Should you start a thrift store?
Challenges to Opening a Thrift Store
On April 1, 2015 my husband and I opened Rejunkery, a thrift and re-purpose store in the Minden Gardnerville, NV area. To say this store was a long time coming would be an understatement. When I was little, my mother stayed home with us. Money was always tight. My mother took us to every thrift store in the area. Our home was decorated in items my mother lovingly re-purpose. She instilled in me the idea that we are only limited by our imagination. Yet, opening a thrift store comes with challenges that most people are not prepared to face.
Owning a thrift store sounds easy. If you hated working retail or have never worked retail, this is not the business for you. Opening a store costs between $20,000 and $30,000 to do it right and survive until the store picks up. Consider that just to have a sign put over your store can cost between 4-10,000 depending on the sign. Although many cites will tell you that you will pull in $1900 a day, the reality is that you will only pull in $100-200 a day (those are good days). New thrift stores pull down $30-40 a day for the first year.
The licensing and accounting behind the business are even more important. I was lucky enough to have an accountant in the family. If you have a tough time balancing a checkbook, then owning your own business may not be the best idea. Licensing takes about a month to process and should be carefully reviewed.
Thrift stores cannot sell food, weapons, or mattresses. That sounds like an odd thing to say, but people have tried to donate knives, and other people have asked if we could sell their food products. Mattresses have to be professionally sterilized and tagged to be resold. Unless you have a local facility that does sterilization, mattresses have to be tossed.
We are not a non-profit. Non-profit takes longer to have approved and you have to function under laws that apply to a non-profit organization. If you are opening a non-profit then you have to start collecting donated merchandise in advance (this is a slow process).
People think they have a ton of stuff and they won’t need to buy anything, you would be surprised how much you have to sell just to make rent. The problem with collecting stuff is that you have to have a place to put it. This may require you to rent a storage unit or pack your garage. Keep in mind your sales are dependent on how much you sell. Some thrift stores tank in the first month because, their merchandise is horrible. Don't take your gems home. By that I mean when you get something you want to take home, sell it. The better your merchandise the greater the chances people will return.
No matter how aggressively you advertise getting people in the door is still a challenge. We wasted thousands on local paper advertising, it turned up few customers. Review your ads from the paper after it comes out. Two different publications botched out ads, one even cut off the name of our business. Do not trust them to print your ad correctly. You have to know what your share of the market is, who is your customer? In our town we have several thrift stores and they all cater to a different clientele. If your store is unappealing, your pricing is off, or you are not pleasant… those customers are not coming back. The atmosphere you create is important.
Location is the key. If you have never rented a building before then there are a few things you need to know. The first is that you have to have insurance to cover the building before anyone will rent to you. Also Common Area Maintenance or CAM is an added expense when you rent. CAM is paid monthly to the building owner to maintain areas such as parking lots, sidewalks, and landscaping. CAM can run a business as much as $1000,00 depending on the area. Businesses sink or swim off location. If your business is off the beaten path, your advertising has to be more aggressive. Even a good ad campaign may not draw enough business to keep you going.
The trade off is that you will pay more for a good location. Busy shopping centers are the best place to put a new business, a spot where the traffic is optimal. We chose a spot at the edge of town everyone has to pass to get anywhere else in the area. Somewhere with a sign at the roadside is also a good idea. Another way to tell if you are making the correct decision on the location is to cruise by that location at times and days when you intend to be open. This will give you an idea of the potential foot traffic.
Presentation sells merchandise. There are people who open thrift stores and those stores are full of smelly dirty merchandise. Some people will still go to these types of places in search of useful items. However, places like this lose a majority of customers and gain a poor reputation. The goodwill has dump bins at some of their locations and people still go there and sift through the stuff. Every market has a buyer. The difference is that cleanliness and presentation determine your market. If people are comfortable in your store they will stay and look longer.
We wash all the clothes before they come out to the floor with the exception of dry clean only clothes. Dirty items are washed prior to going out on the sales floor. Most thrift stores do not wash items before they put them out. Most thrift stores will toss a shirt covered in cat hair but, the three other shirts in the same bag are going to the rack. To me that is gross. It’s up to each thrift store to determine how merchandise will be handled. In our store, the merchandise is clean.
