How to Start a Thrift Store

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Quick Reference

If you’ve resold used items through Craigslist, eBay, or even by holding a yard sale, then you’re already aware that even used merchandise can still bring in some significant income. Starting a thrift store can allow you to put your reselling talents to work at a larger volume. If you’re resourceful, aware of how to evaluate and price good merchandise, and ready for the responsibility of owning a retail store, then it might be time to think about opening a thrift store of your own.

Business Overview

Thrift stores resell items like clothing, furniture, and home goods. They offer a wide variety of inventory that is constantly changing as new items come in and are known for having good prices. Most of the inventory you’ll find at a thrift store is secondhand, though some stores stock closeout and clearance items that they’ve purchased from other businesses or purchased from storage unit auctions, estate sales, and garage sales. While some thrift stores are associated with and benefit a charity, others are operated independently as for-profit businesses.

Thrift stores appeal to shoppers for many different reasons. Some shoppers are drawn to the stores because of their low prices. Others enjoy the ability to browse and discover new items. Thrift stores also support the up-cycling movement, allowing shoppers to find new ways to use old items with an eco-friendly benefit. Some thrift stores specialize by offering mainly furniture, children’s clothing, or other items that appeal to certain types of shoppers.

Industry Summary

According to IBIS World, the used good store industry experienced 3 percent annual growth from 2014 to 2019. During that time, the number of businesses increased to 84,960, and the industry’s employment also grew to 296,711. In 2019, this industry was expected to bring in $20 billion in revenue. Currently, the Winmark Corporation and Savers, Inc. hold the largest industry market share.

Traditionally, used good and thrift stores enjoy higher sales during times of economic downturn since customers are more likely to buy used clothes and supplies at a discount than to buy new items. However, while disposable income increased from 2014 to 2019, this industry still saw increased sales and profits. A change in fashion trends has prompted many people – including young consumers – to buy used clothing, resulting in the increased popularity of thrift stores.

Industry Trends

According to Thred Up’s 2019 Resale Report, millennials and generation Z individuals are the driving force behind the thrifting movement. Shoppers who are 18 to 37 years old are embracing thrifting 2.5 times faster than shoppers from other age groups. An increased focus on sustainability and ethical fashion is partially behind the focus on thrift store shopping, and it bodes well for the future of thrift stores: Second hand stores are predicted to double within the next 10 years.

To keep up with the changing demographic of thrift store shoppers, thrift stores are increasingly meeting these shoppers where they’re most comfortable: Online. Like Goodwill, thrift stores have established websites and online auction platforms where shoppers can buy online without ever stepping foot into the store. Additionally, reselling apps like Poshmark have also evolved and gained popularity as shoppers become more determined to seek out deals on used goods.

According to the Association of Resale Professionals, clothing, cookbooks, furniture, jewelry, kitchen appliances, sporting goods, and vintage items are strong sellers for resale shops.

Target Market

Most thrift stores will target a broad audience. While generation Z and millennial shoppers make up a large portion of the thrift store market, consumers of all ages shop at thrift stores. Some thrift stores may adopt a specialty, like offering affordable children’s clothing or used furniture, so their markets may differ slightly. In most cases, though, thrift stores will target shoppers looking for a good deal on used clothing, accessories, furniture, or other household items.

Skills, experience, and education useful in running a thrift store

Starting a thrift store doesn’t require a business degree, but certain skills and experiences can make the experience easier and more successful.

Awareness of item values. Inventory needs to be priced fairly in order for it to sell, and this can be one of the major challenges of owning a thrift store. Because inventory can be so widely varied, a store owner needs to have a sense of individual item values and the current market. Familiarity with certain brands and products can make it easier to price items fairly.

Awareness of trends. An awareness of trends is also important in selecting inventory that will appeal to customers. A store owner who is aware of what is in demand can seek these items out and prominently display these items to draw customers into the store.

Retail experience. Previous experience in the retail industry will serve a thrift store owner well since they’ll have a better idea of the tricks and challenges of managing a store.

Management experience. Thrift stores require multiple employees, so any experience in hiring, training, and overseeing employees will be valuable for a store owner.

Organization skills. Organizational skills are also important in managing inventory and sorting items so that customers can find what they’re looking for.

Customer service skills. Good customer service can help gain and retain returning customers, and a store owner who is great at customer service can teach employees those same skills.


Cost to Start a Thrift Store

Many factors will affect the exact cost of starting a thrift store business, including the location and size of the store’s space. Plan to spend between $20,000 and $30,000 to start a smaller store.

