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Oxfam faces tough new test in the era of Lidl, Aldi and Primark Oxfam faces tough new test in the era of Lidl, Aldi and Primark
(about 1 hour later)
At 17 Broad Street in Oxford, in the heart of the city’s university district, there is a blue plaque on the wall to commemorate the “entrepreneur and philanthropist” Cecil Jackson-Cole, who died in 1979.At 17 Broad Street in Oxford, in the heart of the city’s university district, there is a blue plaque on the wall to commemorate the “entrepreneur and philanthropist” Cecil Jackson-Cole, who died in 1979.
Jackson-Cole was the co-founder of the Oxford Committee for Famine Relief, which is today known as Oxfam, one of the biggest charities in the world. The plaque is located on Broad Street because it was there, in 1947, where Jackson-Cole opened Britain’s first charity shop.Jackson-Cole was the co-founder of the Oxford Committee for Famine Relief, which is today known as Oxfam, one of the biggest charities in the world. The plaque is located on Broad Street because it was there, in 1947, where Jackson-Cole opened Britain’s first charity shop.
Related: Oxfam looks to discounting as high street shops struggle with competitionRelated: Oxfam looks to discounting as high street shops struggle with competition
Oxfam was founded five years before the shop opened to help Greek citizens who were starving following an Allied blockade of the occupied country. However, the charity received so many donations of clothing and blankets that Jackson-Cole decided to open a shop to sell the leftover products and use the proceeds to fund extra aid for Greece.Oxfam was founded five years before the shop opened to help Greek citizens who were starving following an Allied blockade of the occupied country. However, the charity received so many donations of clothing and blankets that Jackson-Cole decided to open a shop to sell the leftover products and use the proceeds to fund extra aid for Greece.
This was the first time a charity had opened a shop that was simply designed to raise funds for the parent organisation.This was the first time a charity had opened a shop that was simply designed to raise funds for the parent organisation.
The Oxfam at 17 Broad Street is still open, a testament to the success of Jackson-Cole’s initiative.The Oxfam at 17 Broad Street is still open, a testament to the success of Jackson-Cole’s initiative.
According to the Charity Retail Association, there are now 10,500 charity shops in the UK. However, Oxfam’s latest figures reveal that charity shops are facing their greatest challenge to date: the rise of the discounters.According to the Charity Retail Association, there are now 10,500 charity shops in the UK. However, Oxfam’s latest figures reveal that charity shops are facing their greatest challenge to date: the rise of the discounters.
In the year to the end of March, sales in Oxfam’s 670 stores fell 3% to £72.5m. The squeeze was caused by the double whammy of falling demand from shoppers and a fall in the quality and quantity of donations.In the year to the end of March, sales in Oxfam’s 670 stores fell 3% to £72.5m. The squeeze was caused by the double whammy of falling demand from shoppers and a fall in the quality and quantity of donations.
The rise of discounters such as Aldi, Lidl and Primark has played a role in both factors. Not only have they increased competition for charity shops, but the growing popularity of cut-price clothing means the quality of the garments in people’s wardrobes is not what it was. So, when a household clears out its wardrobes, unwanted clothing is more likely to go in the bin than be taken to the charity shop. Oxfam said that donations fell by 2% last year.The rise of discounters such as Aldi, Lidl and Primark has played a role in both factors. Not only have they increased competition for charity shops, but the growing popularity of cut-price clothing means the quality of the garments in people’s wardrobes is not what it was. So, when a household clears out its wardrobes, unwanted clothing is more likely to go in the bin than be taken to the charity shop. Oxfam said that donations fell by 2% last year.
However, the charity’s figures also show it made a loss on the sale of new products, an area that charity shops are moving into increasingly, selling food, gifts and homeware. Turnover for new goods was £7.8m, but the direct retailing costs were £8.5m, meaning a loss of £700,000.However, the charity’s figures also show it made a loss on the sale of new products, an area that charity shops are moving into increasingly, selling food, gifts and homeware. Turnover for new goods was £7.8m, but the direct retailing costs were £8.5m, meaning a loss of £700,000.
Andrew Horton, trading director at Oxfam, said: “It is not a crisis, but the way people shop on the high street has changed a bit. Discounters have had an impact on lots of the retail market. They have driven down perceptions of what customers should pay. But it is not a collapse in the market. We have had dips before and come back stronger.”Andrew Horton, trading director at Oxfam, said: “It is not a crisis, but the way people shop on the high street has changed a bit. Discounters have had an impact on lots of the retail market. They have driven down perceptions of what customers should pay. But it is not a collapse in the market. We have had dips before and come back stronger.”
