Many charity shops won't survive the pandemic

1st June 2020

No element of society or the economy has remained unaffected by the coronavirus pandemic, but among those hit the hardest is the charity sector. By the end of March, for example, the chief executive of Cancer Research was already predicting a decline in fundraising income of up to 25% – a reduction with major ramifications for the organisation’s efforts to prevent, diagnose and treat cancer. Similarly, Oxfam is currently losing £5m a month in revenue.

Recent media coverage has focused particularly on how the cancellation of fundraising events has decimated income for charities large and small. This is perhaps unsurprising given that one of the events affected is the London Marathon, moved from 26 April to 4 October. In 2019, this 26.2-mile road race through the UK capital raised an enormous £66.4m for charities, a new world record for an annual single-day fundraising event for the 13th year in a row. Since it began in 1981, the marathon is responsible for over £1bn of giving to good causes.

Less attention, however, has been paid to the effects that shutting charity shops is having on the sector. According to the Charity Retail Association (CRA), these stores contributed £330m to their parent organisations in 2018-19, an 11% year-on-year increase. On average, this equates to £27.5m per month, or £55m over two months. In comparison, with lockdown resulting in universal closures, that figure will be pretty near to nought for at least two months of 2020.

Robin Osterley, chief executive of the CRA, is cautious about estimating the extent of damage caused by COVID-19 at this stage. However, he notes: “There’s clearly going to be a big hiatus in our activities. A lot of March and all of April has been zero income. People are fairly optimistic that that will pick up during the course of the rest of the year [but] it’s highly unlikely they’ll get back to their projected turnover or profitability.”

Approximately 80% of our fundraising is impacted so the financial pressures are huge

Holly Kerrigan is head of marketing and communications for Myton Hospice, which provides end-of-life care at three facilities and in private homes in Coventry and Warwickshire. Last year, the charity supported 1,800 individuals and their families. She is frank about what pulling down the shutters on 27 shops means for these services. 

“Retail income was budgeted to be £2.77m which equates to 23% of our £11.92m income,” Holly says. “So, 23% of our income is completely wiped out by the store closures, alongside the financial impact of all of our events being cancelled or postponed and no face-to-face fundraising taking place. 

“In total, approximately 80% of our fundraising is impacted so the financial pressures are huge.”

Although loss of revenue is the largest and most damaging aspect of charity shop closures, there are other effects too. They are a major player in the second-hand market, with 82% of their income coming from the sale of donated goods. Clothing is a key category in these sales and charity shops have a vital role in the resale – and reuse – of garments; the CRA states that in 2018-19, charity shops prevented 339,000 tonnes of textiles being sent to landfill. This environmental responsibility is significant: a recent report found that the UK produces 206,456 tonnes of textile waste per year, making us the fourth largest producer of textile waste in Europe. Without charity shops as a convenient donation point, that figure would only be higher.  

Charity shops contribute to the communities around them too, offering a link between local people and the parent organisation. Chest Heart & Stroke Scotland, for instance, have community hubs offering a space for people to meet and chat, access information about local services and attend healthy heart exercise classes, while the new My CWA store in Macclesfield offers food and interview clothes as well as a cleaning and toiletries bank for women and families in need.

Robin Osterley regards such facilities as a crucial part of charity shops’ function, saying “You’ve got the ability to use your retail establishment as a community hub to allow people to access services from the charity. They are literally a shop window to those services, or in some cases a portal where you can go in and access the services in the shop. That’s something that’s becoming more and more common.”  

There isn’t a lot of real affluence, so they offer an alternative to toy shops, bookstores and clothes shops especially

With an average transaction value of £4.46, charity shops also are a source of cheap goods – particularly important in areas of poverty. The Midlands borough of Nuneaton and Bedworth, for instance, is home to 6% of areas listed in the country’s 10% most deprived wards in 2019. The borough is home to many charity shops too; Nuneaton town centre alone has 17.  

Low cost is one of the main reasons shoppers in Nuneaton give for visiting charity shops. Kaz, for instance, says: “Clothes and furniture I look for at a good price… Plus it helps charity,” while Kelly says: “I love charity shop shopping, best pastime ever. You never know what bargains you’re going to find and [I’m] lucky to live in a town with a wide selection of charity shops to choose from.” Michaela says: “90% of my clothes come from charity shops. I love bargain hunting. Plus, new clothes cost a fortune.”      

Some respondents see charity shops in terms of the area’s socioeconomic status. “I think they are invaluable for a community like Nuneaton,” says Mandie. “There isn’t a lot of real affluence, so they offer an alternative to toy shops, bookstores and clothes shops especially.” In a similar comment, Pamela says: “I do think the [charity] shops play an important role in town because even people with not much money can afford to buy from them and they raise money for good causes.” 

Sadly some charities won’t make it

Fortunately for devoted customers, Osterley is reasonably optimistic about the prospects for charity shops post-COVID-19. “As long as the charities themselves are able to weather the storm,” he says, “then I’m pretty sure their retail chains will.” The Charity Retail Consultancy expresses a similar view: “In the long term, sadly some charities won’t make it. We hope that this is a small minority as our sector is a resilient and robust one.” 

Furthermore, while charities rely heavily on other sources of income aside from retail, once shops are able to reopen, they will deliver a funding lifeline. As long as staff and volunteers are available, and safety measures around social distancing are in place, “A charity shop can open and start providing cash for its charity essentially immediately,” says Osterley.

“It’s not so easy to recreate the London Marathon or other events, or to pick up the direct debits that have been cancelled, or any of those things that charities are suffering from.” 

1st June 2020