Today, we had an opportunity to visit one store of a popular thrift store chain called Value Village / Savers. The company is present in USA, Canada, and Australia.
The visit was very interesting because what this company does is very close to what we have learned so far during a semester in our Social Entrepreneurship and Innovation program. Indeed, Value Village is a social for-profit organisation: they make profits but they give a part their profits back to charity organisations and they help the environment by reducing waste.
Our hosts let us visit their store and a warehouse what helped us to understand their business model. The business model of Value Village is based on very low costs. They receive donations from two major suppliers: first from partnered non-profit organisations which regularly deliver all kinds of objects by trucks (4 trucks a day), and second from people who just want to get rid of stuff they do not use anymore. To compensate these donations, Value Village pays them little amount of money depending on value of these donations. What happens with the donations afterwards? They sort out all pieces and put them into the store (about 8000 pieces a day). Stuff that can’t be sold is recycled or shipped to developing countries (6 big boxes a day). The company try indeed to avoid as many waste as possible. Unfortunately they get sometimes ripped clothes or stuff that can’t be recycled and they have to pay to send it to the landfill. That process of selection requires a lot of time. They spend 6 hours to complete the entire process. Nevertheless, they try to help the community, for example they give unsold books to schools.
In order to track all inventory, the company labels goods in five colours. For instance, the first colour is blue which means they just received the products and put them into sale. 3 weeks after, if a product has not been sold, then they put a red label, with a 50% discount. Unsold products for more than one month are shipped to developing countries or recycled. It is difficult to estimate because in winter you get summer products and in summer you receive winter products, so they have to deal with all those difficulties.
Apart from explanations we received from the employees, our initial observations of Value Village were that the goods inside the store were of relatively decent quality. Nothing we saw had any holes in it. Some clothes there, while mostly old, could be put together to form a decently stylish outfit. The store was also well organized and the working staff was constantly putting out new items on the racks to be sold as we got there an hour after Value Village opened. The smell of the store is one of the things that stands out. This is likely due to the detergent they use to clean the clothing. We also noticed the clients of the store seemed to lean towards older people as money may be tight for them.
Only 50% of all donations are sellable. Out of those 50%, only 50% will be sold so we see that out of all the donations, only 25% will actually be sold.
This business is not very glamorous but terribly efficient as they receive products for almost nothing and they make good money out of it even if sold for very low prices.
Concerning the staff, 80 persons work in the store. Only 20 of them work as salesmen and the rest is doing everything that is needed before an item is actually prepared to be sold.
It has been a great experience to get close to what can be called a real success story with relatively simple idea that everybody could have had.
Written by Léo CAUJOLLE & Antoine COLPAERT