The Rise of Goodwill and the Thrift Store

March 12, 2020

This article analyzes the growth of the brick-and-mortar used merchandise sector, such as Goodwill and Buffalo Exchange, and includes used apparel, antiques, used books, used sporting goods, and other secondhand goods. More specifically, I investigate the growth of establishments in North American Industry Classification System (NAICS) code 453310. The description for code 453310 is: “This industry comprises establishments primarily engaged in retailing used merchandise, antiques, and secondhand goods (except motor vehicles, such as automobiles, RVs, motorcycles, and boats; motor vehicle parts; tires; and mobile homes).”

Turning first to the amount of revenue generated by selling secondhand goods, Chart 1, below, shows that revenue in used merchandise stores reached $16.8 billion in 2017. Compared with the year 2007, used merchandise sales grew 79% in the ten year period.

Turning next to the number of establishments selling secondhand goods, Chart 2, below, shows that the number of establishments grew the fastest between 2009 and 2013 with a 15.6% increase over a four year period. The growth trajectory after 2013 remained pretty flat–the growth in number of establishments between 2012 and 2017 was 3%. In light of revenue increasing by 30% over the same time period, between 2012 and 2017, this means that existing establishments have been making more money. In other words, the growth in revenue between 2012 and 2017 is not coming from a greater number of establishments in the market, it is coming from existing stores selling more goods. In 2012, each establishment earned $658,000 on average, while in 2017, each establishment earned $826,000 on average–for an increase of 26%.

Finally, turning to employee compensation, I find that wage growth has not increased as much as revenue growth. Between 2012 and 2017, wages grew by 6%. Again, revenue grew 30% during this time frame. Therefore, wages did not keep pace.

To recap, used merchandise sales grew 79% over a ten year period between 2007 and 2017. This growth, in recent years, was fueled by existing establishments selling more goods and not an increase in the number of establishments. Finally, employee compensation is not keeping pace with revenue growth.

Sources: https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=BP_2016_00A1&prodType=table, https://www.naics.com/naics-code-description/?code=453310#:~:text=, https://data.census.gov/cedsci/table?q=naics%20453310&hidePreview=false&tid=ECNBASIC2017.EC1700BASIC&n=453310&vintage=2017

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