COVID 19 Update

When Charity shops reopen in June is your donation strategy good enough?

All charities should be planning their donation strategy because as soon as charity shops reopen the donation flow is going to be vastly different to anything experienced within charity retail previously. I will expect every charity will have carried out the required detailed analysis on how to deal with the very heavy influx of donations, and there are a few different credible strategies. However simply ragging more is not a strategy, it is a reactive tactic and that will simply cause medium term problems.

The reality

It is universally recognised that there will be an extremely high surge of donation’s when the charity shops reopen. However, what has not been widely discussed as there will most likely be by month two after reopening a steep dip in donations to well below previous levels for several months.

Therefore a donation strategy needs to be written immediately by charity retailers because those charities without a post opening donation strategy are going to struggle. This will be due to shortage of donations within a few months of reopening, and this will be when the sales are beginning to build towards peak season.

Where there is no strategy and considering the seasonal change charity shops will have to undertake on their return, the rag is highly likely to be excessive, partly also caused by the surge in donation and the inability to cope with the lack of volunteers in many shops.

The modelling
Having carried out the generic modelling on donation volumes after the reopening of charity shops based upon known tends when people spend time off work at home and unsurprisingly it has highlighted a number of factors:

  1. More people will have had considerable time during the lock down to sort out unwanted things ready for donating, and far more than ever before in history and these are likely to be offered in the early weeks of charity shops reopening.
  2. Most people once they have sorted and donated after the charity shops reopen will not donate for a while. This is based upon the amount of time people with have to sort out everything during this period.
  3. With purchases having been suppressed during the lock down there will be less items being selected for donating after the lockdown is relaxed for a number of months because the replace purchases have been delayed. This could be especially true for clothing.

These are likely to also be an initial adverse effect on sales with them starting slowly and growing over the 6 months after reopening.

The modelling clearly indicates a challenging 6 months with sales (orange) growing from a lower base than previously and donations (light blue) spiking then falling dramatically before recovering.

The dark blue line is sales at 100% as expectation before COVID 19, and it is expected to return by month 6 by the modelling, although it will vary in different locations.

The dark brown line is the ideal donation quantity to achieve the sales of 100% of expectation before COVID 19 and based on the modelling it might not reach this level until after month 6.

The donation gap in months is largest between month two and month five after reopening and this will seriously suppress sales unless there are enough donations across the whole charity to supplement the donations over the door in the majority of shop locations. Ideally charity shops need 10% more donations than sales so best practices of merchandising can be applied, however the modelling indicate a challenge in reaching that ideal for quite a few months, and this is likely to suppress sales.

The danger in this type of modelling is that it is generic and the effect within in some charity shops will be far more dramatic than within charities without robust donation strategy it could be devastating in terms of sales performance.

Key aspects of a donation strategy
Every charity retailer should have a robust donation strategy already based around best practice, but this will need adaptation during this time. You should already have a calculation of your average donation value (Average quantity x Average value) per week over the door and by collection (if you sell furniture) for every shop and donation centre. This information will allow the donation modelling of what every shop will require in months two to five when donations fall and slowly recover to supplement their self-generated donations.

Now is the time to do the donation modelling and sales prediction for every charity shop over the initial 6 months after reopening. Our generic donation modelling clearly indicates that the donation surge in the first month needs to be expertly managed. This might when in conjunction with well-advertised, very convenient donation drop off locations to assist potential donors and to generate enough donations to cover the donation dip in months two to five.

Here are some key aspects to consider:

  • If you over rag just because you cannot sort the donation as normal, it will most likely generate a short-term sales uplift in rag revenue but the effect on sales will be considerable in months three, four and five which will greatly outstrip any additional reg revenue.
  • If you have donation centres or easy to donate to shops, then consider having extended opening hours definitely over the first 6 weeks. Also it will be beneficial to advertise them strongly that you want donations and highlight the locations / days / times where donors can easily donate.
  • It will be impossible to sort all of the donations during the first month in every shop due to the and lack of volunteers, therefore ideally you will need to store excess donations and then use them as required in later months.
  • Consider sourcing free temporary storage should be considered as moving some donations to storage is something that is likely to be required.
  • It is highly likely you will need to move unsorted donations more than once during this period of feast followed by famine to ensure a steady supply for your shops.
  • You will need to consider the reduction in retail space within some shops because of social distancing and the effect on sales of some product categories due to this and the potential changes within consumer potential spending habits.
  • Overseas holidays will not be happening this summer so more people will be at home or holiday in the UK and this will impact sales depending on individual shop locations when you do your sales projections.

Don’t forget the Gift Aid
Donor engagement will be critical, and all should be offered the chance to Gift Aid however the process if paper driven will need to be refined for social distancing.

Summary

A six-month donation strategy is urgently required, and this is highly likely to mean changing your current donation strategy. It needs some quick agile thinking and using the following info:

  1. The monthly sales projections per shop for the next six months
    1. This needs to consider any changes to retail space and product categories stocked due to social distancing.
  2. The average donation quantiles and value per shop currently and what the donation level model will look like per shop based on the principle of the diagram within this article.
  3. Using 1 and 2 you will be able to predict the amount of donations you will need to store in Month one and then redistribute.
  4. There will be a need to schedule some changes in logistics and donation locations and opening hours.

The key will be to take all of the available donations and maximising the Gift Aid.

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