After my recent post on how home improvement thrift stores tend to be counter-cyclical with the economy, a Chronicle of Philanthropy blog directed readers to an article on new problems facing retail thrift stores. A story in The New York Times shared about how thrift store chains like the Salvation Army and Goodwill were experiencing an increase in sales similar to our experience at Bud’s Warehouse. But unlike our home improvement thrift store, they were also seeing a sizable drop in product donations. Some were worried about the possibility of running out of product later in the year.
At the Salvation Army, sales were up by 5% to 15% with donations down by 10% to 25%. Goodwill was seeing increases of 6% in sales but a donation decline of 5%-10%. The organizations pointed to several factors contributing to these trends. Like at Bud’s, the slow economy has caused consumers to seek low-cost bargains at thrift stores. But at the same time, individuals with extra clothing have increasingly decided to sell the product on EBay or Craig’s List over donating to a charity.
I suppose for large thrift store chains their scale of operations contributed to this problem. A large thrift store requires a large amount of clothing donations to sustain the enterprise. A percentage decrease in donations is multiplied in effect. In our Baby Bud’s thrift store, we have not seen a decline in baby clothes donations but our operation is so small. The fact that we have chosen a niche specialty—baby clothes—and tied it to a specific mission--job training single mothers-- also woks to our benefit. The more you can tie your mission to your social enterprise, the more effective your marketing efforts.
The problem that The New York Times has identified is not the end of large thrift stores. It is just a new economic reality that demands a new strategy. A thrift store manager needs to take advantage of increasing customer demand to shift marketing dollars from advertising for customers to advertising for donors. Non-profits in business need to see economic changes not as threats but as opportunities for new strategies and new markets.