31/07/2020 - 09:00

Op shops pivot under pressure

31/07/2020 - 09:00

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Charity-run op shops lost millions in revenue when stores closed during the COVID-19 shutdown, but the threat has provided opportunity.

Op shops pivot under pressure
Melanie Kiely says COVID-19 pushed Good Sammy to consider digital options. Photo: Gabriel Oliveira

An op shop T-shirt selling for $4 is a bargain in anyone’s language.

More importantly, however, all purchases at these retail outlets serve a broader purpose in contributing the bulk of revenue for some of Western Australia’s major charities.

That seemingly secure business model was suddenly shut down earlier this year when concerns over COVID-19 led Good Samaritan Enterprises and St Vincent de Paul Society WA Inc to close their op shops.

Good Samaritan Enterprises chief executive Melanie Kiely said the organisation’s 29 op shops were shut for at least a month, and some were shut for up to seven weeks.

“For the month of April, we had zero revenue coming in from retail; the impact was to the tune of $1 million,” Ms Kiely told Business News.

“Plus, any … income invested in our cause is being hammered by the stock market.” Good Sammy, ranked as the 25th largest charitable organisation on Business News Data & Insights, has revenue totalling $24.6 million, to which retail sales contribute 72.6 per cent, according to Good Sammy’s 2019 annual report.

Ms Kiely said Good Sammy had been absorbing the loss in its capital reserves and received government support from Lotterywest, Services Australia and the Department of Communities, as well as JobKeeper.

“We are very fortunate that our organisation was in good financial shape going into it,” she said.

“And then all this assistance through JobKeeper has been out there to help keep our people employed.

“We can’t fault how all levels of government have come to our assistance.”

The shutdown prompted Good Sammy to start an online op shop, which was launched in June.

“When COVID hit, it gave us a good kick in the right direction to look at all sorts of digital options,” Ms Kiely said.

“We decided we would prefer not to stand any of our people down, like our store managers, and that we would use our store employees to get things ready, find merchandise, and mount an online store.”

Staff members were tasked with collecting more upmarket goods, antiques, and collectibles from stores, and organising them for sale online.

It is hoped the venture will provide more job opportunities for Good Sammy staff, given the need to catalogue individual items and prepare the online store.

“Ultimately, our goal is the stores will be able to upload their own stuff, photograph it in store, upload it and then do click-and-collect into their own store,” Ms Kiely said.

St Vincent de Paul Society WA Inc, ranked as the 23rd largest charity on Business News Data & Insights, is another organisation heavily reliant on op shops to provide support for its range of services for low-income earners, the homeless, refugees and migrants, and children.

According to the not for profit’s 2019 annual report, $13.2 million of its $24.7 million revenue came from retail stores.

Vinnies WA executive manager social enterprise Carl Prowse said revenue from op shops was down $400,000 in March, $1.2 million in April and $600,000 in May this year, resulting in the organisation losing $2.2 million in revenue overall.

Rent relief from landlords, a $702,000 Lotterywest grant, use of cash reserves, and a 20 per cent reduction in the hours of full-time op shop staff had allowed services to keep running, he said.

“We have been lucky, really; we are going to be able to maintain our services, definitely, significantly helped by the Lotterywest grant,” Mr Prowse told Business News.

He said there had been a significant increase in donations and patronage at Vinnies’ op shops since they reopened. “The average sale is up over 50 per cent in our shops,” he said.

“The way we finished last month, even though we had reduced stores open, we actually hit the previous year’s revenue figure for June.

“With the Lotterywest grant, with JobKeeper still until the end of September, and the way retail has really kicked back in for Vinnies, we are hoping to be in a similar cash position to what we were prior to going in to COVID, with everything going well.”

Mr Prowse said the not-for-profit was also considering setting up an online op shop in the medium term, and was investigating different models.

Anglicare WA has op shops throughout the state and started an online store in April, but retail sales only contribute $2.5 million to the organisation’s $48.3 million revenue, according to its 2019 annual report.

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