Want to boost revenue by $300,000? Open a hospice consignment shop

Good management creates cash and goodwill for agencies

Not only has the recession resulted in a 3.6% drop in charitable giving1 but 62% of Americans say they also have cut back on their spending since the recession began.2

Although the drop in charitable giving is not good news for hospice managers, the change in spending habits has provided a boost in income for hospice programs that offer resale or consignment shops. According to the National Association of Resale Professionals, resellers report a net growth in sales of 12.7%.3

"We have a 23 to 24% profit margin for our stores, which means we've been able to give about $300,000 annually to the hospice," says Cathy Olsen, director of resale shops at Hospice of Palm Beach County in West Palm Beach, FL. The hospice has two resale shops, one at the north end of the county, and one centrally located in the county served by the hospice, she says. "Our north shop has been open for 17 years, and our central shop opened 12 years ago," she says. "The central shop recently moved to a new location and expanded to 7,000 square feet of space." The previous location had 4,000 square feet and almost no parking, so it was important to move, she says.

Although a hospice might not need 7,000 square feet when first opening, your needs might grow quickly, Olsen says. "We started with a couple of 1,200-square-feet spaces and grew as we needed," she says.

The two shops accept donations of household items, clothing, furniture, appliances, and vehicles, says Olsen. "We've had donations of a recreational vehicle, a plane, boats, and even a Rolls Royce," she says. "We also had a condominium donated as part of an estate left to the hospice by the donor." The vehicles and condominium are not typical donations, but all donations are evaluated before they are accepted, she says. "They cannot be damaged or soiled and must fit our motto of 'resale at its finest,'" she adds. Even when you tell donors that you are looking for gently used and clean items, you may receive donations that are not appropriate for your shop, she says. Consider giving them to other local thrift shops that take a wider range of items, she suggests. "If we end up with something we can't sell, we pass it on or use our dumpster."

Although she's seen an increase in the number of people coming into the stores to purchase items, Olsen admits that the donations of furniture and household items has dropped some due to the slow housing market. "Most people clean out their homes as they pack to move and they get rid of furnishings and larger items they intend to replace in the new home," she says. With fewer people buying new homes, there is less "cleaning out" these days. "We are still seeing donations of clothing and smaller items, especially from families of former patients," Olsen says.

The hospice resale shop at Hospice of the Western Reserve in Cleveland, OH, has not seen a drop off in donations in their area, says Debbie Ludvik, manager. "Families of hospice patients and other people see donations to the resale shop as a way to get a tax write-off for a charitable contribution when they don't have the money to make a cash donation," she says. "We are also seeing an increase in our shopping traffic because women can buy a $35 shirt for $15 or $20."

Her shop also has strict guidelines about the quality of item accepted for donation, says Ludvik. "Clothing must be in good shape and be clean with no pills," she says. "We want repeat customers, and the way to ensure that is to offer good merchandise at good prices in an attractive setting."

Pricing items is a challenge, Ludvik says. "We want items priced competitively, but we can't discount items so much that we don't raise funds for our hospice," she says. Donations such as designer clothing with price tags still attached, Longaberger lamps, Burberry coats, and antique jewelry contribute to profits that enabled the resale shop to raise $40,000 for the hospice last year, she says. "High-end items as well as antiques require special research by one of my employees to make sure we don't underprice the item," she says. By using a computer in the office and surfing the Internet, her employee is able to see what other sellers are charging for the items, she says. "Once we set our prices, we don't negotiate a different price."

Although customers in previous years have complained that prices in the shop were too high for a "thrift shop," Ludvik has noticed fewer complaints now that people understand the difference between "resale" and "thrift." There are several not-for-profit organizations in the area that accept lower quality items in the area and price the items at thrift shop levels, she says. "When we have customers looking for lower prices or offering to donate items that are not appropriate for our store, we refer them to the other shops," she says.

Consider contracts for pickups

Ludvik's shop does accept some furniture for the shop after she's had a chance to visit the home and evaluate the pieces if there are several, she says.