Prior to opening we had two storage units full of merchandise. In February 2015 there was a freak windstorm that ripped the storage building off our merchandise. In a 60mph windstorm my husband and a friend moved all the merchandise to another building. While we didn’t lose a ton of merchandise, everything was covered in dirt. Dishes that were clean had silt in them, everything had to be washed again. This is still happening as we get through the stuff that was exposed. It would have been useful to have a hose and a washing machine/dryer at our location after the storm. There is no end to the amount of cleaning that happens in a store. Shelves, floors, windows, and even merchandise all have to be cleaned. I work 12 hours a day and still never feel like the store is as clean as I want it. If you don’t enjoy cleaning, do not open a store.
Strange situations occur when you own a store. People will want to know if you are nonprofit (even though less than 25% of most thrift stores profit actually supports a charity). The fact that you are up against nonprofit organization for both donations and business is tough. In our town there are two nonprofits that feed and clothe the homeless. These are noble causes in which I can’t compete. People want to feel good about their donations and they should. I’m thankful for the merchandise that we do get for free although its few and far between.
Buying storage units
Many people have watched the storage auction TV shows in awe of the amazing finds. We did storage auctions for a year before we opened. Storage units are disgusting. People who are willing to let a storage unit go are the same people who pack items in boxes with no lids so the mice can get in, or travel with their own set of roaches/bugs. So if you do not like to dig through mouse poo for “treasures” then you better figure out where you are going to get your merchandise. It’s not glamorous to wear gloves and a face mask for five hours while you try to find one item to pay for the unit.
Which brings us to the next part of storage auctions; going to the dump. Guess what, usually more than half what you buy at auctions never should have been stored to begin with; broken toys/furniture, rotten food, car parts (not the good kind), chemicals, and people’s underwear. Is it always that way? No, you can get a unit that is clean now and then, they are the units going for $500-1000. That doesn’t sound like a lot of money. But when you figure most units only have about $300-500 in merchandise you are taking a big risk paying more. Plus it can take six months to sell everything you got in the unit. People who do storage auctions have an attitude that is not unlike the gambler who loses in the casino. You will hear someone say “I made $700 on that unit” well they are not considering their time, the dump trips, and often they are not even considering the money they paid for the unit. Television is entertainment.
Thrift stores in our town have figured out that people are doing resale online, and they have jacked up the prices through the roof and priced themselves out of the resale market. A month ago, I saw a large wooden frame in a thrift store with a $75 price tag on it. That same frame would be $25 in my store. If an item is donated to you, be respectful of the person who donates it, give it a reasonable not inflated price. Pricing should average 1/4 the retail. If a lamp costs $100.00 new, its $25 used.
Before we opened the store we considered waiting until we retired to open a small shop to sell my items. Now we know that owning a store is not a good "retirement". It's long hours, 60-70 hours a week. Being your own boss turns you into a slavedriver. The slackers in this business don't make it.
With all that I have told you, do you still love the idea of owning a store? Well let me tell you what I love about it. I love up-cycling things. Sometimes I am at the counter repurposing an Item and a customer comes in and sees what I am up to. People are naturally curious. These occasions give me the opportunity to discuss my feelings about re-purposing a topic near and dear to my heart. I love creating displays. Most of my displays have a theme. It’s fun when people come in and say “oh that’s a great idea”. I move things and create new displays daily. I love my customers. People are wonderful, they come in and tell me stories, tell me about their kids, lives, and about what this area use to be like 20 years ago. I love helping customers solve problems, decorating dilemmas. While some of these things are specific to my store, in general you should like people if you are going to be in customer service. If none of this appeals to you… maybe opening a thrift store is not your gig.
More by this Author
The Effects of Population Density Population density causes environmental issues for the people who live in and visit those areas. The psychological impact of living in a densely populated area is still a...
As business owners how do we know that that our organization is suffering from poor leadership? Do we have the right people in the right positions? This question plagues business owners who may not see the desired...
For one year almost to the day, I was a Loss Prevention Supervisor for Kohl's Department Store. Although I had closed many cases as a Manager, this was the first time I worked exclusively as Loss Prevention. It would be...