CHARITY RETAILING: OLD SHOPS NEW TRICKS

LIZA HELPS

"The whole restructuring was implemented by review. Initially, we did not know where we should be going. So the first thing we did was set up a shop support team with four full-time paid employees answering all questions and if they could not answer it immediately, they could always go and find out."

On a more gradual basis the shops team is helping the outlets to be more self- sufficient in marketing. Harvey is working on a system of templates with Oxfam images, branded posters and leaflets. Shops put their own messages on them for local printers to process.

"They (the shop managers and volunteers) do not have to spend time designing it themselves and additionally it means there is a cohesive, professional brand on a national basis,

says Harvey.

The strategy has certainly paid off with cost savings made on the reduction in the number of staff and bureaucracy, which has freed up the shops allowing them to make decisions quickly.

"In terms of sales, shops have been doing fantastically over the past two years with profitability going up as well."

Initiative Three: Commercial partnership

More recent innovations have included a strategic link with a famous brand such as ActionAid and luxury leather goods brand Mulberry or Textile Recycling for Aid and International Development (TRAID) with high-street retailer Topman.

In both cases the initial link was suggested by the brand rather than the charity, but that does not have to be the case, says Maria Chenowetch, head of retail at TRAID. She says that prior to the approach from Wayne Hemingway, a design consultant for Topman, TRAID was actively seeking a way to supply a high-street retailer with customised and vintage clothing.

TRAID provides 300 pieces of vintage clothing and 90 customised garments each week to Topman's flagship store in Oxford Circus, London. The charity's shops are gaining a reputation for their customised clothing and innovative accessories made from clothes that have definitely seen better days. Previous best sellers have included shoulder bags made from the worn-out jeans.

Chenowetch says the charity's success depends on its centralised warehouse, its skilled team of sorters, volunteers and employees who customise the clothes to reflect current fashion trends.

So successful has the venture been that Topman has asked TRAID to supply its Manchester store as well.

ActionAid was asked to be one of the two charities benefiting from the sale of customised bottletop bags sourced by Mulberry from Kenya and Uganda.

The money raised by Mulberry would go to assisting with HIV and Aids relief in the two African countries.

Although ActionAid is not selling a resourced product itself, the partnership between Mulberry and the charity is very similar to that of TRAID and Topman.

ActionAid's marketing director Lyndall Stein says it is important from the outset to set out expectations and boundaries so that both parties are in agreement.

"It is a working partnership and there are risks involved,

says Stein.

"Mulberry was very keen to raise a lot of money but we thought long and hard before agreeing. We have not had a relationship like this before and we had to weigh up the pros and cons."

There are also very high rewards to be played for and not just in terms of money. Both TRAID and ActionAid have benefited from enormous publicity as well as being able to spread their brand awareness to a new audience. There are few charities that could afford prominent sales space in two of London's top shopping districts - ActionAid in Mulberry's flagship store on Bond Street and TRAID in Oxford Circus.

For Chenowetch the whole experience has been stimulating and all the better for the support given by the team at Topman. The company assists with the salary for a specialist sorter as well as providing washing machines for all the clothes. It is a relationship that she hopes will continue to benefit both parties.

CHARITY SHOPS' VITAL STATISTICS

According to Lekha Klouda, executive secretary of the Association of Charity Shops, the latest three-month benchmarking survey carried out by the association shows that the quarter to the end of June was hard due to The World Cup, the Queen Mother's funeral, the Jubilee and bad weather.

Klouda is warning of tougher times ahead. "We know from reports in the press that commercial retailing is undergoing a slowdown. That may feel its way into the charity shop sector."

A recent Charity Finance report shows that there has been a recovery in the sector, which should prepare charities for a slowdown in the future.

Profits rose by 37 per cent with the average profit per shop at £302, on a par with levels not seen since 1998. More than half the charities surveyed reported an increase in profits of more than 20 per cent over 2001 levels.

Total income for the sector was £4.27 million, a 12.4 per cent increase, with the average shop recording sales of £1,371 per week, an increase of just under 15 per cent.

Shop numbers decreased year-on-year but overall when asked about future plans, charities said they expected a net increase of 137 shops, which if this comes about would reverse the trend of the past two years.

A few years ago, charity shops appeared to be in crisis. However, the pessimists have been proved wrong. Liza Helps looks at some initiatives that are giving charities a new lease of life on the high street

There is no doubt that the past couple of years have been tough for charity shops. But a revitalised charity retailing sector has emerged with some very innovative ideas - a far cry from the dowdy image of the second-hand shop.

"The past two to three years were the first real tough period that charity retailing had gone through since an expansion of shop numbers from 1990 to 1996, and of course that was driven by profitability,

says Lekha Klouda, executive secretary of the Association of Charity Shops. "People did not really have to concern themselves with whether a shop would make a profit at the end of the day; it was more or less guaranteed."

The period between now and then has been a wake-up call. Shop numbers are still declining, says Klouda, but that is no more than a response to hard economic fact. "If (a charity) had 100 shops a few years ago, it was not a major concern if one or two were not performing as well.

Now you have to think hard and market actively rather than just living with it."

Klouda points out the simple fact that "the fortunes of the sector are tied up with the high-street and shopping habits as what we sell is to do with consumer spending."