In response to the slowdown in sales, Oxfam is to trial six “super saver” discount-style stores where donated books, fashion, and homewares will be set out under blocks of £1, £2 and £3. Oxfam also plans to expand its online business, and spend £13m on modernising its shops.In response to the slowdown in sales, Oxfam is to trial six “super saver” discount-style stores where donated books, fashion, and homewares will be set out under blocks of £1, £2 and £3. Oxfam also plans to expand its online business, and spend £13m on modernising its shops.
“We have got to adapt to the changing retail marketing,” Horton said. “We think our shops need to look better. The strategy is to grow our online business and capture some of the growth that other retailers have seen.”“We have got to adapt to the changing retail marketing,” Horton said. “We think our shops need to look better. The strategy is to grow our online business and capture some of the growth that other retailers have seen.”
However, some high street campaigners think charity shops should rein in their ambitions.However, some high street campaigners think charity shops should rein in their ambitions.
Since the financial crisis, there has been a sharp increase in the number of charity shops on Britain’s high streets. Research from Experian shows that the number of charity shops in Britain has grown by 36% since 2000. Also, the proportion of high street charity shops has grown by a fifth as traditional chains have collapsed or closed stores in response to a decline in consumer spending.Since the financial crisis, there has been a sharp increase in the number of charity shops on Britain’s high streets. Research from Experian shows that the number of charity shops in Britain has grown by 36% since 2000. Also, the proportion of high street charity shops has grown by a fifth as traditional chains have collapsed or closed stores in response to a decline in consumer spending.
East Anglia has emerged as the charity shop capital of the UK. There are 27 charity shops in the centre of both Colchester and Norwich, compared to 20 and 21 respectively in 2010.East Anglia has emerged as the charity shop capital of the UK. There are 27 charity shops in the centre of both Colchester and Norwich, compared to 20 and 21 respectively in 2010.
In the last year alone, an extra 64 charity shops were added to Britain’s leading 500 town centres, the biggest increase of any retail sector according to accounting firm PwC and the Local Data Company. This is in stark contrast to the overall reduction in shops in Britain of 987 during the same period, running at almost three a day.In the last year alone, an extra 64 charity shops were added to Britain’s leading 500 town centres, the biggest increase of any retail sector according to accounting firm PwC and the Local Data Company. This is in stark contrast to the overall reduction in shops in Britain of 987 during the same period, running at almost three a day.
The Charity Retail Association says that sales for the charity sector as a whole grew 2.7% last year, ahead of the overall sector, with the performance boosted by new store openings.The Charity Retail Association says that sales for the charity sector as a whole grew 2.7% last year, ahead of the overall sector, with the performance boosted by new store openings.
According to Paul Turner-Mitchell, a high street campaigner, the main reason that charity shops have fared better than traditional chains is that they enjoy an 80% discount on business rates.According to Paul Turner-Mitchell, a high street campaigner, the main reason that charity shops have fared better than traditional chains is that they enjoy an 80% discount on business rates.
Retailers have constantly pressed the chancellor to overhaul business rates, with the burden of the property tax increasing as online shopping siphons off sales and profits.Retailers have constantly pressed the chancellor to overhaul business rates, with the burden of the property tax increasing as online shopping siphons off sales and profits.
Government figures show that the tax relief granted to properties occupied by charities has almost doubled since the 2006/2007 financial year from £760m to £1.5bn.Government figures show that the tax relief granted to properties occupied by charities has almost doubled since the 2006/2007 financial year from £760m to £1.5bn.
“It is distorted massively in their favour,” Turner-Mitchell said of charity shops. “You can understand if they were being charities, but they are moving into replicating being a retailer. They are next to retailers like Argos and selling the same stuff, yet they have crippling overheads and charity shops don’t. I think we need to look at the rates relief [for charity shops]. In the last decade it has increased massively.” “It is distorted massively in their favour,” Turner-Mitchell said of charity shops. “You can understand if they were being charities, but they are moving into replicating being a retailer. They are next to retailers like Argos and selling the same stuff, yet they have crippling overheads and charity shops don’t. I think we need to look at the rates relief for charity shops. In the last decade it has increased massively.”
However, Horton insisted the tax relief for charities was justified, and that charity shops are vital in promoting the goals of the organisation.However, Horton insisted the tax relief for charities was justified, and that charity shops are vital in promoting the goals of the organisation.
“It helps to lower our costs, but we are a charity. We are raising funds to help poor people,” he said. “Shops give us tremendous exposure and keep us in touch with the British public.”“It helps to lower our costs, but we are a charity. We are raising funds to help poor people,” he said. “Shops give us tremendous exposure and keep us in touch with the British public.”