If you’re looking to open a thrift store, now is the perfect time — it’s a business model that’s rapidly gaining popularity. According to the National Association of Resale Professionals, there are over 25,000 resale, consignment, and nonprofit resale shops in the United States. But that doesn’t mean there’s no space for you in the industry — after all, online retailer ThredUp estimates that the global secondhand market will reach $350 billion by 2028, growing three times faster than the overall apparel market.
Although you want to strike while the iron is hot, opening a thrift store is a complex process. Whether you’re an individual thinking about starting a small business or a nonprofit looking to supplement your fundraising efforts, following these steps will help you confidently start the process of opening your thrift store.
A thrift store is a retailer that sells used or secondhand items, usually at a lower price than new items. Some thrift stores focus on a single type of item, whereas others offer a variety. Here are a few examples of the items thrift stores usually sell:
Many people shop at thrift stores because of their relatively inexpensive goods. Others shop there in search of vintage items that are no longer produced. Regardless of the reason, shopping at thrift stores is incredibly popular. Just consider these statistics from Capital One:
Opening a thrift store allows you, as a business owner or nonprofit professional, to capitalize on the popularity of secondhand shopping — and see an increase in profits.
Plus, thrift stores support sustainability by empowering consumers to reuse items. Every year, 92 million tons of textile waste end up in landfills, yet much of that is recyclable. The thrift store business model keeps textiles and other items out of landfills by encouraging individuals to donate their items to these stores to be resold. Through thrift stores, old items are given new life, contributing to a more eco-friendly and sustainable future.
Now that you know what a thrift store is and why you should consider opening one, let’s take a look at the steps to do so.
The first step to opening a thrift store is to select your niche. For thrift stores, this usually means choosing to either focus on a specific type of item or accept items of all kinds. For example, you could select books as your thrift store’s niche. In that case, you’d source popular or valuable secondhand books to sell in your store.
After you’ve selected your niche, you’ll build a business plan based on it. Your business plan should include the following:
If your store is part of a nonprofit or all proceeds will go toward a nonprofit cause, you can still benefit from creating a business plan. While you’ll run your store differently than you would a for-profit business, the contents of your business plan will help you identify if opening your store is feasible and which steps you need to get up and running.
After creating your business plan, gauge how realistic it is. If necessary, bring it to your organization’s leaders for approval. Based on your judgment and your stakeholders’ approval, you can start the process of opening your thrift store.
Once you’ve decided to open a thrift store, you need to register it by:
If you’re a business, then you’ll also need to determine your business structure and whether your thrift store will be a:
If your thrift store is part of a nonprofit, then you won’t need to worry about deciding your business structure. However, there may be regulations you need to follow to ensure that your thrift store follows all the legal requirements of a 501(c)(3) organization.
Regardless of whether your thrift store is a for-profit business or part of a nonprofit, we encourage you to consult a lawyer to help you navigate the rules and regulations of registering your store. They’ll ensure you comply with federal, state, and local requirements and protect you from legal liabilities.
After declaring your thrift store as a legal entity, you need to obtain the necessary licenses and permits required for you to operate and sell your products. Generally, these include:
Required licenses and permits will vary from state to state, and even county to county. Be sure to check your local regulations and don’t hesitate to contact a lawyer to determine if you’ve obtained all the licenses you need.
At this stage, you may also want to purchase insurance for your thrift store to protect you from any issues that may occur. For instance, you may want liability insurance, commercial property insurance, and workers’ compensation insurance.
If you don’t already have the funds needed to open a thrift store, then you’ll need to obtain them. For individuals or small groups, this means that you may need to request a loan from a bank. You can also try crowdfunding, asking friends and family to support your thrift store by contributing a small amount.
If your thrift store is part of a larger business or corporation, you may be able to request funds from the company to support it.
For nonprofits, you can put your donations toward opening your store. You can even host a capital campaign or create a specific fundraising program, letting donors know that you’re planning to open a thrift store to garner more funds for your beneficiaries. Your loyal supporters will likely be thrilled to help you in this new fundraising venture.
Now that you’ve taken care of the legal requirements and obtained the necessary funding, it’s time to look for a retail space. Most thrift stores that are just starting out will need to lease an existing space and customize the inside to fit their needs. Start by inquiring at local malls or shopping centers, as those areas usually guarantee foot traffic and ensure that your store will have customers.
After you’ve obtained your storefront, create a floor plan. This means deciding on:
Focus on creating a well-organized and inviting thrift store space that maximizes sales. For example, fitting rooms are usually in the back of stores to avoid taking space away from displays. They’re also there so customers must walk through the store to reach the fitting rooms, resulting in customers discovering more items they want to try on.
If a physical space is not an option, you may consider opening an online thrift store. There are plenty of e-commerce platforms that you can host your store on. However, you will not have the benefit of an attention-grabbing storefront, which means that you may need to put more effort into marketing and promotions to gain visibility.
Next, obtain the initial items and products your thrift store will sell. Thrift stores can obtain inventory from:
In addition to these options, you can also source inventory through donations. This option is best suited to nonprofit thrift stores, as in-kind donations (also known as non-monetary donations) to nonprofits are tax-deductible, making donation drop-offs a more attractive option for those looking to get rid of items. However, if you’re a for-profit business, you can incentivize them by offering a $5 or $10 coupon for every acceptable bag of items.
Keeping track of your sold inventory and finances, and managing your thrift store overall, can be very time-consuming. To mitigate that, invest in robust thrift store software that will help you automate and streamline your processes.
In particular, look for software with the following features:
If you’re looking for a thrift store solution, take a demo of ThriftCart. Our cloud-based software is built specifically for thrift stores, making it the best choice for meeting unique thrift shop needs. ThriftCart has all the features above and more, and the software is incredibly easy to use.
Before you open your store to the public, make sure that you have the help you need to ensure everything runs smoothly. That means hiring staff members, which may include:
Depending on your store’s unique needs and growth, you may need additional staff members. For instance, if your thrift store has a large furniture selection, you may want to hire a staff member with expertise in furniture repair or refurbishment. Or, if your thrift store rapidly gains popularity online and you want to create an online storefront, you may need a dedicated e-commerce manager.
Now that you’re all set up, it’s time to promote your store and gather customers. To maximize your visibility, market your thrift store through various channels. This way, individuals who only pay attention to one specific marketing channel can still learn about your shop.
Use the following channels to market your thrift store:
Additionally, don’t miss out on using your grand opening as a marketing tool. Give away promotional items to entice people to attend, such as discount coupons or branded merchandise. Make sure to promote your grand opening several weeks in advance to ensure a good customer turnout.
Opening a thrift store is a complicated process, but with the help of this guide, you’ll be well on your way to successfully starting your store. With the tips here, you’ll be generating revenue for your business or nonprofit in no time.
If you’re interested in learning more about running a thrift store, take a look at these resources: