by Robert Bell on Monday, Aug. 9, 2010 12:00 am
Brian Itzkowitz, president and CEO of Goodwill Industries of Arkansas, said the current retail climate has made large spaces more affordable for the nonprofit.
Back in the olden days, the local thrift shop was often housed in a rundown storefront in a strip center that was 15 years past its prime, locations that were acceptable to a mixed clientele of low-income households and intrepid bargain-hunters.
In recent years, however, thrift shopping has become socially acceptable and many thrift stores have gone pro - more like a T.J. Maxx than a musty-smelling church basement. Several have set up shop in Arkansas in the last couple of years in suburban power centers, empty big-box stores and other prime retail locations.
In July, Goodwill Industries of Arkansas signed a lease for the former Circuit City building in west Little Rock. An opening date has not yet been announced, but when the store opens, it will have about 19,000 SF of retail space, said Brian Itzkowitz, president and CEO of Goodwill in Arkansas.
"We are looking for the same real estate and the same locations that your normal retailers are looking for," Itzkowitz said - namely, locations "that are convenient and in high-traffic areas. Especially if you're looking from a donor base, you want to be able to attract donors and make it very convenient for them to get in and get out."
Savers of Bellevue, Wash., a for-profit chain that partners with local nonprofits, recently opened two more stores in Arkansas. A 28,000-SF store opened in April at Bowman Station in west Little Rock in a former CompUSA. In July, a 33,000-SF Savers opened in what had been a Linens 'N Things on Rogers Avenue in Fort Smith.
"Due to the fallout of some of the big box guys - Circuit City, CompUSA, Linens - that's been an opportunity for us," said David Cree, director of real estate for Savers.
Resale is a multibillion-dollar business. According to the industry group NARTS: The Association of Resale Professionals, Goodwill had 2009 revenue of $2.8 billion, with the majority generated by its 2,324 thrift stores.
Adele Meyer, executive director of the group, said she had noticed some increase in the number of thrift stores opening in former big-box spaces.
"I know Goodwill and sometimes Salvation Army and Volunteers of America have been going into some bigger buildings that maybe Kmart or something else vacated that was large like that," she said. "There are a lot of those buildings empty now."
Meyer said that her organization hadn't seen a huge increase in the number of thrift stores opening in former big box locations, but it was happening.
Goodwill has another store in the works, in addition to the west Little Rock store. The nonprofit will open a location in September in a former Harvest Foods in Bryant.
Goodwill has budgeted about $300,000 to convert the former Circuit City location into a modern thrift store. Many of these large, well-lit stores take the same basic approach as conventional retailers, with racks and shelves full of organized merchandise, fitting rooms and plenty of staff, Itzkowitz said.
A large part of Goodwill's mission is creating jobs and providing job training to people with disabilities and special needs.
"And 93 percent of our budget comes from our donated goods business," he said. "We don't get a lot of outside funding, so we count on the revenue generated by the stores to fund our programs. That's why we are aggressively growing, because certainly there is a need out there in the community, with the economy the way it is."
In 2009, Goodwill's donated goods program brought in about $10.2 million, up from $9.5 million in 2008, according to the nonprofit's annual report
The current retail climate has allowed Goodwill to be able to move into large sites that have become available, Itzkowitz said.
"It's an opportunity for us to grow, and to grow [without] impacting our balance sheet the way it would've five years ago. Because even if that [Circuit City] location would have been available, the cost on it would probably have been prohibitive at that point," he said.
"It just makes it that much more important that when you do a location like that, that it performs well. You can't mess up and you have to do it right, because you have too much invested in it for it to not do well."
Itzkowitz did not disclose the lease rates for Goodwill stores, but said the rate on the former Circuit City property was a good deal.
Goodwill has also expanded into northwest Arkansas recently, opening a 25,000-SF location in a former Today's Office in Springdale and a 9,000-SF store and donation center on Walton Boulevard in Bentonville, Itzkowitz said.
Several of the new Goodwill stores have drive-up donation services, where donors can simply pop the trunk to allow staff members to unload the donated goods.
The first Savers in Arkansas opened in 1998 on Cantrell Road in Little Rock and is now located on JFK Boulevard in North Little Rock. The company employs about 145 people at its three stores in the state and about 13,000 at its more than 240 stores in the United States and Canada.
Savers' total revenue from 2005 to 2009 was nearly $3 billion. Between December 2005 and the end of this year, the company will have opened 58 stores, and plans to open 50 to 100 more during the next five-year period, Sara Gaugl, a Savers spokeswoman, said in an e-mail.
"Arkansas is a strong Savers market, and we've found that our value proposition really resonates with people here," Gaugl wrote.
She said the company didn't have any specific information about whether it plans to open any more locations in the state.
But the company is "reviewing all the markets that remain," said Cree, Savers' real estate director. "We haven't made a decision on any of them, and they're all under consideration, whether it be Fayetteville, Bentonville, Rogers, Texarkana. There's still a number of markets in the state that are worthy of consideration."
Thrift store shopping has entered the mainstream as more and more customers have become accustomed to buying second-hand merchandise from a wide variety of sources, including eBay and Craigslist, and is no longer considered a resource solely for lower-income individuals, Gaugl wrote.
"Some may be surprised to learn that a significant percentage of our shoppers are well-educated bargain hunters, with household incomes between $40,000 and $70,000," she wrote.
Though the privately held chain is a for-profit operation, local charities collect merchandise for Savers to sell. The company then pays the donor charities for every item it sells, including those dropped off at Savers stores.
In Arkansas, the company has partnerships with two Big Brothers Big Sisters chapters and with the Arc Arkansas, which provides various support services to people with disabilities and their families.
The west Little Rock Savers partners with Big Brothers Big Sisters of Central Arkansas.
"It's been a great relationship so far," said Christel Cater, vice president of marketing and recruiting for Big Brothers Big Sisters.
Savers does not allow its partners to disclose the dollar amounts it contributes to the nonprofits, Cater said.
Since Savers' inception in 1954, the company has generated more than $1 billion for 120 local charities and nonprofits, Gaugl said.
Landlords Have Positive Perception of Resale Stores
Willis Smith is part of West Group LLC, which owns Bowman Station in west Little Rock, where Savers recently opened.
He said about a year passed between CompUSA closing and Savers opening. The thrift store chain signed a one-year lease, with an option to renew for 10 years.
Smith did not disclose the lease rate for the Savers space, but said it was about 25 percent less than what CompUSA was paying and would eventually increase to within the range it commanded before.
The environment for large retail space has been tough since the recession began.
"That first year, no one was doing anything, so we felt lucky to have anybody," he said. "And I think they'll be a good tenant."
It is likely that more people are shopping at thrift stores because the recession has caused consumers to be more bargain conscious, said Smith, whose wife, Elaine, owns Elaine's Closet, an upscale Little Rock consignment store.
"It's all shopping habits," he said. "I think everybody's gotten more conservative."
Smith said he was not reluctant to lease space to a resale store, and he found that, as a company, Savers is "pretty strong, if you research them. It's one of those under-the-radar-type companies."
Gregg Mueller is director of operations at Ashley Co., which leases four retail spaces to Goodwill in Arkansas. The spaces range in size from 7,500 SF in Jacksonville to 19,000 SF at Indian Hills Shopping Center in North Little Rock.
"They've been an excellent tenant," he said. "We've never had any problem with rental payment. Obviously, they do well as far as operation of their stores, they're stocked neatly, and they keep them nice and clean.
"And they do generate reasonable traffic as far as shopping centers go," he said.
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