Olof Williamson was a Senior Consultant at NCVO, looking at the latest thinking on funding, finance and public services. Olof has left NCVO and his posts have been retained for here for reference.
Have you thought about what makes a good charity shop? Maybe it looks great. Or the staff are helpful and efficient. Perhaps it has unusual stock and is the best place to find rare vinyl and antique lampshades. For charities, shops are a great way to diversify income – if you have the energy and the skills to make them work.
I’ve brought together some top tips to help voluntary and community groups get the most from shops, gathered from the experiences of our members and from our expert advisors.
Start your shop the right way
Setting up a charity shop is complicated, and you need to get off on the right foot. The Association of Charity Shops is expert in this area, and the following tips are from their advice on Starting a Charity Shop, which I found very interesting:
1 Don’t think it’s an easy earner. According to the Association, “You will find that you are faced with the same issues as someone running a small business – such as security, health & safety and trading law – as well as problems specific to the sector, such as where to get your stock and your volunteer workforce.”
2 Be ready for a big investment – “Raise your start-up capital. You will need at least £5,000 to pay the rental deposit, as well as for the shop-fit, essential building repairs and staff recruitment.”
3 Figure out how the tax works – there are many benefits for registered charity shops. Note that sale of donated goods are zero rated for VAT, but other sales may not be! Get expert advice on this.
You may also need to register for a music licence with PRS if you want to play copyrighted music in the store. NCVO and the Association of Charity Shops are currently calling for the Government to continue an exemption for charities from music licensing charges. Follow the link for a briefing and discussion on the Don’t Stop the Music campaign.
Once you’ve got the shop up and running, it is no use resting on your laurels. Now is the time to set about improving what it has to offer the customers.
Maximise your shops’ potential
Bath Cats and Dogs Home recently spoke to us about their plan to diversify their income, a conversation we have written up into a downloadable case study (see link below). They have had one shop for years, but recently put in the effort to increase the number of stores and improve their offering. This took a big investment of time and money, but they think it was worth it.
They gave us some tips for ongoing improvement, including:
4 Research, research and then do some more research – Visit other charities that are also running shops and think about what works – everything from whether you sort your stock by colour to whether you hang clothing on metal or wooden hangers.
5 Build support for improvements. If you are modernising, it is likely that some volunteers and some trustees won’t be keen on change. Try to convince them with well-researched proposals and include them as much as possible. But at the end of the day you need to do what is best for the organisation.
6 Make sure you invest enough money into doing things right. The till system that takes care of the different types of income (including gift aid) cost £11,000. The shop fitters cost £15,000 – but according to Bath Cats and Dogs they were both worth it to improve the customer experience and boost long-term income.
On NCVO’s Funding and Finance pages you can get the full Bath Cats and Dogs Home case study (pdf, 800Kb) which also includes tips on donor relationships and effective use of volunteers.
Bath Cats and Dogs also got helpful advice from other charities through the Only Connect Visit Scheme. This scheme gives bursaries to help charities visit and learn from other organisations, and I would recommend it as a great way to get a fresh perspective on your work.
Plan your image and branding
The way you set up a charity shop can give out subtle – or obvious – messages about your organisation to potential customers and donors. Thinking about image and branding can ensure these messages are saying the right things.
TV fashion expert Mary Portas has quite a few things to say about this matter. When she spoke to NCVO’s Engage magazine last autumn she had recently made a programme about her experience of intensively supporting several charity shops. Her work focused on attracting more customers through better brand image and quality products, and Mary also saw the importance – and difficulties – of building support for change.
Mary gave the following tips:
7 Make sure the shop looks right and don’t forget they are a very important part of the organisation. “They are there day in, day out. Consumers pass them every day – shops are the most visible piece of brand awareness that there is for a charity.”
8 Think about the demographic you are aiming your shop at – “you’ve got to have a concept that speaks to all age groups – charity shops are not just for the young fashion bods, they really are for all age groups.”
Engage magazine is available every quarter from NCVO – you can find out what’s in the current issue and subscribe at Engage Online.
Be strategic about your new income
Richard Piper is NCVO’s Head of Strategy and Impact and something of an expert on charity shops – he has a PhD in Identity and Professionalisation in the charity retail sector. According to Richard it is also vital to plan how your shop will bring in the maximum amount of unrestricted income. He echoes our branding tips above, noting that customers see the shop as another access point to the whole charity. Here are Richard’s tips:
9 “Don’t forget to make the most of the shop to earn other forms of income. People will look to the shop as a place to just donate cash or set up a legacy, so make sure you are able to do this. Have the necessary information and Gift Aid forms on site.”
10 “Don’t fall into the trap of looking only at income as a sign of a shop’s success. Instead, stay focused on profit. Benchmark against other similar shops (for example with Charity Finance magazine’s annual survey of charity shop performance) and aim to maximise the profit per shop per week. The two things that play the biggest role in making a profitable shop are (a) enough high quality donated stock, and (b) enough high quality volunteers working as a team, so make sure you have ways of getting both these things.”
Selling is not the only income option
Charity shops can be a great way for voluntary and community groups to develop new earned income streams. The tips above give you a taster on how to make the most of the opportunities they present. Like any form of earned income they require investment of time and money to bring returns, and it might not be the right thing for you.
If you want to explore earned income and trading in more detail, or want to see what other income opportunities might be available to your organisation, take a look at the Sustainable Funding Project’s Income Sources pages.
And once you’re done with that you can go and find that retro lampshade.
Posts written by guests who have contributed to NCVO projects and events. 
