Using Technology to drive a Retail Renaissance
Younger consumers are increasingly aware of environmental and sustainability issues and the idea of buying second-hand and pre-used goods is becoming much more acceptable and is indeed a preferable option for a growing number of people.
This arguably places charity shops in a strong position as they are established traders in used goods and could potentially be on the cusp of something of a renaissance if they can capitalise on these fundamental changes in shopping behaviour.
Technology for Good
At RetailEXPO Mike Taylor, commercial director at British Heart Foundation (BHF), made it clear he was fully aware of the developing opportunity for charity shops and that in order to take better advantage of the situation BHF is in the midst of an overhaul of its technology infrastructure.
“Youngsters do not see the differentiation between pre-loved and new. In fact pre-loved is seen as cool, unique and sustainable. We are called a charity retailer but this is simply where the money ends up. We’re really a re-use retailer. Our side bit is that we fund research into a killer around the world,” he explains.
It has certainly been successful since formation in 1961 with the key aim of funding research into cardiovascular disease: “We fund or co-fund 4,000 of the leading specialists in 50 research locations across the UK at any one time. It’s been a success story as the number of deaths have halved.”
Helping this fundraising has been the retail operation that in 1989 consisted of a mere nine stores and which had grown to 738 by 2018. These consist of 552 standard high street shops and 186 large Home stores that collectively help the charity to sell the 90-100 million donated items it receives each year and which drove revenues of £200 million in 2018.
Maximising revenues through the most relevant channel
As well as the stores Taylor has been driving BHF to sell an increasing amount of items through a variety of alternative routes in order to fulfill the key objective of “selling through the most optimal channel in order to maximise revenues” for the charity. These include the BHF online store, via eBay and also placing listings on Gumtree.
With this added complexity and desire for growth Taylor says: “We had system challenges. We had a Point-of-Sale suite that had been used for the last 12 years and we did a review of it and it was clear we’d outgrown it. It did not meet our needs. We chose to work with K3 and implement Microsoft Dynamics because of their scale, experience, and customer base, which we knew would meet our needs for the future.”
The desire to further build the eBay opportunity was clear. By selecting rare and unique items from donations at its stores the use of eBay to drive significantly higher prices has been a great success. This was evident recently when a Beatles single was sold for nearly £10,000 on eBay.
“We originally had two guys doing it in Halifax above a shop and they were generating £90,000 of revenues. It was the most profitable part of the business and we needed to take it seriously. We now have a 10,000 sq ft facility and 90 people who are specialists. It’s like a mini Antiques Roadshow. We can take advantage of discounts at eBay, which supports charities. It’s a huge opportunity to use these other technologies,” explains Taylor.
Using Technology as an enabler
There are other added complexities in the BHF model that will further benefit from the new technology system. These include the fact that each store is effectively its own central warehouse – dealing with donated goods. More problematic though is the issue at the Home stores where there are two stock files in use. One is for the furniture items – including beds, mattresses and chairs – that are donated and the other is for the new goods, which represent 10% of items sold by BHF and are given by retail partners.
“At the moment there are two stock files but with the new system we can simplify this into one file and be able to run promotional activity too because we can better manage the stock in the business,” says Taylor, adding that there is also a requirement to produce inventory information for the retail partners including DFS and Bensons For Beds.
As well as dealing with these new products from retailers, BHF also handles the complex task of collecting unwanted goods from their customers. “One of the problems for people buying big items is getting rid of the old one. We send a two-man crew to them and do one million furniture collections per year. We’ve sold 1.1 million donated sofas so far. Integrating these 24,000 collections per week [into our new system] is being worked on at the moment,” says Taylor.
User friendly approach to Gift Aid
One further element that is unique to charity shops and which the new technology infrastructure will provide a massive boon is with the collection and management of Gift Aid: “It has been a huge revenue generator for us, with £100 million raised on stock sold since it started 12 years ago. But it’s critical that we monitor it and have compliance around it. Our new technology innovations in-store means we can have hand-held tablets with printers that can help [in-store employees] with Gift Aid compliance.”
Such devices, along with the PoS, have to be especially user-friendly, according to Taylor, because of the high level of volunteers in the BHF stores. There are 19,000 volunteers alongside the 3,200 paid employees. “User friendliness is needed even more than with other retailers where all the employees can be trained.”
Creating a retail destination
Other initiatives in-store will involve a move away from paper posters to digital screens and the launch of BHF Radio as well as the installation of Wi-Fi. “It’s part of a whole layer of tools for communicating. It’s about making it easy. The big change will be about the [connected] end-to-end experience.”
“Customers want nice shops along with good merchandise and the technology is the driver of sustaining what is a fantastic business,” he says, adding that this is being enhanced by the fact sustainability is now on people’s minds.
The reality is that charity retailers find themselves in something of a sweet spot in what is a very challenging retail environment and it is clear that BHF is putting itself firmly in a position to maximise value from this evolving scenario.
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