“As the sector has become more professional and more specialised, charity shops are contributing to a more vibrant and eclectic retail mix on high streets.”
“This trend towards greater specialisation can enable charity shops to become destination stores, which can add value to the high streets in which they are located.” DEMOS REPORT
It is estimated that there are more than 11,000 charity shops in the UK, generating more than £295m for a range of good causes in the UK each year.
Whilst the charity sector is not immune from the challenging trading conditions that are closing high street shops, it is undoubtedly a cornerstone of the bricks and mortar retail sector. But contrary to the popular belief that our high streets are full of charity shops, they make up only four per cent of total retail units in the UK, compared to the national vacancy rate of around ten per cent.
Of course, the primary purpose of a charity shop is to raise money for their parent charities but alongside that, they bring huge value to their local community, support a huge number of volunteers and boost their local high street. An incredible 220,000 people volunteer in charity stores nationwide, this is the largest single group of volunteers in the country. But charity shops are not just staffed by volunteers, the sector provides some of the most rewarding and valued jobs on the high street.
But it is important to make the point that charity shops should not be seen as direct competitors to other retailers, but rather, their partners on the high street. The donated stock that is sold is not available to other retailers and charity shops can help to reduce vacancy rates and keep the high street populated and busy, even during tough times. This is extremely beneficial to the local economies of high streets up and down the country.
There is also considerable variety among charity shops, some charities have hundreds of stores with much of the stock supplied from central depots. Others might be standalone or part of a small group of shops, entirely reliant on locally sourced donations. The variety is immense and can range from traditional charity shops where bargain-hunters can rummage to those which specialise in weddings, vintage goods, furniture or electricals. Some have paid managers and assistants and others are run entirely by volunteers, but regardless of which, the charity retail sector provide valuable opportunities for young people to gain work in this increasingly competitive industry.
The charity retail sector is clearly helping people, both young and old, but the stores themselves are also changing the high street. In this increasingly challenging market, charity shops are beginning to offer more than simply being a shop. Some use the space to promote their charitable causes further, with some even offering free training events in their stores, with others engaging with their local communities by putting on events such as festivals or cookery classes in their shops.
Despite all this, charity shops are often accused of having an unfair advantage over other retailers because of fewer overheads and reduced business rates. To set the record straight, charity shops do benefit from tax concessions under UK tax law because all profits go to fund the work of the charity, which provides public benefit and serve a ‘charitable purpose’. Charity shops benefit from exemption from corporation tax on profits, a zero VAT rating on the sale of donated goods and 80 per cent mandatory non-domestic rate relief, on property taxes. This is funded by central Government. But like any other business, charity shops negotiate appropriate rents with landlords. A charity shop does not get discounted utilities (such as gas, electric) in line with other retail outlets, but a discount on the business rates they pay due to the charitable nature of the shop.
But all profits received from a charity shop go directly to the parent charity in order to carry out their charitable function, not shareholders or private owners.
Whether people shop, volunteer or donate, charity shops play a growing role in an ever-changing UK high street, providing vital funds for their parent charity and ensuring that huge benefits are brought to a wide section of the community.
But more than just fundraising, they make a massive contribution to society at large, benefiting the environment through recycling and ethically sourced goods in this world of fast fashion. They also create valuable training, skills and opportunities for both young and old and are increasingly using these retail spaces to educate and host local events in the heart of a community.
We hope that this article has busted some of the myths around the sector and that it has explained some of the many benefits that charity shops can bring to a local economy.
What is very clear is that charities are big business and as with any business, making a profit is key. RMS can help by providing an Epos solution to suit the individual circumstances of any charity retailer. Whether that’s single or multi site to omni-channel, we can deliver a range of seamless benefits including stocktaking, inventory management, performance analysis and reporting and the ability to understand and track customer behaviour in real time.
Give us a call to discuss how RMS can improve the profitability and efficiency of your charity shops.