A Case Study: Pricing the Catholic Charities
Community Services Thrift Store
Beyond the Dollar Amount:
Pricing Strategy
Pricing Strategy Defined:
A pricing strategy is a plan of how to use pricing as
one of the drivers of your business, it incorporates
many other factors than just the bottom line price,
including:
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the mission
the target customers
inventory management
brand management
location
facilities
staffing
Our Pricing Strategy Detailed:
Our Pricing Strategy reflects our four-stores-in-one
concept: each store has a unique pricing and discount
structure to accommodate separate business models and
plans. Each strategy however, is strongly defined by
– our mission to provide low cost goods while maximizing
revenue for programming,
– benefit the residents of the immediate neighborhood,
– keep merchandise flowing through the store quickly,
– build our reputation as a destination thrift store,
– reflect the community we are located in,
– and to maximize our facilities and staff strengths and
minimize their weaknesses.
Discounts
Discounts are an important part of our pricing strategy. Daily changing
discounts are offered primarily to encourage shoppers to shop
frequently. However, discounts also help regulate the flow of
merchandise and build customer satisfaction and loyalty.
• Today’s Sales daily discounts offered based upon inventory
and other factors including holidays and seasonality
• Senior Citizen Discounts
• Client Discounts
• Targeted Outreach Discounts
• Promotional Event Discounts
We do not haggle prices, nor do we
barter. Staff persons, including
managers, are not allowed to offer
any other discounts or price changes
to individual shoppers.
Price adjustments for items that may
be priced to high, for any reason, are
done after we are closed for the day,
not for individuals on-the-spot.
A Quick Look at Our Pricing
The Catholic Charities Community Services Thrift Store
Thrift Store Clothing Prices: Category Pricing
All Thrift Store Clothing is $1, $2, $3 or $5 each
Boutique Clothing Prices: Value-based Pricing
Boutique Clothing is priced as a percentage of their know or estimated
retail value, typically 50% to 75% off
Furniture Store Prices: Modified Category Pricing
Furniture Store pricing is a combination of category pricing, with a
scale for quality and condition, an estimated 10% to 30% off other
second hand stores
Antiques & Collectibles Prices: Value-based Pricing
Antiques & Collectibles are priced at or slightly below other antique
stores, a value-based system subject to perceived value
Thrift Store Clothing Prices:
Category Pricing
All Thrift Store Clothing is $1, $2, $3 or $5 each, based
upon categories: Children, Women, Men, Coats
Thrift Store Discounts:
•Daily: Thrift Store Clothing is marked down to $1
after a day or two, for most items.
•Special Discounts: based upon seasonality, excess
inventory, etc
•Senior Discount
•Occasionally, selected Thrift Store Clothing is
included in Today’s Sales
Planned length of time in store: one or
two days for most items
Merchandise: high quality, gently used
clothing and other necessities
Price Range: $1 to $5
Boutique Clothing Prices:
Value-based Pricing
Boutique Clothing is priced as a percentage of their
know or estimated retail value, ranging from 50% to
75% off
Boutique Discounts:
•Daily Discount System: Items move though a series of
discounts based upon length of time in the store. Price tags are
punched to indicate the current discount.
•Today’s Sales Discounts: Every day we offer some type of
discount in the Boutique which may include: 30% Off, 50% Off,
BOGO (Buy One Get One) Free, etc.
•Senior Discount
•Special Discounts: based upon seasonality, excess inventory,
etc
Planned length of time in store: one month or less,
weekly markdowns
Price Range: $1 to $1,500+
Merchandise: New items, luxury items, vintage,
specialty, and other unusual or high value clothing
and accessories
Furniture Store Prices:
Modified Category Pricing
Furniture Store pricing is a combination of category
pricing, with a scale for quality and condition
Example: Sofas typically range from $35 to $150
based upon condition, etc
Furniture Store Discounts:
•Daily: Items are marked down 30%, 50% and
finally 75%, typically based upon length of time in
store and inventory levels.
•Excess Inventory: Pick it up Today and Save 25%,
or more
•Senior Discount
Planned length of time in store: a few days,
up to a week or two for more expensive or
unusual items
Merchandise: gently used high quality
furniture, house wares, regular art, electronics,
lighting, floor coverings, limited medical
equipment, books, records and tapes.
Price Range: $1 to $500+
Antiques & Collectibles Prices:
Value-based Pricing
Antiques & Collectibles are priced at or slightly
below other antique stores, a value-based
system subject to perceived value
Antiques & Collectibles Discounts:
•Often included in Today’s Sales: 25% to 50% Off, BOGO, etc.
•Weekly: Items are marked down 30%, 50% and finally 75%,
typically based upon length of time in store and inventory
levels. Occasionally, price adjustments are done if the item
was originally priced to high or damage occurred in the store.
