Non-Profit Thrift Stores continue to identify challenges within the zoning process

Our non-profit ReStore

Habitat for Humanity Halton-Mississauga has heard on multiple occasions that our ReStores are considered “retail facilities”. This means that they are only allowed to operate on retail lands, or in employment lands with a restriction of 15 to 30 per cent of our net floor space allowed for retail.

To some, the obvious solution would be to just conform to the government’s restrictions or exist in a retail zoning designation. Unfortunately for us, it’s not that simple. Retail lands are extremely expensive for a nonprofit organization like ourselves. They are meant to be developed and inhabited by for-profit corporations that are able to pay the price per square foot. Without the scale of funding that for-profit corporations have, it is difficult, if not sometimes impossible, for us to purchase retail land.

Habitat has decided that it would be difficult to function within that restriction and still provide the funds our organization needs to serve our communities. For anyone that has stepped foot into our ReStores, it becomes obvious fairly quickly that we deal with products that are quite large and take up a lot of space. By limiting that space, the government is limiting the amount of product we can use to fundraise for our upcoming builds.

Our team has worked hard to review provincial, regional, and municipal policy to find out what these designations mean for our organization and how we can solve it. It is important to break down key elements of a “retail store” and demonstrate how we are different, they also explain how we serve government objectives and contribute to our communities.

Sourcing

Sourcing is a part of the operating model which is a key dimension of a retail business model according to an article by the Boston Consulting Group titled “The Elements of a Retail Business Model.”

A big problem with considering us a “retail store” is that it puts us on the same playing field as the Walmarts and Rona’s of the world. This is most evident when it comes to sourcing product. 

When it comes to product, we rely completely on donated items. We do not buy products from other merchandisers. Our organization accepts donated items from the community and either repurpose them at our ReVive Centre, discards of them through the proper channels, or puts them on the floors of our ReStores.

However, when it comes to “retail stores,” much of their product is bought from another provider or manufactured internally. This provides more access to consistent products as they can supply with the demand, whereas our ReStores are reliant on timely donations from members of the surrounding communities.

While our ReStores do consist of “product offering,” they are completely distinct from typical “retail stores” and are thus deserving of a separate definition that captures essences of our social enterprise more accurately.

Pricing and Revenue Model

The pricing and revenue model is a part of the customer value proposition which is a key dimension of a retail business model. When it comes to product pricing, we do not sell any of our products at retail price as that is a driving factor for those who visit our locations. This is not the case at many “retail stores” who often sell products at a marked-up rate to increase their profit margins.

In comparison, any revenue generated by the ReStore goes back into home-building for our communities. This is an important part of our model because our donors and those who acquire items from our ReStore both know that they have made an impact in the affordable housing crisis.

This is quite different from for-profit entities whose revenue goes into the bottom line of their Excel spreadsheets. While this is understandable as many businesses require investors to finance the starting up and ongoing short-term problems that might occur, it is still fundamentally different than what our organization does and offers an increased amount of capital to adhere to planning policy mandates.

By forcing our non-profit to have to play by the same rules as for-profit entities, planning authorities force us into situations that require funds that we simply don’t have access to, especially since we are selling our products at discounted rates.

Shopping Experience

The “shopping experience” is a part of the “customer service proposition ” which is a key dimension of a “retail business model” according to an article by the Boston Consulting Group titled “The Elements of a Retail Business Model.”

Buildings/organizations that are traditionally considered retail stores are filled with full-time and part-time employees. This is not how Habitat for Humanity’s ReStores operate.

Our ReStores are primarily operationalized with the help of community volunteers. There are a few full-time employees in the ReStore, but their jobs focus on volunteer engagement and management. There needs to be oversight, especially in the warehouse where safety, efficiency, and expertise are paramount. Our people are there to ensure the safety of our volunteers and to maintain a consistent set of operating principles while tasks like merchandising, repairing, and inventory are being performed.

Habitat’s shopping experience, another part of the customer value proposition outlined by the Boston Consulting Group, is completely distinct from that of a retail store because our customers will be interacting with members of the community who have volunteered their time to support our organization. This leads to more thoughtful interactions and regular relationships being built than that of a retail store, whose employees are contractually obligated to be there which may detract from the atmosphere of the business.

