retail strategy updated

7/18/2019 Retail Strategy Updated

http://slidepdf.com/reader/full/retail-strategy-updated 1/16

Retail Strategy 2014 - 2017

www.demelza.org.uk



www.demelza.org.uk

Executive Summary

1

Demelza has an established network of 19 shops selling a mix of donated and bought in goods. This strategy outlines our

plans for the three years up to 2017 and articulates our intention to:

• Establish a growing portfolio of outstanding Demelza shops across our region, each raising high levels of sustainable

income and increased public awareness of our work

• Build our reputation as the leading charity retailer in the region, delivering exceptional customer service and profitability

Over the period of the plan we intend to acquire a further four retail units in the West Kent and South East London areas and

capitalise on the higher income potential of second-hand furniture retailing, by piloting a larger retail unit for furniture

collection and sale.

All new shops are projected to make an operating profit from the year of opening and the cash flow for them all will be

positive in 2015/16. When they are all at their maximum sales capacity the average annual profit for the High Street shops is

projected to be £51k p.a. and for the furniture shop £95k, compared with the current average for 2012/13 of £39k and £45k

for the 2013/14 budget.



www.demelza.org.uk

To grow the Retail

business, increasing

the number and

type of retail outlets

across the region we

serve in South East

England, particularly in areas where we

are under-

represented in order

to raise awareness

and profile for our

fundraising and

service delivery

Strategic Intent 2014 - 2017

1 To improve business

efficiency and deliver

growing net contribution

from each retail unit

2 To develop the online retail

business, significantly

growing sales of both new

and second hand goods

3 To use the retail operation

to deliver increased

awareness of Demelza’s

work and raise the profile

of the brand across South

East England

4

To develop the excellence

of our retail staff and

volunteers

5 To use our retail business as

a springboard for

increased fundraising

activity across the South

East Region

6 To deliver outstanding

customer service

throughout the retail

business

7

2



www.demelza.org.uk 3

Retail Strategy Background

Demelza has a portfolio of 19 shops and a warehouse operated through a separate limited trading company. Our warehouse is on a trading

estate in Sittingbourne. It is used for storage of out-of-season stock, processing and distribution of Donated stock together with the operation and

distribution of our new goods range. A by-product of the Donated stock processing, results in quantities of rag for which we receive an income. It

is also the base for our online sales business, eBay and Amazon trading. The warehouse fulfils our online shop and Christmas card orders; no

direct sales to the public are made from the warehouse.

As our retail business has grown; it has delivered increasing net contribution to Demelza. Net contribution reduces significantly in the years when

new shops have been opened. Recovery and increase has been seen in the following year.

YEAR 2005 2006 2007 2008 2009 2010 2011 2012 2013

Shops start of year

Shops end of year

No of Warehouses

Gross Annual Income

Net Profit

% Profit

Retail Gift Aid Income

8

9

451,380

30,078

7%

9

10

513,991

70,395

14%

0

10

10

644,888

124,311

19%

0

11

13

812,978

111,454

14%

0

13

13

1

909,808

171,860

19%

0

13

14

1

994,336

211,544

21%

0

14

17

1

1,170,144

142,381

12%

18k

17

19

1

1,641,131

298,787

18%

36k

19

19

1

1,742000

316,000

18%

50k





Charity shops can provide a long term, sustainable income for

a charity that can be relied upon even in times of economicuncertainty. Our shops increase awareness of Demelza and the

work we do. They have the potential to support other

fundraising initiatives and generate legacy income. Appendix 1

The charity retail sector is buoyant, with charity shop numbers

growing considerably over the past 2 to 3 years. Appendix 2.

Our shops are primarily in Kent; eleven are clustered in and

around the Medway Towns, Swale and the North Kent Coast.

Two shops are situated in Hythe on the South Kent Coast; these

are within a 50 minute drive of our Kent Hospice. There are a

further four shops in East Sussex within 45 minutes of our Sussex office. One shop is in North Kent (West Wickham) and one in

South East London (Eltham) which is close to our South East

London Hospice.

