Selling New Goods in Thrift
Does it help or hurt? What do customers think?
For some thrift retailers, this is tricky.
Selling new goods in thrift can generate additional sales, profit, and give customers a more rounded selection. Things like socks aren’t usually donated in usable condition, people shopping for thrift clothes still need them.
Here new goods are defined as items that are supplied to a store on a steady basis, generally the same item and bar code. This is different from closeouts, store returns, and distressed goods all of which change constantly.
The goal is to turn money into inventory to turn into more money.
There are a few simple criteria that can be used to determine if a category or item makes sense.
Criteria for a new good item or category
Compliments doesn’t compete with donated
High gross margin — 50% or better
Good turn rate — 6X or better
Easy ordering system
Easily stocked and merchandised
Steady supply
Every item or category does not have to check every box, the more the better chance of making good money. Checkout candy won’t hit the margin but can turn exceptionally fast.
Thrift customer expectations are a great advantage with new goods. No one leaves mad if they don’t find a spatula to go with their purchase of a donated frying pan. Their expectations might be exceeded if they do find one at a great price.
A couple of examples that check the boxes in most markets:
Sunglasses
They are donated but not in quantity. Most that are donated are well-worn. Gross margins are excellent. It is a high-demand impulse item. I have found that these sell well in traditional thrift as well as second-hand home center goods stores. To me, it’s the easiest choice.
The gross profit is higher than the average donated item for many thrift stores.
There are good vendors with programs including fixtures with easy order systems.
When kept stocked and well merchandised they generate more than double the average sales per square foot of the rest of the store.
A line I am selling right now has a cost per item of $2, which we sell for $7.99.
Socks
Are an easy category to sell in soft lines. There are always closeouts available so prices can be competitive with good margins. They are great impulse items best merchandised on end caps. I personally stay away from factory seconds in this area.
Men’s belts
Guys wear things out, especially belts. Like sunglasses, they are donated but not in sufficient quantity or quality to meet demand. On the other hand, women’s belts are donated in quantity and quality in lots of styles.
It’s an easy add-on for someone buying pants, they can be kept on a single end cap adjacent to pants or jeans. The margins are in the 50% range and some programs make for easy ordering. A good belt program can generate more profit than donated in the same space.
There are numerous closeout vendors and vendor groups. One that I have used for years is TMC Exhibitors near Chicago. (I happen to live near Chicago so that may be part of it) I am not paid to mention them.
Halloween
Not everything necessary to complete a Halloween costume comes in through donations. Makeup being the most obvious, weapons, accessories, and wigs mostly fall into this category.
There is nothing wrong with a donated only Halloween department, it can be very successful. New goods in this category put the cherry on top and money in the bank.
To ensure good turns and margins I recommend sticking with evergreen core categories. Witches, vampires, pirates, makeup, masks, basic accessories, and so on. In most cases, the fad of the year will be expensive to buy (especially licensed) and may not provide the return you are looking for.
Halloween is the best seasonal category to offer new goods.
The absolute go-to place for Halloween new goods is the Halloween and Party Expo. Vendors from all over the world participate.
Outliers
There is the occasional outlier. For me it’s spices. I have had a feature of spices in thrift stores for years. It’s the same low-priced items that can be found in any big box or discount store. For whatever reason, they sell at a nice steady pace.
They are merchandised near pots, pans, and kitchen electrics on an end cap.
It’s best to listen to the customer.
The merchandising recipe for new goods
Keeping that sunglass display full every day will ensure it is a cash cow. Since they are best merchandised near the checkout, cashiers can keep them full.
Clearly defining what is donated and what is new is critical. Those few donated sunglasses should never be stocked on the same rack as the new ones. It’ll reduce the look of the rack and can confuse customers.
The biggest hold back to a successful new goods offering can be neglect. Regularly ordering and filling new goods has to be a part of a store routine as much as any other merchandising or operational responsibility. I usually have one or two people tasked with keeping up with new goods in the rest of the store.
Location can make or break this category just like any other. One school of thought is to segregate new goods into its department. This system makes it clear what is donated and what is new.
Merchandising new items in places where they can become add-on sales often makes the most sense. Belts by pants for example. Spatulas on clip strips by pots and pans. Winter gloves next to donated coats.
Markdowns are a key to success in traditional retail, the same works here. Everything has to pay for its space. If something isn’t making money, let it go.
The customer doesn’t care what you paid for anything. They care what it’s worth to them now.
I knew a couple that owned a Pendleton clothing store. Pendleton doesn’t go too far out on the fringes of fashion, last year’s style will probably sell this year. Maybe with a small discount. That said my friends had clothes that had been there for five years or more.
They weren’t even bothering to put them on the sales floor. They also couldn’t bring themselves to discount those goods. Rather than put whatever money they could in the bank they left cash on hangers and in boxes in the back room. They were worthless and less every year. I equate it to holding on to Blockbuster stock. As great as it might have been, it will never be great again.
Conclusion
It is very important to be a thrift store first and foremost. A thrift store that has some new goods is one thing. A thrift store that looks like a dollar store is confusing to customers.
The right mix can serve two very important purposes. Provide a more positive shopping experience to the customer. Increase revenue for the store.
The trick is to maintain a balance that fits with the personality of the store and customer expectations.
New goods can help or hurt depending on what you sell and how you merchandise them. Those two things will also guide what customers think.
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