How Does A Thrift Store Function?

The childhood memories of every middle-class American would surely include garage sales and second-hand purchases. Often the parents would buy them clothes from the store, but that too would be refurbished.

The stores that resell used items are known as resale stores. But, not all resale stores are the same. One such store is a thrift store, that sells donated goods at dirt-cheap prices.

Many of us would like to know how does a thrift store operate? But, to answer this question, it is essential that we understand what it is and how does it differentiate from a resale store.

What is a thrift store?

Typically, a thrift store sells used goods donated by anonymous people. These stores may or may not specialize in any product. But, the goods they sell are refurbished to look like new.

Usually, the stores sell items at rock-bottom prices to make them available to every one, since, the motive is not to earn any profit. Therefore, these stores sell everything from photo-frames to clothes and accessories.

How does it differentiate from a resale store?

A resale store is broadly categorized as retail stores that sell used goods. The products sold by these stores can be donated or purchased. Since some of the goods are purchased, these items are expensive as compared to a thrift store.

On the other hand, a thrift store usually receives all of its products through donations. Moreover, thrift stores do not operate to earn profits. In fact, these stores generally support non-profits and all the profits are used for a social cause. For example, thrift stores like MERS Goodwill use the money earned to run their Excel Center for grooming and skill development programs. Such thrift stores usually work in collaboration with a non-profit to help develop the community.

Having said that, a resale store is actually a broad class of retail stores. Whereas, a thrift store is a type under the resale store category. Since both the stores resell used goods, both differ entirely on the basis of their revenue model.

Let us understand… 

Where does the money come from to operate the store?

The typical revenue model for any retail store is to purchase goods in bulk, and then sell it at an increased price per unit. The difference between the purchase cost and the selling cost is the profit earned by the store. Out of this profit, they pay the salaries for the employees and also pay their bills and duties.

Whereas, in the case of a thrift store, the purchasing cost is usually zero. This is because the thrift stores usually replenish their stocks with donated goods only. And since there is no purchase cost involved, the entire selling price is profit for the store. But, this profit is not used for any personal gains. Rather the profit is reinvested to generate more revenue along with paying for the salaries of the employees and donations for community services.

To put it simply, a thrift store operates to serve the community and manages to operate at its own expense. Thus it brings the social services and community contribution on equivalent platforms.

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