queer ideas

Impact of recession on Oxfam's charity shops

Oxfam have released a fascinating report on the impact of the recession on their charity shops. Having the largest number of stores (714) of any charity in the UK, it presents a pretty comprehensive picture of what is happening nationwide.

The highlights are:

• Donations of goods are down by 12%.
• Projected over 2009, this could mean 1.2 million fewer donations.
• The number of shoppers remains level with that seen in 2008.
• Sales are up by 5%.
• Donations of homewares (crockery, glass, china) are down by 7%.
• Donations of furniture are down by 13%.
• Donations of clothing would be down by 8% had it not been for the Marks & Spencer Clothes Exchange programme.
• The M&S exchange programme generated an extra 900,000 donations in the first year of operation.
• Total shops profit was £20 million.
• Oxfam's online shop generated almost £1 million in sales last year.
• Worst hit areas for falling donations include:
  

• North Yorkshire
• North London
• Nottinghamshire
• Devon
• Cornwall

• Areas that are doing the best include:

• West Midlands
• Tyneside
• Teeside
• South Wales

The recession is impacting on the level of donations in a variety of ways.  As families reduce the amount they spend on new things, they have less to donate to charity shops. This has been made worse by the reduction in people moving home, which has traditionally been a time when people have a clear out and buy new curtains and furniture.

But Oxfam have taken an innovative approach to beating the recession. They have introduced some fantastic ideas, which seem to be working very well.

• Rather than stick to the standard charity shop approach of "you give it, we sell it" they are moving items to specialist stores and now have an expanding chain of high fashion boutiques along with book and music shops.
• They now have their own recycling programme called Wastesaver which recycles items they simply can't sell.
• Shops are open longer. This worked out at an additional 1,000 trading hours a week. That's the equivalent of opening up 20 new shops.
• Sales from Oxfam's online shop contributed almost £1 million in over the last year.
• The M&S exchange programme generated £1.8 million in it's first year.

But Oxfam is not alone. We are seeing other examples of innovation elsewhere.

Sue Ryder Care has experimented with a "pay what you choose programme" and the British Heart Foundation has set up their own voucher exchange programme with WH Smiths.

Information like this is great to have. A big thanks to Oxfam who are great for sharing it so freely.

Return to Melksham

Just before my short break, I had a very interesting conversation with Helen Reynolds of Sue Ryder Care about their pay what you choose pricing experiment in their Melksham charity shop.

This has been one of the most popular topics I've covered so I've started a blog string so new readers can speedily get up to date on the launch and the initial results – shops experiment.

And now with far more detail, I can share the thinking behind the test and describe what actually happened.

First off, this wasn't a test entered into lightly. Staff were fully aware of the possibly of the scheme being abused. Melksham was chosen because of the strong community nature of the town. Pretty much everyone who came into the charity shop was known by at least one of the staff or volunteers. Most importantly, everyone was trained on how to handle a selling process where the customer could decide the price.

As a result, the staff and volunteers weren't pawns in the experiment – they were actively involved. All were encouraged to engage with customers about their pricing decisions and were actually empowered as a result.

If someone asked if they could pay 10 pence for a ladies winter coat for example, they were told yes, if they honestly thought the coat was worth that amount. But the emphasis on how the answer was given left shoppers in no doubt how that 10 pence would be received.

The fact is the charity element of charity shop had a real impact on the outcome of the experiment. Choice was important, but if people paid too little they were simply taking from a local charity – nobody wanted to be in that position. 

The engagement with customers was key to the success of the experiment. Staff and volunteers learnt about why people were buying certain items. If someone needed a pair of school shoes or a young family had moved into their first home and needed pots and pans, the price would reflect the buyers need.

Helen spoke of the words of Lady Ryder in respect of this:

"Our work is a summons to seek out and face the reality of human suffering and do something about it."

Staff were able to help those members of the community who were in greatest need and appreciated the chance to do so. As a result, the morale in the shop went sky high.

But more importantly, once they understood what customers wanted, they could up-sell. And now that final sales have been analysed, it is the increase in the units / transaction that has made the real difference. Sales are up by 21.5% in comparison with the two weeks preceding the experiment.

Across the board, Helen feels that people paid slightly less than when items were ticketed. But placed this into context by drawing attention to the fact that it is possible to buy new items from low cost retailers like Primark for little more than the cost of second hand goods at a charity shop. With men's shirts going for £6 and ladies' cardigans for £8, she isn't wrong.

This has caused a re-think on pricing policy. With customers increasingly comparing prices as the recession hits the high street,  there is a trickle down that reaches to charity shops.  One of the great things about the experiment was that it acted as a market research exercise into price sensitivity that allowed Helen and her team to hit the sweet spot when items were re-ticketed.

The experiment also increased footfall with many new customers attracted into the store. This was driven by a combination of local press coverage, word of mouth and promotional materials. It's interesting to note, that people didn't pop in just once. There were a large number of repeat visits as new stock was moved to the shop floor.

As for the overall impact of the recession on donated goods, Helen feels that generally donations are down, but not significantly. Some shops in her area were stock rich and some stock poor. With the aid of a van, stock is distributed to where the need is greatest. If there is a shortfall, it is on books. This isn't an immediate problem but come the summer holidays, they will sell out very quickly.

