Capitalising on charity shop popularity

Long-gone are the days when charity shops were viewed as the second-class citizens of the high street, the place where those who had fallen on hard times purchased much needed, but often poor-quality, clothing and bric-a-brac.

Driven by a combination of pressures relating to the cost-of-living, and a desire to consume goods in a more ethical and sustainable manner, in recent years charity shops have experienced a boom that stands in stark contrast to many more commercially driven retail outlets.

Indeed, the first quarter of 2023 was particularly strong for the UK charity shop sector with like for like in-store sales rising by 15% compared to the same period of the previous year. Of course, maintaining growth of this level would be exceptional, but recent figures released by the Charity Retail Association reassuringly demonstrated that sales have indeed remained steady.

Whilst there was a slight (0.8%) rise in in-store sales, the transaction value of those sales increased by 4.2% (no doubt reflective of continuing improvement in the quality and desirability of the stock on offer), whilst online saw sales increase by 14.3% during the first quarter of this year, possibly demonstrating a further evolution in charity retail sales.

Overall, the report detailed total income growth of 2.9% and resilience within the sector appears high with many charities planning to open new stores in the coming months. These are points to celebrate and certainly demonstrate that charity retail has come a long way since the days of being a choice only made under challenging circumstances.

The fact remains, however, that it’s not always plain sailing in charity retail and whilst some of the larger operations now offer highly curated stores of premium products that drive strong till receipts, this isn’t always the case across the board.

Many Directors of Retail or Finance within the charitable sector are guardians of retail estates that still require improvement to benefit from the greatest returns possible. Each charity will face its own challenges. Indeed, each shop within a charity’s own network may experience different challenges. The key to success, is in recognising what those improvements are, and how to tackle them.

Amongst those factors are:

Location – by reviewing the local demographic, you can tailor your stock so that it best appeals to your current and potential customers. Many larger charities move stock around their retail network to ensure it’s located where it’ll have the greatest allure – there’s no reason why all charities with multiple stores can’t consider this. Remember, you’re competing with other local retailers, so presenting the most appropriate and impactful goods is vital.

Staff – whether salaried or volunteers, the people running your retail network are the face of the charity. You need to not only attract and retain the best talent – a continuing challenge for many charities – but also ensure that they are all performing to the same, high, standards. This shouldn’t become onerous but should include checks that all front-line workers confirm the Gift Aid status of those donating goods; that they’re all maximising every sale and charging accurately; and that all new stock is dealt with appropriately.

The real estate portfolio – costs associated with maintaining your physical retail presence are likely to have increased. Keeping abreast of the upkeep of each shop and pre-empting any snags becoming larger issues, will have an impact on your shop’s profitability.

So, ask yourself: is your retail presence performing as well as it could? Is each shop performing to its own full potential? Is each shop as profitable as it can be? 

There’s always room for improvement and whilst the charity retail sector is currently buoyant, now is not the time to lose sight of the further opportunities on offer. In an increasingly competitive market where a charity shop can be pitched against high-volume discount retailers, the increasingly sophisticated vintage market, and peer-to-peer marketplaces such as Vinted and Depop, now is absolutely the time for charities to secure their place amongst this realigned shopping landscape.

Sayer Vincent’s risk and assurance team has supported many charities improve their retail operations. From the identification of operational risks and assessment of the extent to which policies and procedures are consistently applied, we help charities to promote a culture where continuous improvement across the retail operation becomes a reality.

Arlene Clapham

Senior Risk & Assurance Manager