"I make sure it is the right quality for our shop and that the size is something we can handle," she says. "We contract with a local moving company to pick up large items, so I want to make sure the items will be appropriate before we pay for the pickup."

Transporting large items is one issue that can be tricky, says Ludvik. "We used to have a couple of our people handle pickups with a truck that we would rent by the day, but it became too costly for us to continue," she says. "Now, we contract with a local moving company, and it is more efficient when you don't routinely have large items to pick up."

The resale shops at Hospice of Palm Beach County employ two truck drivers and own a van for pickup of larger items, says Olsen. As one way to combat the drop in furniture and appliance donations due to the slow housing market, only one of the shops has a consignment section, which includes furniture. There is a pickup charge of $65 per hour for items that are in the consignment program, but the shop picks up donated items for free, she says. "Usually, we only pick up a piece or two of furniture from donors, but consigners often have a truckload of furniture they place with us," she adds. The seller sets the price for consignment items, she points out. "Our consignment program lasts 90 days, and we split the proceeds with the seller, so the seller gets one-half of the price. If the item has not sold in 90 days, the seller can pick up their items or they can donate it to the shop for us to sell at our own price."

One reason Olsen's shops have a high profit margin as compared to the typical retail shop's 4% margin is the availability of volunteer labor to supplement a small paid staff to keep the shops open six days each week. "I have two truck drivers and three employees in each of the shops in addition to myself as paid staff, but we have over 100 volunteers who work in the two shops," she explains.

Recruiting volunteers is easy because the shops are a fun place to work, Olsen says. The volunteers get to see the items as they come in, so they have the opportunity to purchase items before customers see them, she says. "Volunteers attend the hospice orientation and select the areas in which they want to work. If they choose the resale shops, they attend the hospice volunteer orientation, then come to us for orientation to the shop," she says. "We schedule volunteers according to their availability and their specific job."

Volunteers specialize in areas such as receiving, checkout, sales, and setting up displays, Olsen explains. "We have one lady who dresses the mannequins as her job because that is what interests her and because she's very good at it," she adds.

Olsen had retail experience in her background when she started working at the hospice eight years ago, because she had managed a sales staff and three retail stores for a telephone provider. Ludvik, however, remembers telling hospice management that she "liked to shop" when talking with them four years ago about accepting the shop manager position. "I had been with the agency as a consultant and volunteer for 16 years, so I knew the agency philosophy, and I had served as a fundraiser and community development coordinator," she says.

Although retail experience might not be required for the shop manager position, it is important to run the shop as a retail business, Olsen says. "Bottom line is important so when sales decline, you have to understand how to manage expenses," she says. Cutting back on promotion activities, controlling overhead expenses such as repairs, or delaying the installation of new displays are all ways that a shop manager can manage expenses, she adds.

Marketing efforts such as newspaper ads, flyers, and social media publicity are all ways to improve donations and sales, Olsen says. "Our main focus is raising money for patient care, so we are always looking for opportunities to increase donations and sales so we can keep contributing money to the hospice," she says.

References

1. Giving USA Foundation. Giving USA 2010: The annual report on philanthropy for the year 2009. Indianapolis, IN; 2010.

2. Pew Research Center's Social & Demographic Trends Project. A Balance Sheet at 30 Months: How the Great Recession Has Changed Life in America. Washington DC; 2010.

3. National Association of Resale Professionals. Resale continues to thrive in a slow economy. St. Claire Shores, MI; 2010. Accessed at http://www.narts.org/i4a/pages/index.cfm?pageid=3290.

Sources

For more information about setting up or running a resale shop, contact:

• Cathy Olsen, Director of Resale Shops, Hospice of Palm Beach County, 5300 East Ave., West Palm Beach, FL 33407. E-mail: colsen@hpbc.com.

• Debbie Ludvik, Manager, Hospice Resale Shop, Hospice of the Western Reserve, 300 E. 185th St., Cleveland, OH 44119. Telephone: (440) 442-2621. E-mail: DLudvik@HospiceWR.org.