Goodwill of Orange County plans to reshape the merchandising and logistics behind its retail business with a move to a 154,040-square-foot distribution center in Tustin by year’s end.
The two-story facility, at 1231 Warner Ave., is roughly four times the size of its existing 30,000-square-foot processing space in Santa Ana.
It will enable the nonprofit to house and sort a significantly larger amount of donated goods, boosting the potential to increase sales at its 23 retail stores, a roster that now includes four boutiques that offer higher-end goods.
Goodwill’s retail operations provide training and ongoing employment for individuals facing barriers to employment, including adults with disabilities and veterans.
“We are consistently taking about 92 cents of every $1 earned and putting it right back into programs and services for our program participants,” said Goodwill’s President and Chief Executive Frank Talarico Jr. “Our successes in retail operations—with this lease a key component to that success—translates into serving more people.”
The limited space at the current Santa Ana distribution center means that Goodwill has to send merchandise to stores on the same day it’s donated, leaving no ability to make considerations for seasonal factors or demand at a particular retail location. Goods are kept on store shelves for as long as a month, shifting to sales racks for the final two weeks. Anything that doesn’t sell by then is sent back to the distribution center and sold in bulk at close-out prices.
Goodwill plans to use some of its larger distribution space to store goods, allowing it to time delivery to stores to maximize the value of the donation.
“If you have sweaters on the floor when it’s 100 degrees out, chances are they are not going to sell in the first two weeks for full price and probably not going to sell in the next two weeks at 50% off, and will likely end up in the wholesale,” Talarico said. “So, effectively, if that sweater was $5, and it sells for 50 cents, we have left a significant amount of revenue potentially on the table.”
The nonprofit collected $117.7 million in donations and revenue last year. Its retail operations accounted for $52.3 million of the total.
The new distribution center will also have enough space for 200 Goodwill employees to sort donations based on their potential resale value—designer apparel and accessories usually can fetch higher prices if categorized properly.
“At traditional stores we utilize unit pricing, so any pair of jeans that comes to a store is sold for $7.99,” said Chief Operating Officer Corrine Allen. “But if we are able to pull out those name-brand jeans and send them to one of our boutique stores, we can probably get $15 or $20.”
The extra effort in sorting will ensure that items under $20 go to Goodwill’s 19 regular stores throughout OC.
Each store will also be able to “request and receive inventory to fill gaps in fast-selling merchandise,” according to the organization.
Higher-priced merchandise is delivered to the four boutiques—in Huntington Beach, Lake Forest, Tustin and Anaheim—where “fashion-conscious shoppers” are looking for deals on luxury apparel and accessories, as well as new and used housewares, furniture and home decor items.
Specialty goods, such as musical instruments, artwork or jewelry, are usually set aside for online sales at shopgoodwill.com. An oil painting by Louis Apol had 10 bids last week, bringing the price to $2,501 with two days until the end of the online auction.
The site, set up and managed by the OC chapter, brought in about $60,000 in revenue in 1999.
It now serves about 160 Goodwill chapters throughout the U.S. The eBay-like platform is managed by the OC chapter and is on track to bring in about $65 million this year—proceeds that are divvied up among the 160 chapters.
The improved retail efficiencies will not undermine the key draw to shopping at Goodwill stores—the treasure hunt.
“We’ll never be able to pull everything that should be sold online or in boutiques,” Allen said. “It’s just not possible.”
