Savers Expands into Australia Amid Controversy Over For-Profit Thrift Model

The grand opening of Savers' new retail outlet in Geelong, Victoria, on August 27, attracted a significant crowd, with eager shoppers forming a long queue outside the store. Among them was a pregnant woman who humorously noted her need for clothing for her two children as she stood at the front of the 100-meter line.

This latest location marks the 19th store for Savers in Australia, but what many shoppers may not realize is that Savers Australia is part of a larger entity, Savers Value Village (SVV), a $2.2 billion company traded on the New York Stock Exchange. SVV is recognized as North America’s largest for-profit second-hand retailer, boasting 185 stores in the U.S. and 172 in Canada. The company reported a gross profit margin of 50% and earned over $300 million last year, according to Refinitiv data.

In the competitive landscape of second-hand retailing in Australia, Savers stands out due to its for-profit model. It goes head-to-head with non-profit organizations like Vinnies and Salvos, as well as small charity op shops that depend on donations to fund community initiatives. Local charity leader Esther Koning-Oakes expressed concern about the impact of Savers on her organization, Norlane Community House, which runs a volunteer-operated op shop called Treasures. She worries that the presence of a large, profit-driven retailer will diminish both customer traffic and donations to her charity.

Koning-Oakes emphasized the importance of community goodwill in donations, stating, "Having it for a for-profit company means that… it doesn’t actually go back into community." In contrast, Savers maintains that it actively supports local charities. According to their spokesperson, the company contributed $5.6 million to non-profit partners in Australia last year, averaging about $310,000 per store.

Diabetes Victoria’s CEO, Glen Noonan, highlighted the benefits of their partnership with Savers, noting that the funding received helps them provide vital services to the community, although he declined to disclose the specifics of their financial agreement with Savers. Customers who donate goods to Savers are offered a 20% discount voucher for future purchases, a tactic that some shoppers view favorably while others prefer to give to more traditional charity shops.

Savers' business model raises questions about its environmental impact, especially in a country known for high clothing consumption. While the company does not publicly disclose how much unsold stock ends up in landfills or is recycled, it promotes its role in reducing waste. The company has also implemented ThriftIQ, an AI-backed program in North America designed to optimize pricing and inventory management, though it remains unclear if this technology will extend to Australian stores.

As Savers continues to grow, with plans to open more stores in the future, local communities remain divided over its presence. Michael Fisher, the local head of Savers Australia, hinted at the potential for more openings next year, expressing excitement about the increasing popularity of second-hand shopping in Australia. The company aims to capitalize on this trend while navigating the complexities of the charity retail landscape.

Source: www.abc.net.au