Why are Value Village’s prices getting so high?

Dec 19 2017, 6:35 am

After mining through hand-me-downs at Value Village to put together an original Halloween ensemble, a jarring realization occurred at the till: buying a new costume-in-a-bag elsewhere would have fared better. Value Village – you used to be cool. What happened?

This sentiment has been growing loud on the thrift store’s Facebook page, so much so that it caught the attention of Vancouver’s News1130. The page is inundated with comments from disgruntled consumers across North America about the thrift store’s rising prices over the last few years. Value Village’s prices have been under the scrutiny of journalists for a while – perhaps indicative of the journalists’ ‘lavish’ payroll.

Why are Value Village’s prices getting so high?

Contrary to popular belief, Value Village is not a charity; it is a private for-profit entity operating under a unique business model that was exposed in 1987 by the L.A. Times in this article. Basically, TVI Inc., the company’s registered name and formerly Thrift Village Inc., partners with local non-profit organizations and, through contracts, buys their donated clothing and household goods and then sells it at Value Village locations. The charities also get a share of the proceeds – but not the ‘lion’s share.’

Items that you deliver personally to a Value Village location through their community donation centres are weighed in and also purchased from their partnered charities, even though the product has not physically left their lot. The goods are given an industry measurement called an “OK”, which is 2.7 cubic feet. This equates to approximately two grocery bags or a box of goods, according to this article.

TVI has partnered with over 140 non-profits across North America and their three main Canadian organizations are: Canadian Diabetes Association, Big Brothers Big Sisters of Canada and Developmental Disabilities Association.

The L.A. Times investigation uncovered that Value Village operators make approximately $1.50 for each dollar the under-signed charity makes. With some operators the $1.50 went as high as $2.55 for each dollar turned over to charity.

If a Value Village operator makes $2.50, Value Village would get $1.50 and the charity would get one dollar. So, in most situations, Value Village gets approximately 60 per cent of the value of the donated goods, according to these numbers. If you bought a used tennis racket from Value Village priced at $9.99, technically Value Village would get $5.99 of the sale and the rest would go to their charity.

There is a profit margin, which means that someone at the top is sitting on some fat cash stacks in the billions, that someone being the Ellison family. William Ellison opened his first company-owned Value Village in Renton, Washington in 1966 and within five years had opened several more. In 1972, Ellison incorporated his business as Thrift Village Inc. and opened his first Canadian store in Vancouver in 1980. By the mid-1980s, Thrift Village Inc. changed its name to TVI Inc. when it became a corporation in Washington and signed all of its non-profit suppliers to bulk-purchase agreements. TVI became the largest for-profit chain of thrift stores in 1995 and is currently headed by Ellison’s son, Thomas, and a private equity company. Value Village is known throughout the U.S. as Savers and there are over 200 locations in Canada, U.S. and Australia.

Your box of donated goods to any of the charities partnered with Value Village may not be going directly to a family in need, however, they are still benefitting but in a roundabout way so there is still a charitable element when shopping at Value Village. Items that either did not make it onto to the sales floor, or don’t sell, are recycled or donated to a developing nation through their Value Village Cycle program. Being that this is a for-profit business; if an item is deemed not profitable it is not priced and placed on the sales floor. Remember, Value Village is said to make at least a 60 per cent return on items and the quality of some items are questionable, like running shoes.

The anger being thrown on the Value Village Facebook page isn’t about the fact that donations to a charity are ending up at a retail store for profit, it’s mostly the fact that the $9.99 used tennis racket at Value Village will cost the same as a brand new tennis racket at, say, Walmart.

Value Village’s website claims that donations are value-priced and are set by a ‘Value Village team’ at the store levels. All questions pertaining to pricing were redirected to a Value Village regional manager of Vancouver and Vancouver Island, who then redirected all questions to their marketing department at the Value Village headquarters in Washington.

“Our team members are trained to price competitively with regard to other thrift stores and discount retailers and, on average, more than 90 per cent of the items on our sales floor are priced under 10 dollars,” says Sara Gaugl, marketing manager for Value Village.

Gaugl also says there may be times when team members make judgment errors and under-value or over-value items. If you have a question or complaint about pricing, Gaugl urges you to talk to the store’s management team or to their customer care department. Value Village did address complaints on their Facebook page and also encouraged customers to call customer care.

Should second-hand items be priced according to their retail value in the non-thrift realm?

Image by Roberrific