Resale Value

Thrift is thriving in spite of—and because of—the economy.

By R.L. Nave | March 2010 | FROM THE PRINT EDITION

Credit: Photograph by Hayley Young

Ken Alternman

Ken Alterman had no clue that his former assistant from a
previous job purchased her clothing at a Value Village thrift store until he
took over as chief executive officer of the chain's parent company, Savers Inc.

"I always wondered where you got all those outfits because I
knew how much I was paying you," he recalls quipping at the time.

Once considered mostly a refuge of low-income individuals
and the young and counterculture sets, thrift shopping has entered the
mainstream as more and more customers have become accustomed to buying
secondhand merchandise from a wide variety of sources, including eBay and
Craigslist.

Bellevue-based Savers has been a big beneficiary of that
trend, and is now the world's largest for-profit retail thrift chain, with 220
stores in the United States, Canada and Australia (19 locations in the Puget
Sound region alone). The company recorded sales last year of an astounding $663
million, up 26 percent from 2006. That's in spite of a world economy mired in
recession. Or perhaps, because of it. In hard times, customers flock to its
retail outlets where products sell, on average, for just $4 apiece.

But this success is not only about low prices. Savers has
also played a key role in changing the experience of thrift shopping. Once the
place to shop for the down and out, these days, there's no telling whom-or
what-you might encounter at a thrift store. To attract a broader clientele,
Value Village has abandoned the age-old practices of cramming knickknacks onto
every available square inch of surface space. Now, stores are brighter,
cleaner, and better organized.

The company is also more strategic than old-line thrifts
about the way it goes about selling merchandise. "Our philosophy is not how
much money you can get for an item, but how many items can you sell," Alterman
says. "We don't want to get rich on an item. We want you to buy two. Can I get
$10 for that item? Maybe. But I'd rather sell you two for $7." Unsold items are
rotated out every four weeks to keep customers coming back, and inventory
turnover in stores is an impressive 12 times a year, about triple the level for
the average retailer.

The thrift shop industry is far from being recession proof.
Still, it's among a handful of businesses that tend to do better when times are
tough by attracting customers who want to save money.

How does Savers, which started in San Francisco in 1954,
generate nearly three quarters of a billion dollars in revenues