Charity Retail predictions 2024
What are the key predictions for charity retail in 2024?
Background
We are living in a very traumatic period with high inflation although this may have reached its peak in late 2023. It is unfortunately a perfect storm with a war in Europe plus serious unrest in the middle east, high interest rates, very high gas and electricity prices but unemployment is low.
Consumer spending therefore will remain under increasing pressure, throughout 2024 and this is going to influence spending decisions. There is also a growing pressure to change behaviours to help the planet and buying preused items for charity retailers will continue to become not just acceptable but desirable. At the same time purchasing online is continuing to grow and high street will continue to evolve with many retailers reducing their number of shops.
This combination of economic and politically influenced ‘perfect storm’ will help charity retailers. The sales from the end of 2022 and throughout 2023 have seen over 10% year on year growth in most months and although it will slow it is clear evidence of the exceptional opportunity charity retailers have.
Predictions
The latest planned increases in the minimum wage will have a considerable effect on all charity retailers. This coupled with a levelling of year on years sales growth is most likely to reduce the profitability of charity retailers in 2024. This will or influence the amount of focus charities give to retail as for the past 18 months whilst costs have been high, the charity retail sales boom have tended to gloss over any retail problems and reduced the cost focus.
1. Reflection
Many charities will reflect on their retail performance and review their retail operations to understand its true potential before making strategic decisions. Most charities will correctly believe that if their retail operation is going to fit for the future it will need a reviewing to confirm how it is doing when compared to its true potential. This review should include:
- Shops Locations: Are they right for the future.
- Donations: Are they being fully utilised – Pricing, Merchandising, Use of retail space and Optimising the customer journey in shops.
- People: Including shop staffing levels and is the retail structure fit for the future.
- E-Commerce: Is it generating the profit it should.
2. Investment in people
Most charities are finding retail recruitment challenging so are having to make commercial decisions to fill vacancies. A growing number of charities will invest more to training their retail team than ever before because it makes commercial sense to do so. With the higher wages being paid for shop managers, with a growing number coming from traditional retail, which is very different training is key for getting optimum performance from your shop managers. Shop managers within charity retail can make the competitive advantage so those charities who invest in the right training will reap the long-term benefits, but cheap online training is definitely not worth the investment.
3. E-Commerce
A growing number of charities will either stop selling online due to its low profits or invest in online and make it highly profitable by improving its efficiency by automation.
4. Differentiation
More charities will trial new shop concepts, some very creative, some simply larger superstores. Some will be highly successful some unfortunately will fail. However, there is a gap opening up within high street retail for charity shops to fill but there is a formula which some charities either don’t know or don’t use when making these decisions.
Summary
2024 is going to be defining for most charity retailers. Some will grasp the opportunities available and considerably grow their unrestricted income, others with struggle. The key for all charities is to reflect and then take the appropriate action to optimise their unrestricted income and measure it against the true potential rather than budget or the last year sales.
