

You need to know exactly how many sales you need per month to make it worth it. Best way to do it is a quick formula. Consignment shops around here ask for 30-60% of the retail price so we'll say an average of 40%. So, you figure you'd be getting 60% from regular consignment while the rent based consignment gets you 88%.

Regular --------Rent Based

SALES*60% = (SALES*88%)-RENT

Simplified you get

SALES*28%=RENT

So, if your rent is $200 per month with this place you'll need to make $714.30 in sales to make it more appealing than a regular consignment shop. After that $714.30 you'll see a dramatic increase in how much profit you'll make from the rent based compared to the regular. Example, if you had $1500 in sales you'd receive $1,120 from the rent based shop while regular consignment would only get you $900, a difference of $220.

Hopefully this is helpful and not totally confusing.

[LynnS]

I wouldn't do it.I pay 20% at 2 locations. Have been at both for almost 2 months.No check yet but wonderiing when.The one I have just a few candles but the other one I volunteer once a month there and so far no check.I see candles being sold though.

A worker said the director mails the checks.I need to ask when??? I don't expect if a few sold and think about 10 but it is getting to be a few more.The first week it was maybe 5 candles.THis area has almost no traffic but I knew that when I started. They will have big functions for the next 6 months.Same with the other place.The other place has thousands come through when they do anything.

I am OK doing what I do with these 2 places but hope fall things will pick up???

A commission and a rental fee No way!!!!!!!!!!!!!!!

LynnS

[Twoscentsworth]

The first thing to think about is that SHE contacted you. If this place is so hot she should be turning people away not soliciting them.

You have to sell a heckalota candles to make any profit. The profit is being made by her renting the spaces out.

Think very very carefully before entering into this venture.

[sassyQ]

I was approached like that too. Beautiful antique mall. Tons of customers. Anyway, hubby and I went to take a look and decided the same thing as you.......booth rental (110.00) plus the amount of stock I would have to put in there to fill up a booth was just not feasible. Plus they got 10%. We gracefully declined. Two weeks later they contacted me again and offered a shelf space (I had a huge 6 tier ornate Spanish-type shelf that was my grandmother's that was too large for anything I have but kept it all this time) for 20% commission only, no booth space. This is an upscale antique mall so not a lot of children running around, so we thought not a lot of scratches and dents. Each person's booth is more like a mini store. It is fantastic. Anyway, we decided to try it. The first month was slow, but now the sales are unbelievable. The 20% does not hurt because I just upped my price a little to cover it. I can get about 50 or so candles (I do pillars) on it. I can check my sales every day on their site. It has worked for me under these circumstances. I would not do a booth either, but maybe they could work you a deal similar to this. HTH.

[LuminousBoutique]

I would attempt to negotiate with her, and if she will not lower her price, look elsewhere. Here in Utah there is a store called "The Quilted Bear" and it is a consignment type deal, where you pay a booth fee and also they take commission. I spoke with a manager about the fees being too expensive, and she informed me they will negotiate for the right products and for a space which has maybe been vacant for too long or so on... so its a possibility you could get her to work with you on a trial basis, or negotiate her down just to see if it works.

I agree with the other posters though.. shes asking too much as is. Foot traffic or not.

I have my products in a shop where they pay ME 1/2 of wholesale, then the rest plus 10% when it sells. Works well for me and for them. for example.. if I sell them 10 bars of soap, they pay me $3.00 wholesale for each.. they pay me half up front ($15.00) and then the rest when they sell them for $6.50 each, usually in a month or less, plus 10%.. so I end up making $33.00 off the bars which is less than I woudl sell them for myself or on ETSY but its nice to get "chunks" of money back and I never have to pay them anything.. and cash is tight so thats a huge benefit.

[amillion3147]

Thanks to all for your fine adivice and wisdom. After giving it careful consideration I think this venture will end up costing me more money than I may bring in due to those wacky booth fees. I still will try to work out a better agreement with her as it can't hurt to ask.

I still wonder how any of the other merchants are really making money with this venture with her. I guess they are not dealing with items with low profit margins.