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How Plato’s Closet Was Built to Sell

1851 Franchise takes a look at how the number-one clothing resale franchise reached its industry-leading position.

Plato's Closet is a resale clothing franchise that purchases and sells used brand-name children's and teenagers' clothes, shoes and paraphernalia. Unlike consignment shops, Plato's Closet pays sellers on the spot. The used clothes are purchased at between 30% and 40% of what Plato's Closet intends to sell them at, creating a profitable model for both franchisees and customers. The store's name was inspired by Dennis and Lynn Blum’s son's school work about the philosopher Plato, who had been an early proponent of recycling. 

Eager to see more consumers recycle gently used clothing, the founders wanted to expand Plato’s Closet to markets all over the country and knew that the brand was built to grow. When the founders realized that would require an investor with some muscle to get the job done, they turned to Winmark Corporation

In 1993, Winmark Corporation, parent company of Winmark Franchise Partners, had purchased the franchising rights to Once Upon A Child, the Blum’s other resale concept that targets parents of infants through preteens. In 1999, Winmark purchased the franchising rights to Plato’s Closet and started to franchise the concept in March of that year with just four existing Ohio stores in operation. 

For Winmark, Plato’s Closet represented a phenomenal growth opportunity. In fact, Plato’s Closet was the first brand where the parent company was able to successfully plan and grow a concept into a franchise superstar. Winmark focused on the core strengths of the brand and utilized a combination of marketing and public relations, as well as digital and social media, to accelerate the growth rapidly throughout North America.

A 2001 article in the Star Tribune brought the brand national attention by noting that Plato's Closet stocked up on brand-name items from retailers like Abercrombie & Fitch, Gap Inc., Silver Jeans Co., Sean John, Express, Inc. and Dr. Martens that they sold at a markdown of between 50% and 75%. According to a 2002 article in Winston-Salem Journal, Winmark spent around $67,000 for each television advertisement for Plato's Closet.

With this business model and marketing strategy, the Plato’s Closet concept caught on like wildfire. As more and more young adults started shopping at Plato’s Closet, more and more franchisees started buying up locations. In 2001 there were 45 units and by 2008 there were 281. In a 2009 interview with Star Tribune, CEO John Morgan said Plato's Closet did the best during the Great Recession among Winmark's franchises because people were more likely to sell used clothing to make money and to buy used clothing to save money. 

In 2011 Plato’s Closet featured over 280 franchises in North America, and by 2018 the number nearly doubled, reaching 480 units. Over the past 20 years, Plato’s Closet has turned into one the great success stories in franchising, currently boasting over 500 stores and growing at a rate of 25 to 40 new stores on average a year.

This incredible growth story required a solid concept, strong unit-level economics, an efficient operational plan and franchisee success in both the short and long run. Now, as new markets and new franchisees continue to enter the system, new technology platforms in digital and social media give franchisees better access than ever before to their customers.

Plato’s Closet has received its share of accolades over the years, including top retail franchise by Entrepreneur magazine and the No. 1 franchise investment by Forbes magazine. Moving forward, there is no doubt that Plato’s Closet will continue to impress both its franchisee partners and the industry for years to come.