Thrifty retailer on a mission

Goodwill's ambitious strategy hit the market just as the recession took hold. And it has proved over the last decade that secondhand retailing, if presented in bright, clean, well-organized stores with bargain prices, can be a bona fide growth strategy,

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Beth Glasoe (left) from California, was visiting Sue Maki of Chaska, MN, go to the thrift stores after lunch every time Beth visits the Twin Cities. On June 20th they made a stop at the Goodwill store in Bloomington, Mn to look for a skirt and blouse. June 20, 2012.

Photo: Joel Koyama, Star Tribune

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A 28-store retailer that grew sales more than 20 percent last year will open a second store in Roseville in a few days.

The chain's typical customer is a suburban woman, aged 30 to 54, with an average household income of $54,000.

Wal-Mart? Target? Sears? Macy's? Nah. They can't hold a candle to that kind of sales growth.

Try Goodwill/Easter Seals Minnesota, the nonprofit skills training and job placement organization for the unemployed and disadvantaged. Goodwill increasingly has funded its mission from a growing network of 26 retail stores and a couple of fashion boutiques that sell mostly donated goods.

Goodwill planned its expansion during good times. But growth has accelerated in the last several years of recession and slow recovery. It competes for donated merchandise and business with nonprofits such as the Salvation Army and Arc's Value Village, in addition to for-profit retailers such as Saver's.

But Goodwill is the biggest nonprofit retailer in the Twin Cities market. And it has proved over the last decade that secondhand retailing, if presented in bright, clean, well-organized stores with bargain prices, can be a bona fide growth strategy, attracting both affluent bargain hunters and working-class shoppers in suburbs such as Eagan, Hopkins, Lakeville, Maple Grove, Minnetonka and Woodbury.

"We have invested to produce the numbers which allow us to expand our mission and the number of people we assist annually," said Debbie Ferry, vice president of retail sales and operations, who joined Goodwill 13 years ago from Jo-Ann Stores. "We've been doing three to five real estate transactions a year -- remodels, relocations. And we've investing in new stores. We have a plan."

Goodwill's Bloomington store, for example, once housed Seasonal Concepts, an upscale retailer of patio furniture. Last week Beth Glasoe, a visitor from California, and Sue Maki of Chaska shopped for skirts and tops priced under $5. And Mina Ghorashi, a medical researcher from Minneapolis and a collector, was looking for deals on vases.

"There are good values and I find unique stuff," Ghorashi said.

Nearly 90 percent of Goodwill's merchandise is donated. The selection may be limited in size and variety. But the stores are bright and the prices are right and the retailing expertise is deep. Bloomington store manager Dyami Moon, for example, is a veteran of Target, as are several other Goodwill managers.

Funding the vision

Goodwill, which employs nearly 1,400, needs to do well to fund its nonprofit mission.

Retail revenue rose 22 percent to $46.8 million in fiscal 2011, and contributions rose 13 percent to $1.8 million. But grants to Goodwill shrank 12 percent, to $6.5 million, as cash-strapped state and county governments cut funding for human-services agencies.

After deducting the $19 million cost of retail operations, Goodwill is left with about $36 million in net revenue to fund its growing mission of employment-training, job coaching and related services to 5,000 clients. Goodwill will place 1,100 of those folks in jobs this year with partner employers, in addition to several hundred it will use as interns or hire as permanent employees.

Sales at Goodwill and other "thrift-store" retailers rose during the recession as sales contracted at many general-merchandise and discount retailers.

"The recession was deep and lasted long, and that led people to try things such as Goodwill or Salvation Army or Dollar Stores," said Dave Brennan, professor of marketing at the University of St. Thomas Opus College of Business. "Goodwill hit the market just right, with new stores and standardized offerings, and that makes it more attractive to middle-income people.''

Michael Wirth-Davis, Goodwill's 21-year CEO, has presided over Goodwill's retail expansion. But he says that's just a means for the mission-driven outfit to help several thousand folks annually develop skills, bolster their confidence and work with other nonprofits, government, schools and business partners for careers in automotive, finance, construction, warehouse, medical office and other industries.

Goodwill counselors work with folks breaking the bonds of chemical dependency, illiteracy, incarceration, physical or mental health issues and helps them to become productive taxpayers.

"Goodwill/Easter Seals is a very high-quality organization, always focused on its clients, employees, volunteers and its core mission of serving those with barriers to employment," said Brian Lassiter, a 16-year Goodwill board member. "Although retail is the most visible part of Goodwill operations, the true value of its work is in its mission."

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com

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