Salvation Army of Indiana and Goodwill Industries and Retailers and Philanthropy and Real Estate & Retail

Not-for-profit thrift stores shake low-end image

May 7, 2007

Thrifty Threads store manager Tim Waldrip can hardly keep up when he puts stylish used clothes on the thrift store's mannequins. Customers snag them so quickly he has to change the outfits three to four times a day.

Regardless of what its mannequins are wearing, the not-for-profit shop on West 86th Street is flourishing. Sales in 2006 reached $336,000--a 24-percent increase from the previous year.

Now the Julian Center, the Indianapolis shelter for abused women that runs Thrifty Threads, is in the "talking stages" of creating a second store on Indianapolis' south side.

Other local charities also are contemplating thrift-store expansions. Goodwill Industries of Central Indiana plans to add or replace eight to 10 stores in the next 18 months, including shops in Frankfort and Martinsville opening in May. Likewise, the Salvation Army intends to open three more Indianapolis stores in the next three years.

Once perceived as shopping destinations for the disadvantaged and dumping grounds for everyone else's unwanted goods, charity thrift stores in central Indiana have fine-tuned their business approach to attract a more well-to-do customer base.

According to Goodwill's research, its average customer's household income is in the high $40,000 range, Marketing Vice President Cindy Graham said.

"People shop with us because they get quality merchandise at a good price," she said. "We're not seeing people coming to shop with us because it's the only place they can."

Last year, Goodwill's 34 central Indiana thrift and outlet stores pulled in $35.7 million in retail sales, a 23-percent increase from the previous year. The 2007 projection is $41 million.

The resale business--which also includes consignment shops--is experiencing growth nationwide. The National Association of Resale & Thrift Shops, which tracks trends in the resale business, estimates sales increase about 5 percent a year.

A sluggish economy could be one factor in the shops' success. Higher-income customers are hitting thrift shops, association Executive Director Adele Meyer said, to save money for more significant investments such as retirement or a child's college fund.

And charities' efforts to make their stores more customer-friendly doesn't hurt.

"The thrift stores are almost certainly upgrading their image," Meyer said.

Salvation Army Capt. Joe Irvine agrees.

"Thrift store operators in general have become much more savvy in the retail approach," said Irvine, administrator of the Salvation Army's Indianapolis Adult Rehabilitation Center.

Its five Indianapolis stores direct all their profits to the Salvation Army's drug and alcohol rehabilitation program. Irvine did not disclose the total amount, but he said adding stores could help boost revenue and meet growing demand for the program.

The local shops suffered under poor management in recent years, he said, but now have new supervision. The Salvation Army also has moved away from "mom-and-pop"-type thrift shops in favor of 25,000-square-foot superstores like the one near West 86th Street and Michigan Road.

Using an annual advertising budget of about $2,000, the agency promotes itself locally through radio, television and fliers.

Goodwill's strategy focuses on location. When choosing a potential thrift shop site, the charity looks for clusters of big-bucks retailers that allow its store to become part of a shopping community, Graham said.

The charity also considers neighborhood income when opening a store, in hopes of improving the quantity and quality of donations. One of its newest stores is in Carmel's Merchants Square, for example.

Adding thrift shops not only increases revenue, Graham said, but also encourages a greater number of donations because more people are close enough to easily drop off their used items.

Along with maintaining bright, clean stores and emphasizing pleasant interior design and atmosphere, the local Goodwill has run a 10-year advertising campaign to boost business and awareness of its mission, Graham said. Surveys show that about 33 percent of central Indiana residents understand that Goodwill's retail profits go to a work-force service program--a 10-percent increase from three years ago.

Thrifty Threads has no advertising budget, but surrounding businesses willingly stuff shopping bags with promotional fliers. The store depends more on word-of-mouth support as well as its upgraded image, which it has revamped to "not have it look so clinical," Waldrip said.

Volunteers spend hours organizing clothing and keeping the store tidy. They also carefully sift through donations and maintain standards for what appears on the floor.

The willingness of retailers to donate leftover merchandise has helped fuel Thrifty Threads, too. Recently, a closing bridal shop gave the store 140 new wedding dresses with a total value of $100,000, Waldrip said. Thrifty Threads sells clothes at about 25 percent of their original value--meaning the dresses have the potential to draw $25,000.

The potential for a deal is a big draw.

"Our customers are looking for great items at a fair value," Waldrip said.

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