Coronavirus, retailing, the High Street, and the Charity Shop

Charity stores are an important part of UK High Streets – but a combination of collapsing footfall, higher costs, and the shift to online shopping all threaten the sector.

Last week ‘retail charities’ – charities with significant numbers of stores on the UK high street like Cancer Research UK and Oxfam – reported significant drops in income. What does this mean for the UK High Street?

Covid-related changes to how we shop and how to sell are an existential threat to charity stores, more so than to any other retailer.

The Charity Store model

In the UK, the charity store sector is primarily driven by sales of quality second-hand goods. Stores rely on high footfall, high levels of gifted stock, significant levels of (often unpaid) volunteer staff, the ability to sell tax free or zero-rated goods (i.e. they can sell new items without charging VAT – which is effectively a 20% discount), and receive 80% discounts on their rates (local land/property taxes).

But the sector relies on face to face sales – so shops are usually in areas with reasonably high footfall. Thanks to Covid, much of this footfall has vanished, while stores need more staff and volunteers to keep open and keep stores sanitised and process donations.

What you sell and how you sell is still important

Just like other retailers, charity stores need to move online to keep their revenues up. The Covid crisis reinforces the weaknesses of ‘offline’ stores -stores without websites, or stores who can’t easily sell stock online.

The charity shops that re-sell ‘packaged goods’ – cds, dvds, games etc. – are at an advantage as they’re more easily able to re-sell goods via mainstream platforms like eBay and amazon.

What’s the future for charity stores?

We could see a significant retrenchment of the sector – with stores closing as their operating model is over-stressed by the reality of Covid-retailing.

On the other hand we could actually see a significant expansion of the sector – as landlords struggle to find tenants and as mainstream chains restructure (or go under), the demand for retail leases should plummet and we could see a lot of ‘pop-up’ charity shops.

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