Most of our shops sell a mix of second hand goods (clothing,

bric a brac, etc.) and some new (bought in) in the ratio of

approximately 4:1. Two of our shops are niche shops selling

only books and some entertainment (cd’s and dvd’s). We do

not at present have any large niche shops which have worked

successfully for other charities, such as dedicated furniture and

electrical shops, although Demelza retails donated furniture

through two of our larger shops and sells electrical items acrossthe stores where there is demand. Other charities have been

very successful in offering large scale furniture outlets, most

notably British Heart Foundation. These are stand-alone

business units offering a dedicated collection and delivery

service.



5


DEMELZA SHOPS An analysis of the current shop portfolio has reviewed

the following criteria to assess the factors that are

most important in driving successful income levels

• Ability to generate stock (also influenced by shop

maturity)

• Manager Engagement

• Calibre and availability of volunteer workforce• Location, accessibility and convenience

• Size of shop and trading areas

Previous analysis by the retail team has determined

that a specialist furniture shop on a larger footprint

than our existing shops would be a desirable addition

to the portfolio. As well as retailing second hand

furniture the shop would develop a volunteer team to

restore and renovate donated furniture for sale.

Appendix 3




Retail Strategy STRATEGIC INTENT OUTLINE

1.To grow the retail business, increasing the number of retail outlets across the region we serve in

South East England particularly in areas where we are under-represented

Key Aims

a. To increase number of mixed offer shops in areas where Demelza is under represented

b. Review feasibility of different types of retail units such as temporary ‘pop up’ shops

c. Develop a culture that allows for entrepreneurial activity that builds on sector experience

i. To pilot a dedicated larger retail unit, in Kent, for selling furniture including up-cycled pieces and electrical goods

ii. Define a template for the standard Demelza mixed offer retail outlet

iii. Evaluate locations and properties that match template

iv. Conduct sector analysis and produce an options appraisal to pilot a Demelza Furniture shop

v. Develop a cost effective methodology to evaluate additional retail models

vi. Establish an advisory group of experienced retailers to enable Demelza to respond to emerging trends

1

1

1,2,3

1

1

1

Objectives Year





2. To improve business efficiency and deliver growing net contribution from each retail unit

Key Aims

a. Increase net contribution in each shop

b. Complete a review of the warehouse operation

c. Review staff roles and working practices

d. Review our Bought in Goods operation and improve the return achieved

e. Increase Gift Aid sales

f. Establish a Retail Advisory Committee with external members to inform strategy development, business improvement and stock generation

i. Prepare an options appraisal prior to warehouse lease renewal in Sept 2020

ii. Clarify all reporting lines and adjust job descriptions, increase accountability

iII. Decrease levels of absence across retail business

iv. Improve transparency and accountability of Bought in Goods; sales and costs

v. Bench mark rates for rag and recycling against other charities

vi. Evaluate a programme of bag drops to generate stock

vii. Set KPIs to monitor gift aid targets by shop

viii. Focus Shop managers on net contribution through training programmes and RAG rating net contribution figures

ix. Maximise return on Rag and recycling x. Increase the volume of donated stock

3

1

1

1

1

1

1

1

11

Objectives Year





3. To develop the online retail business, significantly growing sales of both new and second hand goods

Key Aims

a. Increase sales of interesting and valuable donated product via on-line channels

b. Increase on-line sales of Bought in Goods product

c. Expand on-line customer base

d. Provide additional consumer data for marketing & fundraising purposes

i. Introduce a system to credit and encourage shop managers to put forward items for online sales where price attained would behigher than at shop level

ii. Allocate responsibility for on-line business to one person

iii. Arrange a fact finding visit to a charity with a successful on-line business

