Charity retail saw remarkable growth last quarter

Charity shops enjoyed remarkable sales growth last quarter.

From April to June this year, like-for-like sales from customer purchases grew by 4.7% compared with the same period in 2017, while income (excluding Gift Aid tax reclaims) grew by the same percentage.

The latest Quarterly Market Analysis from the Charity Retail Association (CRA) noted that these figures represented a huge increase on growth in the second quarter of last year, when those figures were 1.2% and 0.9% respectively.

Like-for-like donated goods sales rose by 4.6%, up from the 1.5% increase seen a year prior, and the average charity shop weekly turnover totalled at £2,246.

CRA CEO, Robin Osterley, said: “Despite shoppers habits changing and big chain stores suffering in the high street recently, these figures show charity shops are very much alive and kicking.

“The report indicate growth in key areas and we hope this good news continues for our members.”

The CRA also recently carried out a huge mapping exercise to try and identify the total number of charity shops in the UK. They estimate there are 11,249 shops in total, of which 300 are in Northern Ireland.

11,249 shops, bringing in £2,246 per week - that's over £25m per week for the sector. That is great news for charity shops, and great news for the charities they support. However, does this come at a cost?

Retail

The High Street is having a tough time. It has been having a tough time for years - driven, primarily, by online sales, although retail is a complicated business and other factors (not least an economy that has spluttered for a decade) also relevant.

Independent retail analysts are talking about "a growing catalogue of retail disasters, both locally and nationally" - and the sentiment does not feel new.

Charity shops exist to raise funds for the third sector. The third sector exists to improve the lot of communities and the individuals within those communities.

So, with charity shops apparently bucking the general trend of High Street retail, there are two critical questions that should be explored?

• Are charity shops taking a significant chunk of sales from private retailers and, so, having an indirectly negative effect on their area?
• Are improved sales a sign of something negative, namely that more people are feeling the pinch and therefore choosing to shop for cheaper, second-hand goods?

Finding a niche

Scope spoke with Seamus McAleavey, NICVA CEO, about his thoughts on the role charity shops have to play on the High Street, and in society.

The good points are clear (mostly): charity shops raise money for good causes; they are a great way to recycle used-but-still-useable goods; they provide these goods at low cost to people who need them.

However, as well as all these unqualified positives, there are more nuanced considerations.

Mr McAleavey said: "The big tax break charities benefit from is the relief of rates and in Northern Ireland that extends to charity shops that are selling donated goods. If they are selling new good they pay rates on that part of the shop.

"That all came into focus again during the last rates review. A lot of private-sector people on the High Street appeared to be getting worked up about it - but there is definitely a split in the thinking.

"For some, charity shops are the whipping boy for the decline of the High Street. The other side thinks that it is better to have those shops filled and to increase footfall.

"The context here is the big issue for the High Street: no matter what the public says about loving independent shops in the downtown area, they are all switching online."

Even with the 300 charity shops in NI, and over 11,000 in the UK, there are still plenty of unoccupied retail units in towns and cities. Taking away the charity shops won't help there.

However, the third sector is about improving society, not about dominating the market; the knock-on effects of charity shops should be borne in mind.

Competition

Retail is not a straightforward industry. Market analysts try to understand not just what sales model is on top, but why, and what motivates people to shop (or not) in the way that they do.

Charity shops have changed in recent years. Perhaps they offer quality alternatives - plenty of people are happy to read second-hand books and they can be bought for a fraction of the cost price, and cheaper even then e-books - or are operating in a space that caters for a certain kind of demand.

Mr McAleavey continued: "There are [private] specialist shops dealing with second-hand clothes, dresses for example, that have been worn by stars or are very expensive.

"Think about what happens in TK Maxx, and similar stores. It sells itself as a place that has a lot of stock, most of which you might not care about, but if you are prepared to hoke through it all you might find something that suits you at a very good price."

Charity shops that sell a lot of clothes offer something similar to stores that style themselves as "vintage". They can receive and then sell some very high-quality clothes - while the natural jumbled nature of the stock can be fun for people who like shopping for leisure.

This is supported - or, at least, not contradicted - by the fact that no wealth or income demographic disproportionately shops in charity retail and, per a 2016 report from Demos, "Use of charity shops transcends social boundaries."

Mr McAleavey said: "If you are a retailer you are probably always worried about people spending money in other shops, whether or not it's a charity shop.

"However, the percentage figure in this case has to seen in context, and balanced against the overall value. A 4.7% increase is huge, but what is it in monetary terms?"

The CRA says charity shop retail sales generate "over £270m a year" in profits based on just over income. That is small beer compared with High Street retail in total, which was worth over £108bn in 2017 - while the total value of UK retail in that calendar year was £366bn.

Of course, the main driver of strain on High Streets is obvious. You are using it now. The internet.

Online shopping is dominant and growing and has all the momentum of current change.

"This moves into the bigger arguments about the 4th industrial revolution and job losses as a result of automation, robotics and computing.

"Certainly it looks like that's where retail is going. The questions are whether we can turn the tide on that, and whether we should we want to. I would say probably not. Instead, we can find ways to take more money out of the Amazons of this world."

Charity shops' robust growth of nearly 5% across several key statistics is only over one quarter - and, it should be remembered, stands in contrast to much more meagre growth from last year.

However, if this is not simply a freak result and, instead, points to some greater trend, maybe charity shops are adapting to the inevitable changes in the High Street.

This is good - but further changes will be required. The changing nature of towns and cities is something we all have a stake in.

The future

If you ask the public, they still value the High Street, but if the finances don't match the good will, shops will continue to close.

This is, of course, the central worry for retailers. It should also be of concern to the third sector - because of their interest in the success of charity shops and also because town and city centres are important places for local communities.

There is a general feeling that people use town and city centres more for a day out than as a functional place to buy goods they want or need.

Shops - whether private or non-profit - will still have their place but might need to continue to change to meet the nature of demand. More and more places might offer coffee and a place to sit and chat, for instance.

There could also be a reversal of the trend of several decades ago whereby workers and offices were pushed out of town centres to be replaced by retail space.

Belfast, for instance, has a shortage of office space and so some buildings could be reconfigured for this purpose. This, in turn, could supply a source of nine-to-five, Monday-to-Friday income for the shops that remain.

Charity shops might be doing better than the High Street generally, and this might have little to do with the woes of private retailers, but that does not mean everyone should be self-satisfied.

Luckily the charity retail sector seems to be making great efforts to move with the times.

*This article was amended on 11.9.2018 to say that charity shops generate over £270m a year in profits based on turnover of over £1bn. Initially it stated that turnover was £1bn.