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LATVIA, RIGA,
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SECOND-HAND

Alexander Laubert
Marija Kugele, marija.kugele@bb.lv
Photos: Sergey Samulenkov

At the total crisis background, only turnover of shops that sell second-hand goods does not fall. Latvian middle class, overcoming fastidiousness, set to “reasonably spend money” to second-hand shops.

Scheme
The firms, specialising on gathering worn clothes, are rather popular in the West. Clothes are collect under different pretexts. Somewhere, as it is in Scandinavia, it is more favourable to inhabitants to carry unnecessary things to the special container, than to pay for export of waste. However, more often, as it is in Great Britain, it occurs under the aegis of charity. An enterprise - collector buys from public or other profitless organisations, for example hospitals, the licence. It costs, by the way, a considerable price – hundred thousand pounds.

Collected clothes are processed with chemicals, sometimes sort and then pack. Further, it is sold for export to wholesalers (by weight), and part of profit is used for crediting the account of the organisation, which has sold the licence.

Catch of modern ragmen depends on the area, in which the enterprise is located – poor or rich, as well as from a season and even mentality. In Great Britain, for example, people carry clothes practically one season, and then, with pleasure, transfer it to the needs of charity. However, in Germany, it can be worn out. Many clothes are collected in inter-season period, in spring and in summer when people change clothes.

Sorting and processing often occurs in the countries of Third World. In Latvia too there are come such "processing manufactures", receiving raw materials from the West, which production even does not enter our market, and goes back abroad. Recycling occurs in full. The lowest grade goes to African and Asian countries. For example, in Africa, there is especial demand for tulle; it is used as mosquito net, as well as demand for shorts and vests. However in Pakistan, warm clothes are in more demand.

Absolute rags go through additional processing – "stuffing" of mattresses, a lining for clothes and many other things are made of it.

Latvia buy goods at "Maskachka" (Maskavas Street)
Second-hand shops came to Latvia in 1993. The first firm, which delivered second-hand clothes from the West for sale, was Gala. It is still a leader of wholesale and, according to information on Internet page, it occupies 33% of the market. The firm has a chain of shops Second Best and a sorting shop. At present in Latvia, in total, about ten firms are engaged in wholesale deliveries. Teksa firm has been engaged in trade since 1994. It applies for the second-third place in the market. However, its owner Alexander Laubert admits that it is difficult to evaluate the wholesale sector of the market of second-hand clothes. Clients seldom take the goods only from one company: warehouses are concentrated in one place – in the former premises of Agroapgads at Maskavas Street, so buyers have possibility to visit all of them all and compare the prices. However, neighbours unload trucks in the face of competitors and it is possible to make rough estimation of volumes and frequency of deliveries. The worn clothes and footwear is distributed from Maskachka all over Latvia. However, large retail networks, such as Degas or Humana, have own channels of deliveries. However, this is exception. Majority of Latvian little shops buy goods at warehouses, buying monthly from half-centner to half-ton of things.

Growth began in September
At present, Alexander Laubert buys the most part of the goods in England and Ireland. Two – four trucks with 15-ton containers deliver the goods monthly. It sells only in wholesale. What is his advantage? "Quality of service (he laughs), payment delay. Many small wholesale bases take advance payment, otherwise, they can’t. We conclude a contract, provide with ten days for payment for the goods."

Another our advantage is that most part of warehouses work until three p.m., but Teksa – until five p.m.: "Sometimes, it is pleasure to catch another’s one late client".

There are regular customers with the 15-year length of cooperation. They come from all over Latvia. From Daugavpils, Valmiera, Ventspils. Business of some of them grows before my eyes. "I remember, how owner of Degas chain came and took the goods, beginning from hundred kilos", tells Alexander.

According to his observations, in Latvia about 50 second-hand shops are closed monthly. In addition, a number of newly opened shops are not less, but during last months it was, perhaps, even more. However, at present, when recession is, there appeared firms, turnover of which sharply increases. "Last summer, there was a peak of sales, something crazy. We had no time to provide service for all. People came for the goods twice a day.

Fifty second-hand shops are closed monthly. The same number is opened.
After New Year, everything instantly decreased. However, since September, growth has unexpectedly sharply resumed. Many new clients have appeared. Sometimes, up to five people, who were going to open their shops, came during a day. Many of them have come from other businesses. Some owners of floor spaces in the regions, from which lessees have gone, were unable to find new lessees and decided to fill empty premises by opening second-hand shops there."

