Charity retailers must behave more like high street competitors in order to grow

Charity shops need to focus on merchandising and brand consistency to keep bringing customers through the door, says Ann McLaughlin

Ann McLaughlin

High-street brands large and small have suffered in recent years through a combination of the recession and a dramatic shift in consumer buying behaviour. However, when one door closes, a window opens, and the retail charity sector has thrived. Business rate reductions of 80 per cent or more have made it possible for charity retailers to fill the premises left vacant by failing retailers.

Figures suggest that there are now an estimated 9,000 charity shops in the UK, with a total of £974m going through their tills in 2011. As the middle classes began to turn to charity shops to find better value, the proportion of the population frequenting them rose to 55 per cent.

There is evidence, however, that this upward spiral will not continue indefinitely. With local government budgets being squeezed, councils are less likely to grant additional discretionary business rate relief to any tenant entering the high street, with charity retailers no exception.

A new government scheme due to be launched soon will require councils to fund only 75 per cent of discretionary relief payments – giving local authorities the opportunity to increase their revenue but immediately cutting into the margins of charity retailers. In Wales the figures are even worse, with an independent business review suggesting that rate relief for charities be cut to 50 per cent, with additional restrictions on where charity shops can be located.

If the proposals go through, charity retailers will need to be more competitive than ever in order to maintain their levels of fundraising. In response to this, and to other external retail pressures, such as discount fashion stores and online shopping, charity retailers must begin to reassess how their brands are perceived by consumers.

Their marketing communications strategies should include five key elements.

Branding  A number of charities, including Oxfam and Cancer Research UK, have rebranded over the past year in order to trigger growth. A rebrand is often an essential way of clarifying a charity’s positioning and of boosting fundraising performance. In fact, while donors often complain about money being spent on marketing, they are much more likely to give to charities with strong, stand-out identities – and nowhere are these stand-out qualities more important than on the high street.

Communications Consistency is key for charities that want to build their fundraising base and boost retail sales. Supporters new and old need to be clear about the charity’s core purpose. This purpose should be communicated across all touchpoints, from direct mail to the retail network. Charity retailers that clearly display their missions in-store are much more likely to engender loyalty.

Audience In addition to maintaining the loyalty of their core audiences, charity retail brands need to appeal to younger audiences if they are to grow. This includes communicating their missions more clearly to that demographic in order to secure volunteers and donations, so that the right products are available for the right customers.

Merchandising and promotions Charity retailers must compete visually with other high-street brands. Everything from window merchandising to ticketing displays should convey that good value need not be to the detriment of quality. Consistency and polished production can make ticketing and point-of-sale work much harder for retailers and any investments made there will reap rewards in terms of brand perception.

Specialism Many charity retailers are specialising in smaller product lines, carving out a niche for themselves and becoming more of a destination than simply a place to pop in and browse through. With everything from books and music, vintage fashion and bridal wear, charity shops are beginning to understand the need to classify the brand in order to generate loyalty.

The long honeymoon period for the charity retail sector may well be over. If they can no longer rely on local economies or tax breaks to support them, charity shops will have to make bigger returns just to stand still. Competition for every consumer pound remains fierce, but by focusing on merchandising, brand consistency and quality, charity retailers still have the opportunity to secure their position on the high street.

Ann McLaughlin, business services director at the APS Group

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