I’ve also been responsible for marketing a nonprofit thrift store. For two years I got to see what actually happens behind the scenes. I listened to the reasoning and rationalizations of store management and volunteers. I watched store customers and their habits while they shopped. I studied shopping patterns and the correlation (or lack of) to advertising. I’ve also volunteered at another nonprofit thrift store, helping to sort the donations as they arrived.
I think it’s also important to realize why people go thrift store shopping. Thrift store shopping is radically different from “normal” shopping. Let’s say I have a list of things I need. I need batteries, paper towels, a garden hose and a can opener. I’d also like to look at some DVDs and the fishing rods. I don’t really need more DVDs or fishing rods, but I’m curious to see what the store has on display. Am I going to stop by a thrift store to look for these items? Probably not. I could go to four or five thrift stores and not find everything on my list. In this case, I’d go to a Wal-Mart or Target, stores I know that carry everything on my list. In this situation, consistency and convenience are most important to me. I know these stores consistently carry the same items and I can save time by shopping at one store. Now let’s change my list. In this scenario, I have adopted a healthier lifestyle and dropped 20 pounds. Most of my clothes no longer fit well. Instead of heading to the nearest retail store or mall, I head to the thrift stores. Why? Two reasons actually. First, I know I can maximize my buying dollars by avoiding the mall. I can get ten shirts at the thrift store for the price of one at the mall. The second reason is a little more subtle but it’s tied to the first reason. In the back of my mind, a small part of my mind is wondering if I will be able to maintain at this same size. Maybe my goal weight is still 20 pounds away. In the meantime, I have to get some clothes that fit me now. Do I really want to put a lot of money into a transition wardrobe? No - so I supplement my existing wardrobe with thrift store finds.
So why are some thrift stores more successful, more profitable than others? The answer is actually four-fold.
1. Good merchandise draws customers. A thrift store shopper will usually go into a new (or at least new to them) thrift shop. Whether they come back is totally dependent on the quality of the donations the store has received and put out for sale. New items, quality products and clothing that’s in style will attract new shoppers and keep bringing them back. Nonprofit thrift stores need to focus their efforts more on the donation side of their business with a strong appeal to their supporters for the best possible donations. One of the best campaigns I have seen for thrift stores was developed by the KARM organization in Knoxville, Tenn. KARM (Knoxville Area Rescue Missions) utilizes a billboard campaign to solicit donations. The beauty of their campaign lies in the photos used on the signs. High-end furniture dominates the artwork. The campaign sets the expectation for both the donors and the shoppers.
2. Keep prices in the "impulse price" range. If merchandise is the cake, pricing is the frosting. Fair and consistent pricing is critical. I have walked away from an item that would sell retail for $15 and thrift store priced at $7. Was it a good deal? Sure it was, but I didn’t have an immediate need for it. Priced at $7, it was still priced above my “impulse buy” level. While it’s true that impulse levels are different for different people, regional expectations and product demand can help determine an item’s price. I’ve listened to well-meaning volunteer pricers rationalize the worth of an item instead of pricing the item according to market demand. Pricing of thrift store items is part science and part gut. It’s a mistake to try to maximize the profit on every single item. Let me say that again – It is a mistake to try to maximize the profit on every single item. I’m a big fan of Goodwill’s pricing philosophy. Right now in their stores, a t-shirt costs $1.49 regardless if it’s a plain white Hanes t-shirt or a higher priced Nautica “dress” t-shirt. This pricing strategy actually draws me as a shopper to look at more items on the same rack.
3. Move a lot of stuff. Wal-Mart adopted this philosophy a long time ago. Most successful thrift stores have some mechanism for purging items that don’t sell. I’m not a fan of clearance racks or shelves. These types of sales are driven by the same people who priced the item too high in the beginning. A much better strategy is to place the decision in the hands of the shopper. For example, some Goodwill stores have a store-wide half price sale on the last weekend of the month. Another way to accomplish this is to hold seasonal sales (i.e. reduced prices on summer or winter clothes). One for-profit thrift store chain uses a different color price sticker every month. Older merchandise gets marked down 50 to 75% based on the color of the price sticker. A glimpse into the back of most nonprofit thrift stores, however, reveal crowded racks and shelves, a ton merchandise waiting for whatever reason to be priced and displayed. This is sign that something is wrong. If backroom donations are stacking up because of a lack of space on the sale floor, then prices are too high and need to be reduced. If sales racks are empty and the backroom is still overflowing, then the efficiency and handling of donations in the backroom need to be overhauled. An overflowing backroom also sends the incorrect message to donors that the store doesn’t need their donation.
4. A good location helps but it only goes so far. I’ve driven past stores that were in great locations and go out of my way to go to another thrift store. Why? I bypass these stores because when I stopped in before they either had 1) crappy merchandise, 2) high prices or 3) crappy merchandise with high prices. Another plus for a thrift store is being in close proximity with other good thrift stores. I’ve discovered that I’m not the only person who travels from thrift store to thrift store. Because thrift store shoppers are looking for good deals, a successful outing at one store fuels the desire to keep shopping. I’m also a firm believer in advertising. Traditional advertising – newspaper, radio, television ads - may be advised depending on the market although I believe they are usually cost-prohibitive. A strong Facebook page can help generate strong word-of-mouth buzz for the store. Facebook is currently free for businesses (a huge plus for nonprofits) and growing larger everyday. Facebook is the perfect forum to showcase new items and publicize sales. I’d also devote some time on a regular basis to listing items on Craigslist. For nonprofit thrift stores, I’d also recommend exploring partnerships with local churches and collaborating with other nonprofit thrift stores. As a store manager, visit other thrift stores and adopt best practices.
Thrift stores can be a wonderful source of revenue for the charity or nonprofit organization they support. By following a few simple guidelines, your thrift store can be more profitable.