Why I Have a Love/Hate Relationship With New Goods in Thrift Stores

What's the brand promise?

Apr 02, 2021

Thrift store operators have to stay focused on selling second-hand goods. It's the promise and the reason people shop thrift. That's why I have this love/hate relationship with selling new goods in thrift stores. On the other hand, new goods provide an opportunity to add revenue dollars.

My new goods mantra:

New goods should complement, not compete with donated goods.

To me, that means that a thrift store shouldn't be selling new women's tops as great used ones are donated every day. Socks are another thing. When they are donated, they aren't in any condition to put out and sell. Sometimes they aren't even good enough to be included in salvage. Offering socks to round out a clothing purchase can be a good thing. They do not compete and do compliment.

While running a thrift operation, we tried an experiment, putting new goods on all the store's end caps. The idea was to upgrade the merchandising look. It is easier to make new goods features beautiful and keep them that way. Donated goods end caps require more constant care.

Suddenly customers were saying we looked like a dollar store. Walking in the front door, I couldn't disagree. Our merchandising was not reflecting the brand promise. On the numbers side, total sales continued their trend.

Interestingly as we dug in, the perception mostly on the housewares or hard goods end caps. Having socks, belts, and related goods on textile endcaps didn't seem to create the same perception.

It's no secret that things put on features sell faster. We shouldn't have been surprised when new goods sales replaced some donated goods sales.

That's an issue because gross profit margins on new goods are around half of what they are for donated goods. There are labor and acquisition costs to donated goods as well as purchased goods. The details differ, but they both cost money to get to a sales floor.

The reason for my new goods mantra:

A dollar donated goods sale has a gross profit of a dollar.

A dollar new goods sale has a gross profit of about half a dollar.

Here I define gross profit as the hard acquisition cost of an item. Net profit would include processing, carrying, and other related expenses.

A half a dollar profit on an impulse or add-on item can be an excellent thing as long as they didn't take away a donated item sale.

One example of a non-competing category is sunglasses. Very few that are re-sellable are donated, and they sell for dollars. A pair of sunglasses that sells for $10 at retail might cost $3 ish, leaving $7 in gross profit. In many thrift operations, $7 is more than the profit on the average donated clothing item and a lot more than the average dish or glassware item.

From a merchandising standpoint, a lot of goods fit on a single spinner rack. It can generally go in space, otherwise not being put to good use. (I suggest near the checkout area as it is an impulse item.)

When looking at how new goods fit into a thrift operation, your brand promise has to be front and center. Finding complementary items to add to the mix can enrich the customer experience and add revenue.

about me

I am a thrift, eCommerce, and retail business expert near Chicago, helping individuals and entrepreneurs grow and succeed. You can benefit from my twenty-plus years of retail and seven-plus years of thrift and eCommerce experience.

Check out my website, thethrifter.com, for lots of thrift-oriented resources. You will find plenty of free tips for retailers, resellers, eCommerce operators, and shoppers. I'm always happy to connect on Medium and LinkedIn.

You might also be interested in my Thrift Merchandising ebook on Amazon. It's about merchandising thrift stores more like traditional stores. It's free with a Kindle Unlimited membership.

Tim Gebauer — The Thrifter