Magic Thrift Pricing Strategies
Happy Customers and a Healthy Bottom Line
The two most common thrift textile pricing strategies, rack pricing, and individual pricing have pros and cons. Each can help or hurt a store depending on how it is executed.
Rack Pricing
Rack pricing is when all items in a product group are priced the same. All women’s denim is say 7.99. Or all men’s long sleeve dress shirts are $5.99. (Prices vary between markets)
Rack-priced items don’t have to be individually priced and brands don’t matter. Just hang price signs at the start and end of each section and you are good to go. Faded Glory or Brooks Brothers it’s all the same.
The advantage to this system is that it doesn’t take a highly trained staff to get items ready to go to the floor. A quality check of buttons, collar, sleeves, stains or tears, color tag, and off it goes. Operations that rely on volunteers are often well served using this system. It is faster than individual pricing.
Customers love rack pricing as they get the best deals on the best items.
That Brooks Brothers or Coldwater Creek will sell near 100%. A low percent of the bargain brands will sell.
Cashiers are also tasked with ringing things up at the right price. They have to depend on memory or a cheat sheet. I know from experience a lot of items are rung up wrong under this system. A cashier that isn’t sure about a price that is staring at a line of customers will pick the lowest likely price. Customers don’t complain about being charged less than they expected.
It’s also easy to “sweetheart” items, selling them for less to friends than they should. A lot of sales revenue is lost at the cash register under the rack price system.
Individual Pricing
Individual pricing is when a price is assigned to each item based on brand, quality, and condition. A used but sellable thrift Faded Glory might sell for less than that Brooks Brothers with the original tags still hanging on it.
Individual pricing is a very different ball game. Each item takes a little longer to prep for sale. The person making the pricing decision has to be more knowledgeable or have easy access to value information. This system can be a struggle for a volunteer-based organization unless there is easy access to value information.
When it works the store gets better overall value out of their merchandise. Customers also get a value that is tied more closely to the perceived value of the item. The bargain brands will sell through at a higher rate as they are priced accordingly lower. The brand-name customer will willingly pay a few dollars more.
Value and brand name customers are not the same shopper.
Though the percentage is smaller than most people think, some shoppers only have $10 or $20 to spend on a whole outfit. They are better served with individual pricing.
This is where long-term production employees prove their value. I believe well-paid well-trained producers pay for themselves many times over. They will spot the Browning brand hunting shirt, the real Hawaiian shirt, the lined high-end skirt and will price accordingly.
In this system trained experienced producers will generate easily 20% higher prices than untrained producers. (based on pieces that sell) Their sell-through percent will also be higher, meaning sales rack space was better utilized. Run that over a year and all of a sudden some of the most valuable employees in a store are the producers.
Nothing works all of the time. Last week I bought two pairs of my size men’s Levi’s 501 jeans for $2.99 per pair. They are broken in but still in really great shape. I can’t even figure out how that happened. Thankfully as strictly a Savers customer I didn’t have to.
A very important difference with individually priced thrift goods is at the checkout. Cashiers no longer need to know prices, just read off of the tag or scan the tag as appropriate. Based on my before and after experience that can add an extra 10% to sales all by itself.
What’s best?
You can probably tell I am an advocate for individual pricing. It isn’t the right thing for every place. Product moves to the floor slower, customers switch tags (there are defenses to that) it takes more thought on the front end. A volunteer workforce can minimize the value of individual thrift pricing.
A deciding factor might be store turnover. That can be intentional turnover from work experience programs or natural turnover. Then why doesn’t matter. Anyplace with triple-digit turnover should think hard about what is best.
As noted above, I know for a fact that making production staff an important well-paid job will increase sales and profits. Turning a position like that into an aspirational position can create incentives for others to step up their game.
A baby step for rack pricing stores can be to have a shortlist of great name brands that can be “up priced”, sold for more than normal. The trick is to keep the list short. Tommy Hilfiger and anything Harley Davidson might be on the list. My beloved Brooks Brothers might not because they don’t come through that often.
There is some regionality to this. I suggest starting with 5 brands in Men’s, 5 in Women’s, and 5 in shoes. Once habits are well established grow that to no more than 10 each.
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