Common startup costs include:

  • Building renovation costs
  • Inventory
  • Furniture and fixtures like shelving, checkout counters, and chairs
  • Cash register
  • Signage
  • Working capital to fund the first few months of payroll, rent, internet, utilities, etc.


Steps to Starting a Thrift Store

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

How to write a business plan
Free sample business plans

Step 2: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

Related: Comparison of Business Entities

Step 3: Name the Business

Finding the perfect business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: Tips and ideas for naming a thrift store

Step 4: Select your Location

While thrift store could benefit from being in a prime, high-traffic location, it’s cost-prohibitive to do so in some areas. Most retail stores see better traffic when locating close to shopping centers and major roads.

Rent will vary based on the store’s size and location. Rent costs of building in high-traffic retail locations will be higher because of the amount of walk-in traffic they could bring in. It’s important to find a property that offers enough space for the store at an affordable rate that will allow the business to make a profit after paying its expenses.

Related: Choosing a business location

Step 5: Register for Business Licenses and Permits

There are no licenses required specifically for thrift stores; however, some general local, state, and federal registrations are needed, such as a sales tax permitresale certificateEmployer Identification Number, and occupancy permit.

Resale shops have regulations under the Consumer Product Safety Improvement Act, requiring stores to adhere to guidelines when selling certain products.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a thrift store is another. Funding to start a thrift store can be difficult. To get a loan, the borrower(s) will need to have good credit and personally invest 15-25% towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the business’s income and expenses.

Step 8: Get your Marketing Plan in Place

A thrift store will need to market to bring in its initial customers, as well as to draw in customers once the store is established. Marketing techniques include developing a website, using social media, and even advertising in print or on the radio. The cost of marketing will depend on the technique used. Thrift store owners who can do some or all of their marketing can save costs on this ongoing expense.

Because of the rise of competition online thrift stores, many thrift stores are launching their own website to sell their items to a wider audience.

Related: Low-cost ideas to market a new business

Step 9: Get Business Insurance

To be fully covered, a thrift store will need multiple types of insurance:

  • General liability insurance protects the business if customers are ever injured while on the property, and it can cover expenses like medical bills or legal fees.
  • Commercial property insurance can cover things like the cost of the building and the value of the inventory in case a fire or other event ever damages the store.
  • Worker’s compensation insurance helps cover the business if an employee is ever injured while on the job. It can cover expenses like lost wages or medical bills.
  • Commercial auto insurance covers a vehicle used for business purposes and can pay for expenses like vehicle damage that could occur during an accident.

Insurance policies vary in cost depending on the value of the store’s building, and inventory, the store’s location, and how many employees need to be included on the policy. To get the most accurate idea of what to budget for insurance, request quotes from multiple companies and compare different factors like premiums, coverage limits and exclusions, and deductibles.

Related: Types of insurance your business may need

Step 10: Hire Employees

A thrift store will need at least a few employees to operate. According to Indeed, average hourly rates for the following thrift store employees are as follows:

  • Cashier/Sales: $10.42
  • Driver: $15.52
  • Sorter: $9.57
  • Supervisor: $13.93

In addition to budgeting for salary expenses, a store’s budget also needs to include workers comp insurance, paid time off, and health insurance contributions.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business


How much can you potentially make owning a thrift store?

Owning a thrift store isn’t a get-rich-quick venture, but you will have the satisfaction of helping shoppers find great deals on items they need. Michelle Jackson, the owner of a thrift shop, wrote on ToughNickel that thrift shop income averages $100 to $200 a day once stores are established. Thrift shops in their first year of business can expect to do closer to $50 per day.

These figures will vary according to a thrift store’s location, clientele, marketing, quality of merchandise, and more.


Things to consider before starting a shoe store

Thrift stores can be operated as a non-profit organization or for-profit businesses. If you plan to take the non-profit route, you’ll need to operate the store according to the laws that govern non-profit charities, and that can make for a lot of paperwork. You’ll also need to donate a percentage of your profits to charity and donate to a charity that relates to the items being sold in the shop. However, operating as a non-profit can make it easier to get donated inventory.

If you operate as a for-profit business, you may need to get creative in appealing to people for donations or find good deals on inventory that you can purchase. This can take time, leaving you with less time to focus on running the business. There are benefits and disadvantages to each option, so you’ll need to think carefully about the type of business you want to create and the option that works best.


Association of Christian Thrift Stores
National Association of Resale Professionals

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