Salvation Army, Goodwill expand by-the-pound programs

Twenty years ago, thrift stores were nothing more than glorified garage sales, with worn-out clothes and icky shoes strewn from corner to corner. But the Great Recession and its frugal influence may have changed shopping habits for good, and now resale shops are adding stores, offering more merchandise and launching new concepts to expand the customer base.

An exploding trend among resale retailers is the "pound program," which lets bargain hunters grab a bundle of merchandise, have it weighed, and pay a set price. The concept has been so popular that the Salvation Army just switched half of its flagship Minneapolis store to a by-the-pound program that moves goods in and out weeks faster than before. Clothes, shoes and handbags sell for $1.49 per pound, while toys, kitchenware and tools go for $1.29 per pound.

"We want goods, especially clothing, to flow out the door quickly. If you let them sit too long, you have quality control issues," said Tom Canfield, district manager for Salvation Army stores in Minnesota's Twin Cities area.

In the by-the-pound program, men's, women's and kids' clothes unsold after three weeks are gathered from 12 stores and sent to the Minneapolis warehouse. There they are divided into large containers and dumped onto tables every 15 minutes, where extreme bargain hunters quickly sort through each new load. The Salvation Army has more than 25,000 pounds of goods waiting to be sold in the pound program, Canfield said. Although consumers pay less than $1.50 per pound, it's still more profitable for a charity than selling it as surplus to operators overseas.

Customers can expect to see fresh merchandise every time they shop, Canfield said, not schlocky merchandise that is marked down.

Last weekend's grand opening exceeded sales expectations. "We thought we'd sell 10 percent of everything that we put out, and we ended up selling 40 percent of it," Canfield said.

It's a concept that has worked well in thrift shops on the East and West Coasts, but it has also seen success here elsewhere. For instance, Goodwill-Easter Seals Minnesota has operated a by-the-pound program at its outlet on University Avenue in St. Paul, Minn., for nearly 20 years. Many customers have low incomes, but in the new economy, they're bumping elbows with consignment shop owners, eBay sellers and extreme bargain hunters.

"Every week we see 20 people who own consignment shops, buyers from Africa, Honduras and Mexico, and bargain hunters who would rather pay a buck than $5 for jeans," said Nick Calo, customer service supervisor at the Goodwill outlet.

Jose Gonsalez of Minneapolis has shopped there for five years, buying clothes and shoes that he ships to a supplier in Mexico. "I pay about $3 per bag for the clothes, $2 to ship it and sell it for about $6, so I make a dollar a bag," he said.

Gonsalez and others are looking forward to having another by-the-pound store in the Twin Cities. And they're about to get a third. Along with the Salvation Army's store, Goodwill plans to move and expand its by-the-pound outlet into the existing store location in St. Paul in spring 2015. Then it will open a second by-the-pound location in Brooklyn Park, Minn., by winter 2015.

Nationally, the number of used-goods stores has grown 7 percent each year since 2010, making it a $13 billion industry in 2012, according to the National Association of Resale and Thrift Shops. Locally, thrift stores are reporting record sales. Thrifts such as Assistance League, Goodwill, Salvation Army and Arc's Value Village have reported healthy sales gains of 3 to 20 percent annually in the past several years.

Along with by-the-pound stores, resale shops are launching other new concepts or just growing in general.

For instance, Goodwill will also add a new store called Gina and Will, which will sell casual and trendy clothing shoes and accessories for young men and women. The store will debut in late August in Minneapolis' Venue complex.

Arc's Value Village, which has four locations, has no plans to add a by-the-pound store. Business director Laurel Hansen said customers don't want to dig for merchandise. "Our customers are clamoring for more personal shopping attention. That's why we added personal shoppers in 2012," she said. "Customers buy more when they use them."

Arc is also in a solid growth period. It doubled the size of its New Hope, Minn., store in 2013, and May sales at that location were up 50 percent over last year. "Haute Spot" sections have been added in each store with the best designer brands based on consumers' insatiable appetite for premium labels. Arc's also has plans to open a fifth store later this year at a to-be-announced location and a Village on the Go mobile thrift truck, which will be parked at festivals and community events throughout the summer.

"Historically, people have had low expectations for thrift stores. We want to give them options and keep raising the bar," Hansen said.

With sustained growth each year and a hip quotient solidified in Macklemore's "Thrift Shop" song, resale continues to surge. "There's been a broad shift in the attitude of customers," said Jason Seifert, chief financial and operations officer of Goodwill-Easter Seals Minnesota. "Whether they're looking to be green by keeping stuff out of the landfill or just looking for a bargain, it all works for us."

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