Charity Retail tomorrow
Charity Retail in the past
Most businesses evolve over a period of time, and charity retail is no different. Think back to charity shops pre 2000 and compare them to most charity shops today. Generally, today they look and feel more like traditional high street retailers with smart shop fits and no charity retail smell of the past. Before the birth of e-commerce, the high streets had a wider range of retailers and apart from some mail order companies retail was bricks and mortar. Retail has since changed considerably.
Charity Retail today and in the future
Customer shopping habits continue to evolve and change, and our high streets are still losing traditional retailers at a very uncomfortably high pace. At the same time charities are making investment to grow their retail business, with the majority planning to open more shops and most charities have plans to also grow their online business. This is a very interesting trend because the financial pressure charities are under is also increasing due to a wide range of rising costs plus reduced government funding.
The good news is charity retailers can increase their retail profits considerably, because the market conditions for strategic growth are ideal for charity retailers as there is a growing gap in the market. This is apart from rag prices of course, which is a serious concern, and rag prices are likely to fall again in the short term.
This opportunity is driving an increasing investment in retail for a considerable number of charities. The main areas seem to be the opening of large superstores, modern shop refits, new shops generally plus the trend of unusual shop formats, and e-commerce. At the same time charities are spending an ever-increasing amount on staffing.
The devil is in the detail.
Getting the optimum profits from charity retail is in the detail.
Superstores.
These can be highly profitable, if they are in the right location, and many people believe they are a key part of the future of charity retail, but they are a high risk, so following best practice is highly recommended.
Modern shop fit outs and new shops generally.
For new shops or upgrading existing shops, in fact all charity shops need to have best practice installed to get the best sales. Simply opening a new shop or having a shop refit does not guarantee great sales if best practice is not in place and if it is not considered it could negatively affect the profits.
Unusual shop formats.
These are increasingly fashionable, and some are successful but equally some are struggling. The key is to review the listed best practice and especially number one
Best Practices:
- Make sure the shop format and product categories are right for the location. Understanding the profile of the local customers and target customers is so important but often not considered enough.
- Spend time on ensuring that the customer journey is designed scientifically to increase the dwell time and key product visibility. This approach is proven to generate the optimum sales.
- Pricing within charity retail is a science and can make up to 25% difference in the sales performance, yet so often it is left to the shop teams. Training is vital but so is giving the team some pricing tools to help them get the optimum sales for their donations within their location.
- Base the staffing levels on best practice and ensure they are well trained.
- Be careful not to spend excessively on the fit-out costs.
E-Commerce.
This was once the ‘silver bullet’ for additional profit and remains an enigma for most charities. Most charities are using systems and process similar to selling on eBay at home, which is highly inefficient. After reviewing thousands of listings by charities the majority are not using algorithms best practice which is reducing the visibility of the listed products, normally due to lack of knowledge and training. More staff will not help unless the best practice e-commerce basics are in place.
Staffing.
The staffing costs are growing fast due to the national living wage increases and sometimes even increasing staffing levels to compensate for a lack of volunteers. Apart from having a proven effective volunteer recruitment strategy the key is to ensure that the investment is in manning the shops and keeping the retail structure as flat as possible. Over investment in the retail structure is tempting, however, its expensive and not proven to improve profits.
Summary
Optimum profits are normally achieved by a range of small tweaks but unless you know what the tweaks are and how to implement the tweaks due to the complexity within charity retail then getting advice is often the best solution.
