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Thrift store wars heat up with new players in St. Louis market
Thrift stores

Thrift store wars heat up with new players in St. Louis market

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At first blush, west St. Louis County may not be the most obvious place to become ground zero for the area’s burgeoning thrift store wars.

But a battle for donations and shoppers has taken hold in this fairly well-to-do part of the region as a crop of new players has entered the area thrift store scene, putting their stores in areas where they get the best donations.

Savers, a for-profit chain based outside of Seattle that is expanding aggressively nationwide, opened its first area store last fall in Ellisville. It’s about double the size of an average Goodwill store. And Savers is following that one with a store slated to open next month in the former Barnes & Noble space in Crestwood.

Another chain making inroads in St. Louis is Red Racks, run by the Kansas City chapter of Disabled American Veterans. It recently opened a in Ballwin after making its debut in the Affton area. A third store is coming to Creve Coeur this spring.

The arrival of these new players has not gone unnoticed. Other area operators have been closely monitoring them while also beefing up advertising budgets, honing messages to highlight their local impact, and contemplating more aggressive expansions.

“We’re not going to go willy-nilly and open 40 more stores now to stop everyone else from moving in,” said Mark Kahrs, senior vice president of retail stores for MERS/Goodwill, adding that the organization wanted to be a good steward of donations. “But maybe there’s a little more motivation to make our expansion plan come to fruition quicker.”

That means Goodwill planners might take a second look at a building because they know that if they don’t take it, a competitor might, he said. Or they might pull the trigger more quickly on a new store in order to stake a claim in an area.

But overall, Kahrs said, he welcomes the competition because it brings more awareness to thrift shopping in general.

Rapid Growth

Resale shops are one of the fastest-growing segments of retail, according to the Association of Resale Professionals. The industry has expanded its number of locations by 7 percent a year in the last two years.

Thrift stores, which have been spiffing up their appearance in recent years, have been riding a wave of popularity as the economy has struggled. Buying secondhand items has become not only more popular as cash-strapped consumers look for ways to save money, but it’s even become trendy.

At the same time, many nonprofits have increasingly tried to fill funding gaps by running thrift stores, as grants and other resources have dried up in recent years.

MERS/Goodwill, which is planning to open its 42nd store in the bi-state region this month in Ferguson, has been opening a couple of new stores a year. Two new stores it opened last year in St. Peters and Lake Saint Louis feature a new store model with a prominent drive-through drop-off area for donations in the front.

Despite the heightened competition, Goodwill, which brings in about $50 million in revenue a year from its stores, says donations continue to rise. The organization received a record number of donations — nearly 1.2 million — in 2012, up from just under 1.1 million the year before. One donation can range from a single item to several bags of clothing.

Money trail

But with more players in the resale business, not to mention a host of collection bins for donations to various groups, Goodwill is also tweaking its message. It’s focusing more on its local impact, pointing out that proceeds from its stores help provide job training and placement for thousands of area residents.

“These other organizations, you research them and find out a small amount of the profit is going to who they said they are supporting,” Kahrs said. “Or they are taking all of the donations they are getting and selling them overseas.”

Sara Gaugl, a spokeswoman for Savers, said her company had a different model than a nonprofit thrift store. It has contractual agreements with 140 nonprofit organizations that are paid based on the weight of donations brought into their stores. In the case of the St. Louis area stores, the nonprofit partner is the Vietnam Veterans of America.

“We pay our nonprofits for all the goods that are brought to the stores whether or not they sell,” she said, noting that only about 50 percent of donated items are good enough to sell. The rest is sold to recyclers or sent to developing nations. The end goal is to keep it out of landfills, she added.

Savers, which has 315 stores worldwide, reached $1 billion in revenue last year. Though the company doesn’t disclose the percentage of revenue that goes to nonprofits, Gaugl said that if the company makes a 10 percent to 15 percent profit, that is a good year. And she noted that unlike nonprofits, her company pays local taxes.

As for Savers’ area expansion plans, Rick Sturdivant, a district manager, said the company was “always looking for locations.”

On a recent day in the Savers in Ellisville, Theresa Hanselman of St. Charles was perusing its aisles for the first time. Hanselman, a frequent thrift store shopper, was impressed by the the size of the store, its selection, and the organization of it with clothing separated by size.

“I go to other thrift stores in St. Charles and they don’t have as much,” she said. “And I can’t find what I’m looking for.”

Donations strong

Jerry Orzano, director of St. Vincent de Paul’s four area thrift stores, acknowledges that he was worried he would see a drop in donations when Savers and Red Racks opened stores near his group’s Ballwin store.

Instead, donations at the Ballwin store have outpaced the increases at the organization’s other stores.

“At this moment, our donation level is good,” he said. “It could always be better, but it’s good enough to stock the stores.”

The organization, which hasn’t spent much on advertising in the past, has a small but growing budget for mailers and ads and is planning to boost its presence on Facebook this year.

Orzano said he hoped the buzz about a fifth St. Vincent de Paul store expected to open near South County Center sometime this spring would bring more visibility as well.

“That will help get the message out there we’re here and we’d like a shot at your business,” he said.

With the growing number of thrift store options, it hasn’t been smooth sailing for some of the newcomers to this market.

James Hayworth, regional manager for Red Racks, said he had been disappointed by the performance of his St. Louis-area stores so far. They are doing about half the level of its Kansas City stores, where the group has operated for about 55 years.

“I’m hoping that it’s just that we’re new to the market and we’re not known here yet,” he said. “And there are a lot of Goodwills in St. Louis — more than in Kansas City. Goodwill in St. Louis is a very good operator. They raise the bar for the competition a little bit.”

Still, he said Red Racks had committed to the St. Louis market and was planning more donation drop-off locations around the region as well as a potential fourth store in Wentzville.

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