Business without costs
An empty cold metal hangar without any utilities, except for electric illumination, is filled with bags only by a quarter of it – a consequence of September boom. So production facilities of Teksa firm look. Heating is not necessary. The main thing is that the warehouse should be dry. In wet months, to prevent occurrence of mould on the clothes, Alexander dumps the price for the previous supply faster.

One kilogram of second-hand clothes cost at Alexander about 1.50 lats. Sometimes, the hangar becomes full, and a cart hardly passes the pass in the middle. "Ireland" is in front, "England" is behind. If turnover grows, there will be two hangars. And two workers – Alexander and woman – warehouse superintendant. This is the business that does not require much costs. Alexander buys bags with clothes, and sells them without knowing what is inside. These bags are gradually carried away from the warehouse, similarly as bags with cement, beginning from entry, without any special selection. It is as a pig in a poke. It is by the way, how Alexander's customers call these goods.

Previously, clothes at the firm were sorted by names and quality – by the grades "premium", the first and the second. The second grade was immediately thrown out or sold as rags to car service shops. At present, they refused from sorting – for the sake of reduction of costs. Any waste is absent. Things are sorted and price labels are fixed to them already in the shops, in which they are sold by pieces. Sorting appeared unprofitable by another reason too: different articles had unequal demand. For example, it was difficult to sell jackets and skirts after sorting. They still lie on racks in the hangar, accurately packed, though sorters were dismissed by Alexander already a year ago.

However, sooner or later, everything is sold, up to underwear and socks. By the way, they are the most profitable goods for shops. Unit weight is very small. One kilo of silk scarves – it is the most profitable "article" – can contain 20–30 pieces. In the shop, they are sold by 50 santim for a piece, and even more expensive. Whereas only two pairs of jeans are in one kilo. The easier the goods are, the more profitable they are. The only exception is furs and leather goods.

It is impossible to predict in advance, what percentage of clothes would be thrown out by wholesale client. Sometimes it is nothing, sometimes – a half. Though, the skilled client can tell at one sight at bags, whether the goods are good or bad. But if a shop owner can, at least, feel a bag, Alexander makes absolutely blind purchase. Once it was necessary to throw out all 15 ton that were in the container.

Second-hand clothes, brought from EU countries, are not imposed with custom duty and VAT, but when they are delivered from the countries outside EU, they are considered as usual goods, item 6309 in the customs catalogue.

Worn by themselves
The businessman respects its goods: "Thanks to it, the half Latvia puts on decently!" According to Alexander's statement, the clothes from bags have much better quality than those sold in the majority of our shops of ready-to-wear clothes". I put on both second-hand clothes and clothes from our boutiques. Believe me: having worked with clothes for 15 years, I can define quality of a material to the touch. Things from second-hand shops are worn twice longer, than those that are sold in Latvian shops, even when they have a label of the same manufacturer.

Even paper handkerchiefs, which can be found in bags sealed, serve longer, than those bought in any our chemist's shop. They produce the third grade for us – as for Third World countries". In spite of the fact that demand for the goods does not fall, Alexander gloomy estimates prospects. Crisis has touched the countries-suppliers too. People in Great Britain do not change the clothes now so often, as earlier. The offer decreases.

The schedule of deliveries at all serious British partners is made for a year ahead. In addition, the higher the shortage of the goods is, the lower the profit is. Buying the goods becomes more difficult, and the goods’ quality falls.

Second-hand in retail

Commercial director of Degas firm Renar Strazdins underlined that it is difficult to count a total retail turnover of second-hand clothes, because many little shops sell without a cash desk. The firm does not complain of falling incomes, though growth has stopped.

Retail chain Degas has grown from 15 shops in the beginning of the year up to 22 shops. The firm has got some trucks that carry clothes all over Latvia. They import goods from every corner of the Globe – both from the countries of Europe, and from the USA and Canada. "We buy only clothes of Creme ("cream") and Pemium classes, of the highest quality", the businessman tells.

In the majority of countries – our suppliers, gathering of second-hand clothes is connected with charity. We are engaged in it too, and it is a subject of our special pride. Annually, we give 15 ton of clothes to orphanages, boarding houses. These are things that do not correspond to our standards, but nevertheless they are sound – we simply do not buy bad things."

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