1. Is your ReStore a business or a charity?

2. Agenda Background Who is your Primary Customer? How do you engage your Primary Customer? Inventory Control Case Study: Wake County HFH Discussion

3. BACKGROUND

4. My Experience HFHI 1994 – 2004 Austin HFH 2004 - 2012 Goodwill Central Texas 2012 – 2014 Willard Consulting - 2015

5. Who is your Primary Customer?

6. Types of Customers Shoppers Contractors “Treasure Seekers” Board Members Habitat Home Buyers Donors “Bargain Shoppers”

7. The Donor!

8. Donors drive sales! Sales are completely dictated by the amount of product the store has available to sell Therefore, any plan that focuses on growth, must focus on the product strategy Product In Unencumbered Funds out

9. How do you engage your Primary Customer?

10. Pick Ups

11. Donation Box

12. S3 Rationale Wake County Small Satellite Stores maximize donation coverage More capital efficient Less risky

13. Inventory Control

14. Old Inventory Kills Sales!

15. Inventory Control starts at the donation door. Date receipt of donation Cull donation inventory by donation date After market sales

16. Case Study: Wake County HFH

17. S3 Rationale Wake County Small Satellite Stores maximize donation coverage More capital efficient Less risky

18. Wake County HFH Lessons Staffing is unique –Began with different staffing model –All Volunteers, no community service Store size is unique – smaller foot print (8,000 – 12,000 sq ft) Self sustaining – 85% of product sold is dropped off

19. How Far Apart? Confirmed findings by analyzing the donation receipts 90% of Cary drop off donors live within 5 miles of the store 78% of Raleigh drop off donors live within 10 miles of the store ReStore International data finds “80 percent of the donors that bring merchandise to the ReStore drove four miles or less”

20. Donation Radius Cary (red) has a very tight donation radius – 90% donations within 5 miles Raleigh (yellow) has a broader reach, with 78% donations within 10 miles. This is likely due to its age and the lack of housing adjacent to the store Pick up (blue) occur all over the county Given hub and spoke strategy, a 5 mile distance between stores appears optimal Mapoint Maps Here Source: 1500 donations from June-August 2013

21. What Is Ideal Size? We assert more smaller stores are better than one or two mega stores Smaller stores are more profitable Cary is very successful at 8,000 sq ft, but it is getting tight on space Therefore, a good size to model is 8,000 – 12,000 sq ft to allow for some growth and add new categories

22. Smaller Stores More Profitable An analysis of the 2011 Annual ReStore Report shows that smaller stores are more profitable 348 smaller stores generated 39% profit margin with average size of 6,840 sq ft 250 larger stores generated a 34% profit margin with an average size of 21,800 sq ft

23. Small Populations Can Support ReStore Analyzed ReStores in areas with population of 80,000 or less Size of population is not determining factor of revenue $600,000 stores exist where population is 40,000 or less However, population does have some correlation with overall size Therefore slight preference to larger populations

24. Key Metrics Donations per Household Households at $35,000 per year and higher Sales per Sq Ft Days on the floor

25. DISCUSSION

26. Stores Are Challenging to Staff Model utilizes low payroll model subsidized with strong volunteer program –Cary operates 8 hrs/day, 6 days a week –3 FTE supplemented with strong volunteer base Volunteers are crucial: 52% of staffing hours 70% of people are volunteers in Cary This model: –Is efficient and effective –But it takes time to develop –And it is fragile when staff turns over Manager role is unique – volunteer staff, variable product, no “playbook,” high customer service, and many hats to wear

27. Capital Requirements Store opening will require capital 3 Year lease at Cary rental rate is $288K commitment Build out for new store is approximately $50K Some of this might be recoverable if we are unsuccessful, but we would lose money