iv. Excite media interest in products via social media

v. Link all on-line activity with other marketing initiatives and websites

vi. Improve photography and range of goods on offer

vii. Increase our on-line sales of cards and gifts

1

1

1

1,2,3

1,2,3

1

1

Objectives Year





4. To use the retail operation to deliver increased awareness of Demelza’s work and raise the profile of the

brand across South East England

Key Aims

a. Review branding in shops and ensure all shops reflect the Demelza Brand and Values

b. Ensure Demelza key messages are known by all retail staff and volunteers

c. Establish the shops as a ‘shop window’ for the services generating potential referrals

i. Produce seasonal marketing material for shop displays

ii. Instigate a programme of shop events

iii. Implement a programme of regular production of new posters and marketing material

iv. Develop expertise in producing fashion events and retail focused events

v. Seek out, recruit and engage volunteers from diverse communities

vi. Train shop managers and volunteers to enable them to refer potential supporters or service users

vii. Further encourage promotion of Go Dotty Week and other key Hospice Weeks

viii. Ensure that shops develop an event/window promotion or other activity for each Awareness Week

1,2,3

1

1,2,3

1,2,3

1,2,3

1

1,2,3

1,2,3

Objectives Year





5. To develop the excellence of our retail staff and volunteers

Key Aims

a. Encourage wider participation and awareness of Charity Retail Association by key staff

b. Develop positive case studies for presentation at Charity Retail Conference

c. Instigate a Star of the Month Award for excellence throughout the retail staff and volunteers

i. Establish a retail training programme for volunteers

ii. Develop a shop specific Managing Volunteers programme

iii. Achieve an award for our retail business

iv. Introduce a mystery shopper programme

v. Develop series of visits to other charities for key staff and volunteers

vi. New initiatives to be actively pursued from shop managers

vii. Establish a retail ‘Hothouse’ meeting

viii. Regularly audit processes and procedures from Shop Operations Manual

ix. Collaborate more effectively with Community Fundraisers

1

2

2

1

1

1

1

1

1,2,3

Objectives Year





6. To use our retail business as a springboard for increased fundraising activity across the South East Region

Key Aims

a. To increase awareness of special Demelza events within the retail shops

b. To ensure each shop is a focus for community activity

c. To increase sales of lottery tickets through the shops

d. To increase lottery signups by regular canvassing sessions

e. To strengthen links and working partnerships between community fundraising and shops

i. Distribute marketing material throughout shops as appropriate

ii. Create regular communication between our events and community teams and shop managers

iii. Set up sales training in shops with low levels of lottery ticket sales

iv. Put in place a calendar of canvassing dates

v. Hold regular community/shop get-togethers to foster community fundraising activity and build relationships

vi. Train community team to promote stock generation and our retail businesses

1,2,3

1

1

1

1

1

Objectives Year



www.demelza.org.uk 10 www.demelza.org.uk 12


7. To deliver outstanding customer service throughout the retail business

Key Aims

a. Provide a warm welcoming environment for customer shopping

b. Ensure customers are always properly thanked for donated stock

c. To surprise and delight customers with our customer care

d. To implement a communications programme to our retail Giftaid donors

e. To develop our retail volunteers as Demelza Ambassadors

i. Benchmark shops with mystery shopper visits and reporting systems

ii. Introduce KPI’s for customer service

iii. Provide level 2 customer service training

iv. Organise managing volunteers training specifically aimed at retail volunteers