Shareholders

Another key separation that was touched on earlier is the separation between a company with shareholders and not-for-profits. For those who may not know, a shareholder is a person who owns a portion of the company. This is usually done through the purchase of shares through investment. These shareholders will then receive revenue based on their share of the company and could also have a significant impact on the direction of the company based on how much of the company their shares cover.

This is very different than how not-for-profits are run because, as the name suggests, they are not operating to make a profit, they are operating to help provide a solution to issues like poverty, homelessness, climate change, etc. The following section of an article written by Mollie Cullinane best describes this distinction:

“For-profit businesses can be privately owned and can distribute earnings to employees or shareholders. But nonprofit organizations do not have private owners and they do not issue stock or pay dividends. And while nonprofit organizations can earn a surplus, that income must be reinvested in the nonprofit organization — possibly to benefit or expand programs according to the charitable mission. But that income cannot be distributed to persons.”

Therefore, it is crucial that non-profit organizations are treated differently than for-profits. When money is taken from nonprofits it is not taken away from an individual or group, it is taken away from the communities the organization is serving. These communities are already at a disadvantage, and by putting restrictions on the funds available to nonprofits the government is hindering the support needed in the community and hurting the people who need help the most.

Alignment with Government

Our ReStores serve an important function to our organization’s and our government’s goals. They allow us to fulfil the following objectives relating to affordable housing in the provincial and regional legislature:

Growth Plan for the Greater Golden Horseshoe, 2017:

“Support the achievement of complete communities that are designed to support healthy and active living and meet people’s needs for daily living throughout an entire lifetime”

“Support a range and mix of housing options, including second units and affordable housing, to serve all sizes, incomes, and ages of households”

Halton Region Official Plan, 2009:

31(4) “A healthy community is…one where a full range of housing, employment, social, health, educational, recreational and cultural opportunities are accessible for all segments of the community;”

85(5) “The objectives for housing are to…meet housing needs through the provision of Assisted Housing, Affordable Housing and Special Needs Housing in Halton.”

Peel Region Official Plan,

5.8.1.1 “To provide for an appropriate range and mix of housing types, densities, sizes and tenure to meet the projected requirements and housing needs of current and future residents of Peel.”

5.8.1.2 “To foster the availability of housing for all income groups, including those with special needs.”

5.8.1.4 “To achieve annual minimum new housing unit targets for the Region by tenure, including affordable housing.”

Because our ReStores fund our affordable housing projects, the fact that they are being disadvantaged hinders our ability to meet the objectives of the province and the regions that are within our catchment area.

Internal Importance of our ReStores

Additionally, the ReStores offer other benefits beyond funding our build projects. One such benefit is a fantastic waste diversion program that has diverted more than 2.4 million kilograms of waste from local landfills in the last six years. We have had more than 2,500 volunteers contribute their time to our ReStores during the last two and a half years. This has accumulated in a total of over 150,000 hours of community engagement in our ReStores. Statistics like these are important to our organization because one of our primary operating principles is to engage our community. We find that members of our communities understand that affordable housing is an issue, they just have always needed a way to help. The ReStore provides an opportunity for them to do that through volunteering, donating or purchasing products.

Habitat for Humanity Halton-Mississauga is proud of our ReStores’ performance each year. In 2017 our Burlington ReStore was the top ReStore location in Ontario, a distinction it has held for ten consecutive years. On top of that, our Mississauga ReStore moved from 43rd to third in 2016. In 2018, our Burlington ReStore was honoured to receive recognition as the leading ReStore in Canada while our Milton and Mississauga stores continued to expand and remain consistent with their sales performance.

The constant restrictions put on our ReStores are concerning because they limit our ability to establish new locations and expand our organization. Clearly, our model is successful and allows us to adapt to new market trends. We simply need the freedom within a policy framework to allow us to function at capacity through being allowed to operate on lands which are not designated retail.

Habitat for Humanity will continue to provide desperately needed affordable housing in our community. We look forward to working alongside municipal and regional governments to find a solution to our ReStore zoning that works for all parties.

By Kyle Fritz

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