Profits growth slows down across UK charity shops market

Revenues and profits across the UK charity shops continued to rise last year but at a slower rate than in recent years, the latest Charity Shops Survey shows.

The survey, published by Charity Finance and Fundraising magazines today, reveals that income across the 85 shops chains that took part increased by 4.4 per cent, and profits by 4 per cent.

Though still growth, the figures portray a marked slowdown compared with previous years.  In 2012 profits rose by 14.3 per cent, and the year before that by 12.2 per cent.

Responses from the managers taking part in the research suggest that the deceleration is due to a few factors – high street saturation; increasing competition for both customers and stock, and the growing prevalence of discount commercial retailers such as Primark.

However, this does not seem to have discouraged most charities from expanding. By the end of the financial year surveyed, the charities participating in the study had 6,510 shops between them, up from 6,291 at the start of the year. 

Only six of the 20 biggest chains reduced their shop numbers during the year, and of the six that downsized, only one, Debra, cut shop numbers by more than 2 per cent.

The biggest chain remains British Heart Foundation, with 732 shops, followed by Oxfam with 680 and Cancer Research UK with 552.  Barnardo’s opened the most new shops during the year, growing by 45 to 532 stores.

The chain with the highest profit margin among the large charities was Salvation Army where the £15.5m profit represented 58.6 per cent of total sales across its 152 stores. The highest profit in cash terms fell to the British Heart Foundation which cleared £34.7m on its £163.8m turnover, a profit margin of 21.2 per cent. But overall, hospice shops are much more profitable than non-hospices, with average weekly profits per shop of £699 compared with £376.

A key theme that emerged from this year’s survey was innovation.  A number of charities have come up with new or flexible ways of doing business in order to stay ahead of the game – from Cancer Research UK refurbishing a disused petrol station in Suffolk as a donations bank, to Sue Ryder employing prisoners on day release to help out in its shops.  The latter project won the Education and Training category at the Charity Awards 2013.

The full Charity Shops Survey 2013, the 22nd annual study of the UK charity shops market, is available to view online here.

This article was taken from Civil Society: http://www.civilsociety.co.uk/finance/news/content/16159/