How Goodwill Is Refining Its Stores To Appeal To A Wider Audience

Written by Meg Miller- Fast Company, August 28, 2015

Upon entering Rare, a boutique in Anaheim, California, customers are greeted with chicly dressed mannequins and standing racks full of designer clothing. Vintage furniture is arranged in a lounge area in the corner, below a cluster of hanging succulents. In the back of the store, behind a set of very DIY-looking book shelves that double as a reading area, a sign printed on a wall of stacked books boasts, “We are anything but ordinary. We are Rare.”

Here’s a less advertised fact: this trendy, intimate retail space in an affluent LA suburb is also Goodwill.

Rare is one of the global charity organization’s recently opened Goodwill Boutiques–a chain of smaller, thoughtfully curated Goodwill stores designed to feel more like shopping in an Urban Outfitters than a thrift store. The boutiques exclusively sell Goodwill’s more high-end donations like Burberry and Ralph Lauren, but with only a slight mark-up from regular Goodwill prices (a recent Los Angeles Times article reported that Stuart Weitzman black pumps that go for $350 at Bloomingdale’s are sold for $12.99 at an Orange County Goodwill boutique). By curating an easier, hipper, more pleasant shopping experience, Goodwill’s goal is the same as any other retailer: expansion.

The boutique in Anaheim is one of about 60 boutique stores that have been quietly popping up across the country for the past four years. In nearby Orange County, the local Goodwill was one of the first to think about the new boutiques model not just as way to open smaller stores that carry the best brands, but as an opportunity for a complete overhaul in Goodwill’s image.

“It’s one thing to open small stores, but if we’re going to do this and do it properly, lets achieve number of priorities. Let’s achieve a superior shopping experience and be smart about our market,” Orange County Goodwill CEO Frank Talarico says about his organization’s strategy. The OC Goodwill has opened four boutiques in the area since 2012 and plans to continue expanding at a rate of two stores a year. He says that trading in the frumpy, cluttered, austere thrift store vibe for something more posh and sleek has “enabled us to expand our retail footprint in a way that we couldn’t otherwise.”

Talarico also realizes that the boutiques offer an opportunity to hold on to a portion of the customer base they already have. During the recession, Goodwill saw an increase in baby boomers and Gen Xers who were shopping at thrift stores for their families out of necessity. They were bringing along their millennial kids, who are now grown up enough to be shoppers themselves, and who value unique, one of a kind clothing. “We came out of an economic situation where folks were looking for real value when they went shopping,” says Talarico. “Now they’re looking for something that has value and is also superior and special.”

When designing the layout of the stores, he looked toward retailers like Abercrombie, Urban Outfitters, and Anthropologie as models. He now considers those stores as the boutiques’ direct competition, rather than other thrift stores, or even second-hand shops like Buffalo Exchange. He notes that a common misconception about Goodwill is that because it is a nonprofit, it operates in a completely different sphere than for-profit retailers. “This is not a cigar-box-card-table operation. This is a very sophisticated retail operation with a team that is absolutely expert at deploying really cool ideas.”

To his point, Goodwill Industries International, headquartered in Washington, D.C., is no small player in the retail world. Goodwill is a network of 165 community-based agencies in the United States and Canada with a presence in 14 other countries. From its 2,900 stores nationwide, Goodwill Industries pulls in around $4 billion in annual revenue.

The CEOs of each of Goodwill’s agencies meet up annually and share ideas, but otherwise the local organizations operate pretty autonomously. For his part, Talarico, who worked in branding for years before coming to Goodwill, leads his organization like a for profit: he knows his market and aggressively goes after it, a strategy he’s termed “prudentally aggressive.”

So far, all of his effort seems to be paying off. Revenue is up 6% or 7% over last year across all of the Orange County boutiques (compare that to the 2% growth that most major retailers hope to achieve per year). Talarico says that the average transaction at one of his boutiques is about $5 to $10 than their larger counterparts. While this is due partially to higher price points, the stores are also seeing people buy more per visit. “We always sort of made our name on the ‘treasure hunt’ aspect,” says Talarico. “With boutique stores, you have a higher level of confidence that it will be there.”