•Red Dot Sale: 75% Off Selected Items
•Senior Discount
Planned length of time in store: varies widely based
upon value, market, and other factors, especially our
strategy of becoming a destination thrift store
Furniture Price Range: $10 to $2,000+
Collectibles Price Range: $2 to $900
Merchandise: Antique furniture and other antiques.
Collectibles such as glass, ceramic, metal, etc. Art,
sculptures, paintings, mirrors, etc. Fine furniture and other
high value items.
How do we compare?
In 2006, we conducted an informal study of our prices as
compared to estimated original retail prices and also to
Goodwill and Salvation Army.
– Compared to Estimated Original Retail Prices: Our prices were on
average 87% Off original
– Compared to the published price lists of both Goodwill and
Salvation Army: Our base prices, and average prices were lower,
sometimes significantly
Notes:
•Since that time we have further lowered our Thrift Store Clothing prices to $1, $2 and
$3 each.
•We estimate that our Boutique prices are up to 50% Off similar store prices.
•We estimate that our Furniture prices are approximately 30% Off similar store prices.
•We estimate that our Antique prices are similar to other antique stores.
Pricing Strategy History
•
FY 2001: Category Pricing. Most items
were $1 each. No price tags.
•
FY 2002: We introduced value-based
pricing on a small scale. We began
ticketing higher value items.
FY 2001: $220,000
FY 2002: $270,864
ADS: $903
FY 2004: We had integrated value-based
pricing on selected items, with modified
category-based pricing for clothing.
FY 2003: $253,988
ADS: $857
FY 2004: $371,572
ADS: $1,233
•
Revenue History
approximately
•
FY 2006: We opened an Antique Shop on
the 2nd floor. All items, except regular
clothing, were ticketed.
FY 2005: $358,528
ADS: $1,244
•
FY 2007: We continued to expand valuebased pricing to all categories adding a
“mini-boutique” concept. NOTE: In FY
2007, we began liquidating merchandise.
FY 2006: $384,734
ADS: $1,280
FY 2007: $384,300*
ADS:
$916*
•
FY 2008: Renovation. Moved to
temporary location.
FY 2008: $274,626*
ADS:
$938*
•
FY 2009: We re-opened (4 months late)
with a “four-stores-in-one” concept that
includes a variety of pricing methods.
FY 2009: $188,714*
ADS:
$682*
•
FY 2012: Launched Online Stores
•
FY 2013: Store Closed in March. Revenue
prorated for 12 months.
FY 2010
$350,821
ADS: $1,253
FY 2011
$409,249
ADS: $1,348
FY 2012
$478,804
ADS: $1,417
FY 2013
$551,333* ADS: $1,631*
Who determines prices?
•
Thrift clothing, books, and a few other miscellaneous items follow a category
price list.
•
All other items are priced individually using established guidelines by trained
staff.
•
Boutique items and regular house wares are priced by the cashier and
assistant manager.
•
Unusual items, including Designer Clothing, Art, Antiques, and Collectibles
are researched and frequently priced by the manager.
•
Furniture is priced by the manager and assistant manger.
•
Occasionally, a volunteer appraiser or expert is used to assist in pricing high
value items.
•
In the future, we plan to use trained volunteers to assist with pricing
The Fair Pricing Challenge
How do we determine a fair price when original retail
prices may vary from $1 to more than $6,000?
Recent Example:
• A new gown, $6,000 price tag attached.
• Originally priced: $1,200, now marked down to $600.
• Is 90% off, or $600 too much or too little for a $6,000 gown?
• If we ask too little, are we providing good stewardship if the
donor is expecting us to raise money from her donation?
• Is it offensive or insulting to display it in this neighborhood
at that price?
• Should we take it elsewhere so we don’t have to worry
about offending anyone?
• Does the neighborhood deserve the chance to acquire
something they may not have access to otherwise?
Our solution is to price items based upon their original
value, and mark items down through an formal system.
Although some comment the prices are high, most agree
that our prices are low compared to other stores and
appreciate the opportunity to buy luxury items.
Another Challenge:
Dealers and Resellers
In 2002, dealers formed the core of the business and were
the focus of discounts and other incentives. Additionally,
staff held items for the dealers because they were “good”
customers. The challenge was how do we retain them as
customers but create a system that benefits the community
more?
When items were brought out for sale, the community
customers literally had to fight with the dealers for the best
items. Our primary mission is to deliver donated goods to
the residents of the South Bronx (and other needy New
Yorkers) at low cost.
The residents of the community did not think of us as a
place to get great quality items. The dealers scooped up the
good stuff by 11:00am and would leave to resell them in
other markets. Our revenue for the day dried up by noon.
As we slowly raised our prices closer to industry standard,
the dealers purchased a little less, but the community
customers were finally able to find a lot of great quality
items and purchased more.
By 2005, we had gained a reputation for having great items
every day. Our customer base had changed dramatically, we
were now a community thrift store rather than a dealer
outlet. We became a “destination store”.
Today, far more goods remain in the neighborhood than
ever before.