However, in general the whole retailing sector has seen a growth in sales and profitability. "The success or recovery in the sector has been seen right across the board, not constrained to a few charities,

says Klouda.

"But whether it's inevitable or not, the past two or three bad years made charities take fairly critical steps to rescind the decline and made them look at core business more closely.

"In terms of profitability, it is very much down to how they are run and managed. They have had to take active steps rather than relying on better sales and assuming profit will rise too,

she says.

"There has been hard critical analysis, and difficult business decisions to maximise profit. The past three years were painful and it has resulted in gain. Everyone has had to look very critically at their own operation. Everyone was forced to examine how he or she ran his or her shop."

However, Klouda concludes: "The hard times and rigorous, more business-like approach will put the sector in a good position in the long term."

Initiative One: The internet shop

Selling goods via the internet tends to be restricted to those companies selling new goods rather than second-hand. But with so many charities producing their own mail-order catalogues, particularly for Christmas, a good alternative could be via the web and it may be another way of reaching new customers.

This has been the experience of the National Trust, which launched its e-gift shop at Easter and has already trebled the number of product lines available. "It was hard to make our mail-order catalogue cost-effective,

says Ursula Sheehy, business analyst at the National Trust.

The trust had been looking at the opportunities of the internet for years, explains Sheehy. A membership survey showed that of its 1.5 million lead members (those who are listed by their names and addresses on the trust's database), 57 per cent had access to the internet - a total of 855,000 members.

Sheehy says that this finding together with the belief that society was increasingly driven towards a convenience culture meant that not going down this route "was something that could not be justified".

The trust turned to existing technology to realise its internet strategy.

"Technology is there and people do have outsourcing units to go to - you are not pioneering anymore,

says Sheehy. "Whereas four years ago it might have taken years to establish and cost a great deal of money, it can now take as little as eight weeks from start to finish."

The National Trust outsourced the running of the e-gift operation to iForce, which managed the entire fulfilment process including product storage, stock management, picking, gift-wrapping, packaging and worldwide distribution.

"This meant we could go from nothing to 100 per cent straight away,

says Sheehy. "And because we get charged per transaction, we can manage the business more cost-effectively."

Nigel Richards, divisional director of direct sales at iForce, says: "By outsourcing, the National Trust was able to test the market and be up and running very quickly. That is not to say that they could not do it themselves, but it is risky."

iForce has about 200 staff and more than 500,000 square feet of warehouse space in four locations serving the UK and the Continent. Its clients include John Lewis, Sony, learndirect, and DEFRA.

Sheehy says that the trust had reaped the benefits of experience rather than trying to pioneer a system of its own. In addition it is also linked into economies of scale since iForce buys for all its clients, not just the trust.

The trust is able to monitor operations and can focus on getting closer to its audience rather than concentrating on the practicalities of the day-to-day running of the enterprise.

"We are able to provide greater customer service flexibility and serve those who can not get to National Trust properties, and we can get to an international market,

says Sheehy.

Initiative Two: The makeover

Revamping a brand, image or even a shop is one of the more traditional ways of keeping established and attracting new customers, especially as competition within the sector and on the high street hots up.

For John Canessa, head of retail at Marie Curie Cancer Care, the aim was to beat competition from discount retailers. "We decided to sell quality items at a discount price. You can buy a T-shirt from Matalan for £2.99.

We sell T-shirts from Marks & Spencer for the same price."

To achieve and maintain a high quality and to really get at the core of the charity, Canessa says that all operations are controlled in-house right down to the employment of drivers and warehouse rag sorters, who are trained to recognise good quality items and to establish which of the 172 Marie Curie outlets would achieve the highest price.

"A Vivienne Westwood garment is more likely to command a higher price in Ladbroke Grove than in Richmond and

Teddington, while for a Chanel suit it might be the opposite,

says Canessa.

The charity takes a very proactive approach to sourcing products and will even go door-to-door. All donations are handled centrally from a network of eight purpose-built regional warehouses.

This control has led the charity to buck the downward trend in charity shop retailing and enabled it to post an increase of 70 per cent in profits and a 34 per cent increase in sales over the past three years.

To take the quality image further, Canessa realised that re-designing the shops was another priority. Fortunately, having in-house expertise enabled the charity to keep costs to a minimum.

"We changed the style (of the shops) to be brighter and lighter and went for a more modern look with chrome, mirrors and wooden flooring. We have a look and refit that is durable.

"Refitting has been done at a lower cost than we would have achieved before because we used an in-house team and have not followed the fashions on the high street. The savings mean that we have been able to step up the process enabling every shop to be refitted in the next two and a half years.

"We have created an improvement that we felt the product deserved. It does not look like a charity shop; it is meant to look like a high-street retailer."

Oxfam has also restructured its management and reassessed the way it is run. While looking to keep everything in-house in the same way as Marie Curie, it has decided to decentralise.

Anne Harvey, marketing manager in the trading division at Oxfam, says: "Our new strategy is very much driven from shop level rather than imposing a market strategy from above, based on the fact that we have so many shops and locations.

"Our strategy encourages shops to market their own products to their own customers. But, we still have some national initiatives, such as advertising.

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