Background

Looking back at our key predictions for 2025, they were generally accurate. However, 2026 is harder to predict because during 2025 three different overarching strategies have emerged from charity retailers.

• Retail Expansion
• Retail Stagnation
• Retail Contraction

The context is that many traditional retailers have struggled to absorb the additional costs and combat the growing online sales so have contracted their retail businesses leaving space within the marketplace for charity retailers to grow their sales and shop portfolios.

Generally, those charities that are successfully expanding and achieving great year-on-year sales, which gives them confidence. Typically, these charities are using some or all of the elements of the advanced best practices around the pricing of donations and use of retail space.  Those charities that are contracting their retail shop estate clearly don’t have the internal expertise or have not invested in using external expertise to optimise their shops, which in most cases would have increased the sales of an average of 10% which would have in most cases changes the strategy.  

Charity Retail Market 2026 Prediction

1. Decision time: Expansion or Contraction

There is likely to be a higher level of shop closures than shop openings during 2026, due to a lack of implementation of optimisation of most shops, but it depends on the board decisions. Charities that optimise their shops to generate the highest level of sales does not mean you need to refit them, although this might help in some shops this is not the main reason for increasing sales. This makes 2026 the year of decision for those charities who are undecided – invest in optimisation or contraction.

2. Superstores will continue to grow.

A superstore in a good location will continue to generate excellent profits, but a poor superstore location, plus not implementing the best superstore practic,e will dramatically reduce profits and make some superstores lose money, especially because will cost continue to rise.

What is optimising?

The customer base is becoming broader with an increasing number of younger shoppers choosing to purchase perused clothing for three different reasons: availability, support for recycling and high fashion brands at affordable prices.  This broader customer base has introduced charity shops to a new range of competitors for example, the online shopping channels, like Depop and Vinted. Current and future customers have growing expectations from their shopping experience, and there is a range of techniques within best practice, price, and space that enables charity shops to generate the highest possible sales.  

The only way to thrive is far more complex than simply refitting shops, which some charities are doing. Whilst this could improve sales, it won’t fully allow shops to reach their true potential unless they optimise the shops.  Optimising shops is:

• Designing the in-shop customer journey is to best practice.
• Use of retail space is to best practice.
• Use of hot spots is to best practice.
• Use of product ratios is to best practice.
• Pricing of donations is to best practice

If you would like to understand how to optimise the shops, read Skyline health-check