And as to whether the experiment might be repeated, Helen was relatively bullish. The results had been so pleasing that it may well be considered again and not just for Melksham. With the right people and right location tests could be undertaken elsewhere.

But above all, the key learning was in the level of engagement that was created. As in any charity / donor relationship, the closer people are brought together, the greater the positive impact.

Pay what you choose experiment is a success

I blogged about the Sue Ryder Care charity shop experiment a few weeks ago. 

For a two week period, all fixed prices were removed from donated items and customers were able to pay whatever they thought goods were worth. 

In light of the economic downturn, it seemed to me that this was a great way to position the shop as a community resource and hopefully generate more donations and increase sales.

Having spoken with Anna and Sara from Sue Ryder Care, I can report that the experiment has been a "resounding success".

Both wanted to emphasise that Melksham, the town where the experiment was undertaken, has a very strong community spirit and that pay what you choose would not be rolled out across the Sue Ryder Care shops network.

But what actually happened in the test?

Absolutely nobody abused the system. In fact, people tended to pay more for items. One teddy bear, for example, who spent some time sitting in the  shop window went for £30 rather than an expected £15.

Though full figures aren't yet collated, the number of items donated was up on a normal week – as were transactions. The shop was closed on one day (because of the snow) but there were still over 200 more sales than would normally have gone through the till.

Helen Reynolds, Business Manager at Sue Ryder Care said she was "absolutely delighted with the outcomes of this trial. Customers love the idea of being able to name their price and so far, we have seen an increase in footfall, numbers of revisits from customers and sales".

"It's fantastic. I think this new scheme is working well as people appreciate that we recognise the importance of our community and are keen to do something that can help both the charity and our customers. It's a win-win situation. if people go out shopping more, other retailers will enjoy the benefits of increased footfall. Most people will walk home after buying something that they really wanted and feel good about it."

Sara is going to keep me updated on the final figures and I'll share them as soon as they are available.

Pay what you choose

It seems the downturn in the amount of goods being donated to charity shops is continuing.

David Moir, head of policy at the Association of Charity Shops, is reported in The Guardian as saying:

"While we are getting reports from some members of increased demand, the main effect (of recession) is that people are not replacing their existing clothes.

"They may be selling some on eBay but they are definitely not donating them in the same volumes. When people are worried and money is tight, people tend to hoard.

"But we have, we are, and we will, continue to send out the message that unwanted clothing and other items can make an enormous difference if sold through charity shops."

Other charities are reporting a similar story. 

Cancer Research UK is desperate for stock and has recently launched a detox your wardrobe campaign to encourage people to donate unwanted clothes and accessories.

It's the same for BHF. Chief executive, Ken Blair reports that sales are up but stock supplies are down.

And at the end of 2008, Barbara Buckley, the PDSA's charity shop manager on the Royal Mile in Edinburgh was reporting that sales have increased 10 to 15 per cent on last year, with a large number of new customers:

'We've never seen many of them before,' she says. 'They're talking openly about their finances at the tills and all say they're very short of cash.'

Oxfam continues to buck the trend. I've already blogged about their partnership deal with M&S, which was launched a year ago this week (Oxfam offer a £5 M&S voucher for each bag of goods that contains at least one M&S item). It's reported that this has raised an additional £1.7m over the last 12 months. 

Innovative on-line thinking has also driven sales. Oxfam's web shop now sells more than virtual and ethical gifts. A wide selection of donated goods are also available. As a result, year on year to this January, visits to the online shop have gone up by 200% and sales by 250%.

But there are new ideas being tested elsewhere too.

I was perusing my regular copy of the Wiltshire Times (incorporating Chippenham News) when I saw details of an experiment being undertaken by the Sue Ryder Care charity shop in Melksham.

From Monday, customers will be able to pay whatever they think goods are worth, as staff remove all fixed prices from donated items. It's an interesting approach. It re-positions the shop in the charity marketplace. Rather than simply being a fund-raising vehicle it becomes a community service too. 

As Helen Reynolds, business manger for the charity's shops in Wiltshire says:

“Hopefully it will help people who need that extra jumper or coat or cutlery, but can’t afford it."

This is a new dimension in appealing for donations. 

Oxfam is in reality buying stock with the M&S vouchers; Sue Ryder Care is saying to donors that clothes will go to people – who really need them – at the price they can afford. This, at a time of recession, may drive stock donations by giving people a chance to help the people of Melksham who have fallen on hard times. 

It will also be used as a means to determine if traditional pricing models are focussed too high or too low.

Helen cites Radiohead's, In Rainbows experiment as the inspiration for her test.

Choice and honour based pricing isn't new. The New York Times, Freakonomics blog, reports on a range of different businesses that have attempted it with various degrees of success. The latest being a test on Boxing Day.

I'd love to find out how the idea turned out in practice and I'll be trying to get in touch with Helen next week so I can report back on what happened.

But the whole test has got me thinking. Suggested donation levels are a normal part of cash fundraising. We use it in our postal appeals all the time. Sometimes people give more, sometimes they give less. What would happen in a charity shop if all prices were simply suggested – giving people permission to choose what they paid within a controlled framework? That would be interesting!

It makes me wish I was still in charge of the 100 odd YMCA charity shops that I used to have responsibility for.