Charity Retail – Are you Fit for the Future

Within retail like most industries history has taught us, or it should have after every financial shock or realignment you need to reflect and analyse every aspect of your business.

Covid 19 has caused the biggest financial shock in a century and those charity retailers who believe everything will return to normal a few months after reopening or when a vaccine is widely available are not considering all the facts and trends.

So, what are the trends. Since its birth over 20 years ago online shopping has been growing steadily and within the UK it was at around 22% of all retail spending just before Covid 19. Online shopping has been the stimulus for a gradual but increasing change in consumer shopping habits that have been affecting the whole of retail. The retail lockdown caused by Covid 19 has forced a quickening of the changes to consumer shopping habits with online shopping reaching 30% during the lockdown. Volunteer numbers have been gradually falling and these will be lower now than ever before and this is likely to be a permanent feature within charity retail unless this is addressed creatively.

The Facts Charity retailers are reopening to a completely different retail environment. Consumer shopping habits have evolved quicker due to Covid 19 than would have happened naturally; it is not because of social distancing – it is natural evolution. All retailers, especially charity retailers, need to review their business as a matter of urgency, because any underlining issues before Covid 19 are going to be magnified.

The Reality Most charity retailers are focused on the operational and tactical aspects of reopening, which is completely understandable. It is also true that some charity shops will not reopen, and it will take several months for the donations to return to normal levels.

The reality is every charity retailer needs to carry out detailed analysis of their charity retail business during 2020. This will allow the development of the financial modelling of the whole charity retail business from shop level upwards to initially generate a new budget for 2020 / 2021. This should then help the formation of a robust Charity Retail Strategy for the next 3 years.

The new charity retail strategy will need to be for the next 3 years because many of the actions will take time to implement but waiting will only delay the actions required and have a direct financial impact.

The key is to carry out a highly detailed sales related data analysis (structured and unstructured data) along with a highly detailed cost analysis to generate the financial modelling of the business that in turn allows good robust strategic decision making.

The Outcome It is highly likely that the outcome from the strategic decision making process will be a new charity retail strategy that contains most of the following aspects:
  • A commercial review of the current leases.
  • Some rationalisation of the current retail estate, possibly including new sites.
  • An online trading strategy to grow online trading profits that encompasses best practices and efficiencies to take full advantage of the changing consumer shopping habits.
  • A detailed strategy around the recruitment and engagement of volunteers and measure performance of the strategy at granular level.
  • A new cost budget that could include changes to the retail structure.
  • A quarterly review with clear measurements.

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