v. Establish regional retail volunteer workshops

vi. Establish an Annual Retail Conference

1,2,3

2

2

2

2

1

Objectives Year





DEMELZA SHOPS LOCATION

B A T T L E

C H A T H A M

E A S T B O U R N E

E L T H A M

G I L L I N G H A M

H A I L S H A M

H E A T H F I E L D

H E R N E B A Y 1

H E R N E B A Y 2

H Y T H E B O O K S

H Y T H E

P A R K W O O D

R A I N H A M

R O C H E S T E R

S H E E R N E S S

S I T T I N G B O U R N E

S T R O O D

W E S T W I C K H A M

W H I T S T A B L E

<800800-10001000-1500>1500

Main High Street - PrimeMain High Street - off pitchSecondary

Community

Easy drop off for stock FreePaidRestrictive/expensivePedestrianised

ground only ground and upperground and basementancillary

GOOD AVERAGEPOOR

AFLUENTGOOD MIXLOW INCOMERETIREDSEASONAL TRADE

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SIZE (Sq Ft)SIZESIZESIZE

POSITIONPOSITIONPOSITION

POSITION

PARKINGPARKINGPARKINGPARKINGPARKING

LAYOUTLAYOUTLAYOUTLAYOUT

VOL COVER VOL COVER

VOL COVER

Socio Economic StatusSocio Economic StatusSocio Economic StatusSocio Economic StatusSocio Economic Status





New High Street shops Wkly sales

Income 1 2 1

Opening Yr (6 mths) £1,950 50,700 101,400 50,700

Second yr of opening £2,200 114,400 228,800

Third yr of opening £2,250 117,000 468,000

50,700 215,800 396,500 663,000 468,000

ExpenditureExpenditure Cost

High Street shops

Shop manager + cover (7 mths op yr) £(18,000) (14,700) (54,600) (90,300) (100,800)FTE 1.4

Overheads, including £30k rent £(40,000) (8,333) (56,667) (128,333) (160,000)

(6 mths rent free)

Van and driver cost £(16,000) (1,600) (3,200) (3,200) (3,200)

FTE 0.2

Overhead costs (24,633) (114,467) (221,833) (360,933) (264,000)

High Street shops operational profit 26,067 101,333 174,667 302,067 204,000

Annual profit per shop 51,000

Set up costs Cost per shop

Search consultancy £(3,200) (3,200) (6,400) (3,200)

Capit al - ref urbishment & fitting £(50,000) (50,000) (100,000) (50,000)

Marketing £(1,500) (1,500) (3,000) (1,500)

High Street shops cashflow (28,633) (8,067) 119,967 83,267 204,000

Year 1 Year 2 Year 3 3 YearsFull Yr

operating

Financial Model 24/10/13

continued on next page



Furniture shop 1

Income

Opening Yr (6 mths) £3,000 78,000

Full Yr £4,000 208,000 208,000 494,000 208,000

Expenditure

Furniture shop

Manager (7 mths op yr) £(20,000) (11,667) (20,000) (20,000) (20,000)

FTE 1

Assistant (7 mths op yr) £(16,000) (9,333) (16,000) (16,000) (16,000)

FTE 1

Van driver (7 mths op yr) £(16,000) (13,067) (22,400) (22,400) (22,400)

FTE 1.4

Van apprentice £(8,000) (4,667) (8,000) (8,000) (8,000)

FTE 1

Van costs £(6,000) (3,500) (6,000) (6,000) (6,000)

Overheads, including £30k rent £(40,000) (35,000) (40,000) (40,000) (40,000)

Furniture shop operational result 767 95,600 95,600 191,967 95,600

Set up costs (as for High Street shops) £(54,700) £(54,700)

Furniture shop cashflow £(53,933) £95,600 £95,600 £137,267 £95,600

Central Support Costs

Volunteer services £(19,000) £(7,600) £(3,800) £(3,800) £(3,800)

Yr 1 FTE = 0.4

Yr 2 FTE = 0.2

Finance FTE % per shop 2% £(880) £(1,760) £(2,200) £(2,200)

£(22,000)

Retail Admin FTE % per shop 2% £(800) £(1,600) £(2,000) £(2,000)

£(20,000)

Health & Safety & Maintenance £(2,500) £(2,500) £(7,500) £(11,250) £(12,500)

£(11,780) £(14,660) £(19,250) £(45,690) £(20,500)

Operating result £15,053 £182,273 £251,017 £448,343 £279,100

Cashflow £(94,347) £72,873 £196,317 £174,843 £279,100

Projected Pay Back on investment 2.3 years

Year 1 Year 2 Year 3 3 YearsFull Yr

operating

Financial Model 24/10/13



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