How to turn a $500K thrift store into a $272K one that barely breaks even

First, you take the 20% of the inventory that makes up 80% of the stores sales (the best of the best donations) and flat price those items with similar items. Price all shirts at $3.99 and all pants at $4.99 rather than pricing them for a 1/3 of  normal retail prices. This step reduces what the items would retail at your store by half and alone would reduce sales down to $300K.

Second, you install a structured markdown system that discounts older items by an average of 30%. Your customers are soon trained to buy these items and this move represents another $30K in reduced sales. This discount program makes the customers happy so they will all tell you how nice you are, but will still always want more discounts and will get their way on many occasions.

The new model allows you to hang a lot of marginal textiles and does not require your store to look neat and clean at all times. Your customers will learn tolerate the musty smell and the poor lighting that tighter margins will create via deferred maintenance. And, of course the lower salaries that poor sales dictate will produce a lower level of professionalism that will be appreciated because the goal is to just keep the schedule filled.

What if you have a marginally profitable store and you want to increase sales, can you reverse the process? We have, and it produced 15+ stores averaging $500K per year.

Want more information on how to increase sales and profitability? We would love to help.

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