Wednesday, December 31, 2008

When the going gets tough, the tough get thrifty.

Retailers across the country are reeling, with mass store closings and some high-profile bankruptcies expected, but sales at thrift stores have risen substantially this year. The trend is most pronounced in areas hit hardest by the recession.

Goodwill Industries International, based in Rockville, Md., said that national sales rose 7 percent in the first 10 months of the year compared with the same period last year. The Salvation Army has seen sales gains of 20 percent in some areas from March through October.

Yet both groups say donations of cash and goods have fallen - which limits the charities’ abilities to fulfill their missions and stock their shelves.

But the sales growth is expected to continue.

“We expect that we’re going to see a fairly dramatic increase in the numbers of shoppers at our retail stores through the first quarter and the second quarter of 2009, either by choice or out of necessity,” said Brendan Hurley, vice president of marketing and communications for Goodwill of Greater Washington, which operates nine stores.

“Our key objectives in the first half are focusing on generating more donations for one simple reason: We’ve got to make sure we’ve got the inventory to meet the growing demand. …

“What’s interesting is that we usually see sales drop off as soon as we hit the first week of November [as consumers tend not to buy used items as gifts], but they increased until the third week of November,” Mr. Hurley said.

The Salvation Army is seeing similar growth.

“We only have anecdotal information so far, but we have seen general uptick in sales,” said Melissa Temme, director of public relations at the Salvation Army, which has its headquarters in Alexandria, Va.

According to a survey by the National Association of Resale and Thrift Shops, sales have increased, on average 35 percent during September and October compared with the same two months last year. The most recent data available also revealed that 90 percent of the stores surveyed had experienced an increase in new customers.

The Salvation Army estimates that national sales rose between 1 percent and 10 percent from March through October compared with the same period last year. But in certain regions that have taken the biggest hits, sales are soaring.

Salvation Army stores in Detroit and Southern California have seen some of the charity’s strongest sales gains. Detroit’s economy is sputtering with the auto industry while Southern California deals with some of the most severe hits of the housing collapse. Sales growth also has been notably strong in the South.

Three Salvation Army stores in Northern Virginia, which are all run by Maj. Mike Vincent, have seen about a 10 percent increase in sales from March to October.

A 65,000-square-foot store that opened last month in Manassas, Va., has seen solid sales, though figures were not available.

“I think people are buying more [at Salvation Army] because the economy has had tremendous effect on income,” Maj. Vincent said. “I’m sure we’ve gained some new shoppers.”

At a Salvation Army store on H Street Northeast, shopper Jeanette Turner said, “There are some days when it is really crowded in here.” She said she shops for bargains at the store every week. “This is the place to come if I want to find a good deal on something I really need.”

Britt Beemer, chairman of Charleston, S.C., consumer behavior consultant America’s Research Group, said, “The numbers say normally 12 to 14 percent of consumers go to thrift stores. Now it may be closer to 16 to 17 percent. Not many categories of retail are up 20 percent.

“I wouldn’t be surprised to see the numbers go to 16 to 18 percent this year. Once people go into the stores and find out they’ve got interesting merchandise, they are surprised,” Mr. Beemer said.

He also expects the trend to continue, as he predicts a long-lasting economic downturn.

Despite the increase in sales and reduced donations, Maj. Vincent said, the Salvation Army has no plans to raise prices.

“As more people realize the value, that in itself will raise the sales,” he said. “The way the economy is right now, the worst thing we could do is raise prices. From our perspective, it is not how much more money we can make. We just want to help the folks in the community.”

The Salvation Army has experienced a sharp drop in donations of big-ticket items like cars and furniture, likely because consumers are less willing to replace them with new purchases.

The larger cash donations that usually arrive through the mail, over the phone and over the Internet are down as well. Over-the-phone giving is down 17 percent nationwide while mail donations are down 25 percent from last year, Miss Temme said.

“Impromptu cash giving seems to be holding steady if not doing better,” she said, referring to the organization’s annual Red Kettle campaign. “The kind of giving that you have to plan, which tends to be larger amounts, are the types of gifts that are coming less or not coming at all.”

Still, the increase in sales means more funding for the services that Goodwill and the Salvation Army provide.

Proceeds from Salvation Army sales fund its adult rehabilitation centers for men ages 21 to 65. The adult rehabilitation center in Alexandria, which is funded by the four stores run by Mr. Vincent, costs about $11 million per year to operate.

Sales at Goodwill stores support job training for the disadvantaged, a need that will become more dire as the economy falters.

“We need the revenue because our mission is more critical than it’s been since the Great Depression,” Mr. Hurley said.

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