Surviving The Unsurvivable: A Consignment Store Remains Afloat

by HENRIK ELSTER

In a market overwhelmed by a massive online presence, Daniel Cole is one of a dwindling few clothing shop owners resisting the move to the web. The 43-year-old runs a luxury store on Greenwich Avenue which sells clothing brought in by customers — giving them 50% of the sale earnings — in a process called consignment.

Since Diamonds & Cole opened in 2011, it has been buffeted by competition, notably by the growing online consignment platform The RealReal, which acquired $50 million in funding earlier this month.

“When I opened, there was no RealReal and every consignment store was a sort of mom-and-pop operation,” Cole recalled. “All of a sudden, this behemoth landed. It’s like what happened to independent book sellers because of Amazon.”

With its worldwide audience and low prices, Cole understands why The RealReal has seduced some of his consignors.

“It’s completely devalued clothing,” he said, adding that some prices have fallen thousands of dollars, especially for the higher-end merchandise he sells.

Cole’s sole employee, Michelle, whom he refers to as his ‘lady worker’, only works part-time. “She has to have something else to do because she isn’t going to make a living wage here, unfortunately!” he said, chuckling.

Fierce online competition has already left a trail of casualties. Two weeks ago, 2nd Time Around, a popular high-end consignment chain, suddenly shut down citing “a convergence of market forces hitting all brick and mortar stores — including increased competition from online retailers combined with skyrocketing rents.” Many consignors were worried when the chain announced that it might not pay them after closing.

“There are a lot shady people in consignment,” Cole explained. “If you can’t pay your consignors, then you really shouldn’t have a store. Part of my work is developing relationships with consignors and having them trust me.”

Cole has capitalized on the intimate appeal he’s created for his store. Its layout is simple. There are no aisles; both walls of the brightly lit, narrow space are lined with designer dresses, handbags, and shoes, so that customers can see most of the selection as they walk in.

“I’ve kept the shop really small and edited, and people seem to like that,” said Cole, gesturing towards the wall’s neatly kept shelves. “There are some people, myself included, that don’t like to be bombarded with 50,000 garments!”

If not for the three mannequins in the windows, a passerby with an untrained eye might mistake Diamonds & Cole for an empty lot. With its stylish black storefront, the shop’s only giveaway is its name written in fine print on the small, tinted door.

“I haven’t done any advertising — or worked very hard at putting the store out there — which a lot of people like because they say it’s their secret,” Cole said. “I’ve relied on word of mouth and organic growth. The tricky part is figuring out how to maintain that insider status and stay open. You want to be everybody’s favorite place that they don’t want to talk about, except you want them to talk a little bit because otherwise you’ll never get any more costumers!”

Diamonds & Cole’s online footprint is minimal indeed; its website offers little more than an FAQ and instructions for consignors. Still, it boasts a four-star rating on Yelp. One user calls it “The best consignment store I have found in the City.”

Although Cole has chosen not to write about his store on the web, he is certainly capable of doing so. He enrolled in Columbia University’s School of Journalism in 2002, hoping to work as an arts writer for a publication like Entertainment Weekly, but the programs offered were centered around news reporting and politics.

“I always learn more when things are fun, so I enjoy magazines and writing when there’s a little bit of humor. I wasn’t interested in being a reporter.”

Having always been interested in fashion, Cole was told that he couldn’t write about it in his arts programs. “Why? I don’t know!”

Also, budget cuts in the industry meant that finding a job after graduation was no easy feat.

“It was the beginning of the death of traditional print journalism,” he recalled. “People started getting laid off at major newspapers, so it was very difficult to find a job.” A woman who lived in his building offered him a part-time job at her consignment store, which he excelled at. As it turned out, the skill set he had acquired at journalism school was remarkably useful for this new line of work!

“The ability to talk to strangers is a real skill,” he stressed, adding that he’s become friendly with customers he’s met in the shop, although he’s careful to keep the relationships professional in case a deal were to fall through.

Cole certainly has a knack for getting to know his customers on a personal level. Two types of customers he’s noticed are an aspirational young girl who’s new to the city and living in a studio apartment that her parents pay for, and the middle-aged wife of a hedge fund owner worth millions who’s looking for something different to wear.

“Being able to understand that everybody has a story is a great thing,” he concluded. “There’s a way to relate to everybody.”

In his opinion, selling clothes is more therapy-based than journalism — hinting at how he has managed to stay in business despite the low prices of chains like RealReal. “You talk to people to get them to a place where they feel comfortable making decisions about how they want to look. I like to think that I’m helping them get there.”