As thousands of people flocked to New York this past week for New York Fashion Week, the great cycle began again. Clothes worn by the models will make their way from the runway to fashion desks and designer stores and then to people’s closets. Some of the most expensive pieces will make it to consignment stores offering bargain hunters the chance to snap up high-end clothing at affordable prices.

Consignment stores that let fashionistas trade their clothes for cash have been with us for decades but now there’s a growing appetite for secondhand clothes stores specializing in high-end labels. Everyone seems to benefit. The rich get to offload last season’s looks and the rest of us get to shop the closets of the in-crowd and the 1%.

Department stores have experienced a drop in sales and stores like Sears, Gap, Macy’s and Kate Spade have all announced that they were shuttering shops across the country but resale shops, on the other hand, enjoyed an increase in sales in 2015.

The resale industry – including not-for-profit stores like thrift shops – grew at about 7% a year in 2014 and 2015, according to the National Association of Resale Professionals (Narts). It also saw an increase in inventory with more people looking to make money off of their clothes, according to Narts.

Consignment stores are winning because they have a smart business model, said Tammy Fluhr-Gates, whose family founded and still owns Michael’s on Madison Avenue in New York. Michael’s opened in 1954 and was among the first consignment stores in the US.

“We don’t have much overhead because we don’t own the merchandise. We don’t have to project six months out for what the trend will be and can change on a dime,” Fluhr-Gates explained. Consignment stores can adjust prices according to whatever is happening that day – whether there are more people buying or selling. “There are few businesses where everyone feels like they are winning.”

Consignors are winning because they are able to monetize a piece of clothing they no longer need or want. Shoppers win because they get a piece of high-end clothing at a discount. The consignment store wins by “bringing them together”.

On average, Americans selling their clothes get from 40% to 60% of the selling price. The rest goes to the store.

About 80% of clothes taken in by Michael’s are sold within the first 30 days, said Fluhr-Gates. “We price to sell,” she said, adding that consignors should think of clothes as real estate. If you overprice your house, you run the risk of it sitting on the market for too long. “The same kind of phenomenon can happen in the consignment store.”

Elizabeth Murphy, who along with her husband Ben Malik Karambiri owns three high-end consignment stores called Eleven – one in Manhattan and two in Brooklyn – loves the hustle of consigning.

“It’s always something new every day whether it’s the consignor being crazy or irate and fighting with us about what she wants for price point or someone coming in and buying $3,000 worth of old Givenchy T-shirts because they collect them,” she said.

Haggling over prices does not faze Murphy – there is a specific formula to pricing items at a consignment shop.

“Anything that’s not Chanel or Hermès immediately depreciates by half the minute you walk out of the store. You bought a Prada dress for $500 from Prada on Fifth Avenue. You walk out the store, it is now worth $250. If the tags are on it, you have never worn it, it’s never been photographed, you’ve never washed it, I am going to keep it at $250. After it sells, you can have a half of that. That’s a 50-50 split. That’s consignment. We are glorified eBay essentially with the different percentage,” she said. “If it has been washed, loved, abused, you were photographed in it, it has been worn 10 times or it is a mass-produced item, I cut the price in half again so now that $500 dress is at $125. That’s my price point. That’s how I decided prices.”

There is a reason why items from Chanel and Hermès sell for more: they are unique and the collections are limited.

“I tell people the clothes don’t have the best retail value because they are so mass produced. I mean Prada is in 30 states in the United States and 75 countries. This is glorified Zara at that point,” said Murphy. “When something becomes mass produced, it loses its value just like any antique or a car. Mass production kills value.”

Owners of consignment stores agree that the idea of selling and buying used clothes has become more mainstream over the years. For one, there was a rise in websites like eBay that enabled people to sell their possessions. Then came the recession. As many Americans found themselves without a raise for years or taking lower-paid jobs to make ends meet, making money off clothes one already owned, as well as buying slightly used clothes at a discount, became more and more appealing.

“We have seen everything. We have seen a young girl who got a handbag for Christmas – she wore it, loved it, abused it – and now wants to sell it and make some rent money. We have seen a woman from Connecticut sell us four Birkin bags from the back of her car in a parking lot because she is getting a divorce and has to make money. She is selling them under the fly from her husband,” said Murphy. “Nine times out of 10, [consignors are] someone who just needs straight money.”

Anyone doubting the widespread acceptance and popularity of shopping for used clothes need look no further than Macklemore’s 2013 hit Thrift Shop. The song sat on top of Billboard’s top 100 list for weeks. It was subsequently deemed “the most successful track in the 25 years of Billboard’s Hot Rap Songs chart”.

The $20 bill burning a hole in Macklemore’s pocket, however, would do him no good at any of the high-end consignment stores in New York, where price tags can range from a few hundred dollars to a couple of thousand.

Despite the prices, the market has gotten slightly younger over the years, said Greg Selig, owner of Encounters. Encounters was the first high-end consignment store to open in the US in 1954. Selig’s mother was a salesperson there before she and her husband bought the store in 1981.

“I would say it’s a young girl just out of college, she wants her first job, she wants her first fancy handbag. It’s the woman between 22 and 40 – they want to keep up with the Joneses. They want to look good. They are practical shoppers. It’s people who are trendsetters. It’s people who go: I can’t go to Macy’s. I can’t go to Bloomingdale’s. I can’t wear the same thing my friend does. I have to wear something super unique. I want to stand out,” Murphy agreed.

While the buyers might have gotten younger, consignors remain slightly older.

“The younger audience is not going to be spending $1,200 on a [new] bag in terms of an accessible income. The customer base has gotten younger but in terms of the consignment base – the people selling the goods – there’s only so young you can get in terms of who has accessible income” to buy the items often seen on the runway, Selig explained.

Fluhr-Gates recalled once telling another reporter that the most expensive item sold at Michael’s was an $18,000 handbag. Who would buy that? Someone rich, she said.

“People who are purchasing from us have the ability to walk down to Hermès and buy it from Hermès directly, but they understand the value of consignment because they can get it for a few thousand dollars less, which is not chump change,” she said. “Also, because they recognize that recycling has a benefit and that value can also reside in the thrill of the hunt. There is also a psychological aspect to shopping consignment. And you never know what you are going to find.”