The Importance of Inventory Management Amid Donor Fatigue

In 2023, the U.S. secondhand market generated an estimated $53 billion in revenue — with no signs of slowing down.

However, thrift stores, like any retail operation, must ensure they have a sound inventory flow, especially during times of donor fatigue. With the growth the industry is poised to have over the next few years, these retailers can’t be at risk of low inventory or undesirable, unmovable inventory.

Inventory Visibility and Control is a Bright Spot for Thrift Retailers

It’s no secret that thrift stores are largely dependent on donated materials from people within the community. With so many different types of items making their way into the stores, there needs to be a system to ensure everything is accounted for.

Let’s take the example of the Durham Rescue Mission. Established 50 years ago, the Durham Rescue Mission is Durham, North Carolina’s oldest and largest long-term homeless shelter. In the early 2000s, it sought a way to bring in additional funding to keep operations running, which is when it opened its first thrift store. From 2006 to 2012, the Rescue Mission opened three thrift stores. Upon opening the third store, the organization made an operational switch to a central processing method. However, after making the switch, the Rescue Mission found that it did not have a common language for the products being sold within each store, making it difficult for the central hub to understand and track inventory across the different locations.

With a technology system in place, like a point-of-sale (POS) system, retailers like the Durham Rescue Mission can tag and track donated items so that as inventory sells it is accounted for in the correct way.

Additionally, if a thrift retailer operates in more than one location, it can use technology to control the distribution of items in each location. This can ensure that each store receives a steady inventory supply while also catering to each location’s individual needs.

Data and Reporting is Paramount to Inventory Management Success

Data and reporting in thrift stores, even for single locations, is extremely important. Not only does inventory tracking give these retailers visibility and control over output, as mentioned above, but it also provides key insights into their customer demographics and their desires.

Across the nation, most thrift retailers will gratefully accept anything brought in as a donation. However, they can create parameters based on their past sales transactions. Say, for example, one thrift store accepts both furniture and clothing. After six months, the clothing has successfully turned over but much of the furniture remains. Sales data can inform such retailers on their best next step: continuing to accept clothing donations and stopping furniture donations. At the end of the day, thrift stores want to be profitable and move inventory, so having real-time data and reporting capabilities that are linked to an inventory system is what will help them be successful.

Keeping Thrift Stores Fully Stocked Takes Creativity

Given the nature of donations, at times there may be instances where inventory is lacking, prompting the need for thrift store owners to find other avenues to ensure their stores are meeting the expectations of the consumers they serve.

One avenue that some thrift stores take is obtaining purchased product to offset inventory when donations are at a minimum. This could be anything from clothing to furniture to household electronics sourced from wholesalers or even pallets of returned items.

Once these items are in the store’s inventory, retailers must be able to accurately track and manage them. Retailers can separate items that are donated vs. purchased and ensure that their store is best utilizing the items needed to fill their stores. For example, during times of giving (e.g., the holiday season or spring cleaning) there may be more donated inventory, which retailers can accurately track and sell before needing to lean on purchased product to fill any inventory gaps.

Technology is a powerful tool that has the ability to transform the thrift store experience — both for retailers and consumers — no matter what the donation landscape looks like.

Kyle Payton is the general manager of Thriftcart, an all-in-one POS product assisting nonprofits and small businesses in navigating the complexities of retail.