Sector trends

Charity shops plan for the future

How the charity retail sector is preparing to get back to business.

Charities could increasingly look at generating and using customer data to create a more personalised experience for shoppers.

Charity superstores in retail parks are already proving popular because they can sell a bigger range, including furniture and electricals, and do so in a socially distanced environment


Cherry Whiteside, head of retail and business development at Birmingham-based John Taylor Hospice, knows exactly what many people have been doing during lockdown. In short, a huge decluttering of garages, attics and wardrobes.


“It’s been a lockdown clear-out,” says Whiteside, who runs the hospice’s four shops, which reopened in late July. “Even with restrictions on the number of people in the shops at one time and trading two hours less per day, we’re seeing more customers, spending and donations than pre-lockdown.”


It’s been a similar story at the British Heart Foundation’s (BHF) 750-strong store estate. “One store received more than 100 bags of donations before lunchtime on the day it reopened,” says Jane Flannery, retail regional director at the BHF. “That’s double the normal daily level. We’re almost back up to pre-Covid levels in some shops, but mindful that this is early on in our reopening.”


The caution is understandable. The Charity Retail Association (CRA) says the charity retail sector was hard hit by the closure of “non-essential” shopping, and during the period that the UK’s 11,200 charity shops were required to shut, around £285m in customer sales were lost.


In the summer, the BHF said it was considering cutting 300 jobs as its net income looks set to drop by 50% due to lockdown closures and the cancellation of fundraising events.


Age UK has also started a consultation on redundancies and has said some of its shops will be permanently closed.


According to Pro Bono Economics, which helps charities improve their services, charities face a £10bn funding gap, with one in 10 facing bankruptcy.


So what does this all mean – despite the reopening bounce – for the long-term future of charity retail?

Adapting store estate

“Charity shops are always going to be an essential part of the high street,” says Susan Meredith, deputy chief executive at the CRA. “Pre-Covid, the number of charity shops had plateaued. There might be a slight dip post-Covid but not a dramatic decline. They are more than shops; they are community hubs where people drop in for a chat and are the public face of charities.”


Despite this, Meredith sees more charity superstores, based on retail parks and selling items such as furniture and electricals, opening in the months ahead.


According to Vicki Burnett, senior consultant at the Charity Retail Consultancy, these large-format stores are three times as profitable as high-street shops.


“People feel more comfortable there, given social distancing,” says Burnett. “These and local shops are expected to continue to do well. But those in city centres may struggle.”


There might also be more pop-up charity shops in empty retail units or at events such as fairs.


Whiteside is forging ahead with expansion plans for John Taylor Hospice. “We’re looking to open at least another two shops over the next 12 months,” she says. “I believe customers on the high street will be careful with their money and will spend more in charity shops.”


The BHF is also hopeful of further expansion but is perhaps more cautious. “We’ve seen a steady growth in the number of new shops in the past couple of years,” says Flannery. “We’re constantly monitoring individual shop performance, and any decisions we make around profitability are long term rather than based on these unprecedented few months.”

The shift to online

John Taylor Hospice started its online operation via the eBay for Charity service when it reopened stores. “We were just about to launch when lockdown happened,” recalls Whiteside. “That was a shame as we could have used that income when our shops were shut. At least if there is another lockdown it will provide a cushion for us.”


She says being online gives the charity an opportunity to reach its customers 24/7.


“We pick rare or high-value items such as vintage comics and put them online. It means people looking for something specific can find it easier than in a shop. We’re also encouraging our supporters to sell on eBay and donate a portion to us,” she adds.

We’re constantly monitoring individual shop performance and any decisions we make around profitability are long term rather than based on these unprecedented few months.

Jane Flannery
British Heart Foundation

BHF says its online shop and eBay store brings in £5m a year in sales. “We’re continuing to innovate and are working with companies like Gumtree and [peer-to-peer social shopping app] Depop to appeal to new audiences,” says Flannery. “We’ve launched a free postal donation service where customers can donate smaller, good-quality items without hitting the shops. All items go to our eBay warehouse to be sorted before being sold.”


Meredith says smaller charities have so far been reluctant to go online unless a staff member has technical skills. “There has been a question of resourcing and the time taken to list items online,” she explains. “There will be more apps to help with this and we’ll see more click-and-collect options from shops.”


Burnett says new entrants to the sector may look at online only. “This would be a challenge as you need the stock to populate the online shop and nothing tells people more that you need stuff like a shop on a high street,” she says. “You can make money online, but you don’t get that special customer engagement.”

In-store experience

According to Meredith, shops will still be necessary and could begin to offer more services and information. “Cats Protection has installed tablets in its stores so children can read about protecting cats while their parents browse. Age UK is also selling and marketing products in-store. We’ll see more of that, as well as in-store branding explaining what the charity is.”


There may also be more in-shop cafes and activities such as yoga classes.

Going cashless and the personal touch

BHF says it is encouraging customers to pay by card or contactless methods but is still accepting cash where that isn’t possible. It has no plans to become entirely cashless.


The Charity Retail Consultancy predicts there could be automated till-points in the future to speed up shopping.


Charities could increasingly look at generating and using customer data to create personalised products such as personal shopping. More targeted marketing around the green re-usage of products as an alternative to fast fashion could also encourage younger consumers to spend.


Charity shops could in future develop closer links with corporates, mirroring schemes such as the staff and customers of TK Maxx donating clothes, accessories and homewares via in-store collection points to sell in Cancer Research UK shops.


Another example is Dress To Impress – a collaboration between careers app Debut and charity shops nationwide, where shops housed a dedicated in-store space to help young people find interview attire for just £10.


“As corporate social responsibility increases post-pandemic there will be more relationships like this,” says Meredith. “There may be job swaps of retail teams so perhaps Harrods staff might serve you at your local charity shop.”


She also envisages closer collaboration between a charity’s retail and fundraising teams. “They are traditionally treated separately. We could see more information in-store on how to fundraise and signing up to races.”


In the short to medium term, local lockdowns could impact the sector’s trading activities. “Shops may have to close temporarily again, which will be frustrating,” says Burnett. “But it is more of a known quantity now, and getting open again will be much quicker.


“We’re a flexible, resilient and innovative sector. We’re feeling positive.”

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