Today's consignment shop: hip and online

But the same Web tools that help stores thrive also let individuals compete by selling clothes directly. So consignment shops are innovating.

Small, fringe, and dowdy, consignment stores used to attract shoppers who wanted to be hip and were willing to reach beyond the mainstream to get a good deal. No longer.

Step into Designer Resale, an upscale consignment shop in New York City, and you can see the difference. Labels from trendy Henri Bendel, Saks, and Bergdorf Goodman can be found prominently displayed. The store itself, more than 3,000 square feet spanning five storefronts on East 81st Street, draws customers who come here from as far away as California.

"Technology has come such a long way since our opening 21 years ago," says proprietor Myrna Skoller. "We are now able to post new products on our website." Designer Resale also sends e-mails to customers and consignors and reaches out via Twitter and Facebook. Other consignment stores sell most – or even all – of their goods online.

The arrival of the Internet has been the biggest driver in the transformation of the consignment store. Instead of serving a local market with clothes and accessories acquired locally, the 21st-century shop sells online nationally with items that come from consignors from just about anywhere.

The trend toward "gently used" – spurred perhaps by postrecession frugality – is so strong that stores can now even specialize in, say, evening wear or men's upscale clothing. Because shoppers and even consignors – the people supplying their used clothing for sale – can interact online, the process is far easier and more inviting.

The result is that consignment shops are beginning to experiment with new kinds of promotions that mimic the come-ons from regular retailers. For example, this month Christabelle's Closet, an online consignment boutique based in New York, is debuting a rewards program for loyal shoppers that includes a free gift with each purchase as well as discount coupons every other month. Consignors also have a loyalty incentive: The more they sell to Christabelle's, the bigger the share of the profit they get from each sale. (Typically, consignors are paid a share of the price their item sells for.)

"We do our best to earn the love and respect of our members – both shoppers and consignors," says Christina Carathanassis, who launched the consignment store in 2004. "This sliding scale not only benefits the consignor with extra income, but also offers motivation to actually clean out their closets and purge items that are no longer needed."

Linda's Stuff, the largest consignment store on eBay, is borrowing another page from the retailers' playbook. The Horsham, Pa., store, which specializes in designer clothing and accessories, offers free pickup on items to be consigned no matter where they're located in the United States. The store also has a referral program: $15 for each friend shoppers refer. The retailer also offers free shipping on select merchandise.

Some consignment stores are now willing to buy merchandise outright from consignors. Fashionphile.com, for example, with showrooms in San Francisco and Beverly Hills, Calif., sometimes buys vintage and discontinued luxury handbags. Think Chanel, Chloé, and Yves Saint Laurent. If a handbag was purchased from its website or one of its stores, fashionphile.com will buy it back within 90 days for 70 percent of the purchase price.

Another emerging trend in consignment shopping is niche marketing. Consignment stores specializing in men's clothing and accessories, for instance, are not easy to find. Gentlemen's Resale, a highly successful consignment store in New York City, carries men's upscale designer clothing and accessories.

Reciproque Consignment, the largest consignment shop on Rue de la Pompe in Paris, offers shoppers six boutiques on the same block. Upscale designer labels include Chanel and Christian Dior. Each boutique offers a particular specialty, including couture, evening wear, and accessories for women. There's also a men's boutique.

The Internet is a two-edged sword, however. The same technology that allows consignment stores to do business online also allows individuals to sell their clothing online – on eBay or Craigslist – without going through a middleman. Several entrepreneurs have used this route to start their own online consignment stores. This competition is pushing consignment stores to come up with new retail innovations.

One example is Bagbor­roworsteal.com, a website based in Middleton, Wis., that offers the latest trends in gently used designer handbags, jewelry, and accessories. Customers who pay a weekly or monthly membership fee (it varies from handbag to handbag) can rent items. Loyalty points are given for every dollar spent on rentals. If an item that is rented is available for purchase, a portion of the rental fee can be used toward the purchase price. The company also offers the convenience of handbag cleaning and repair services by mail.

If you need a designer dress for a special occasion and do not want to spend a fortune, renttherunway.com, an online retailer based in New York, rents designer dresses from the likes of Vera Wang, Helmut Lang, and others. There is no fee to join. You can shop by body type, style, and neckline. Customers can save 80 percent off the retail price by renting a dress. A backup dress is also available. Once a dress is selected, a delivery date is chosen. The dress should arrive within four to eight days. A prepaid envelope is provided for the dress's return.

These trends have pushed 21st-century consignment shopping to a new, much broader level. The one thing that hasn't changed is that it still may be the best way to acquire upscale quality apparel and accessories without paying high prices.

•Carolyn Schneider, author of "The Ultimate Consignment & Thrift Store Guide" and creator of savvyshoppingguide.com, started shopping consignment stores 21 years ago, when her taste in clothing was much higher than her budget.