Retail Ready: Enhance Your Branding, Fundraising With Nonprofit Merchandising
No matter the mission, size or location of the organization, nonprofit professionals always are looking for ways to increase their fundraising numbers and invest more dollars into making the world a better, safer place. One way to do that is through nonprofit merchandising.
With the technologies at every organization’s disposal these days, there’s no shortage of ways nonprofits can incorporate merchandising into their plans: online stores, brick-and-mortar storefronts, pop-up stands at events, mobile sales applications, etc. These new tools make managing and running a retail element more realistic than ever.
However, merchandising is far from new in the nonprofit space. Take, for instance, one of the most well-known and longest-running nonprofit merchandisers out there, The Salvation Army.
William Booth founded The Salvation Army in London in 1865, and from the start has used retail sales and merchandising to grow its reach and impact, said Robert Stutts, director of development of the Adult Rehabilitation Centers Command for The Salvation Army USA Southern Territory.
That commitment to utilizing merchandising to enhance The Salvation Army’s mission continues today. Drive through just about any town in the U.S., and you’re bound to come across a local Salvation Army store.
“Today, The Salvation Army operates Family Stores throughout the U.S. that provide an affordable marketplace for shoppers while also providing funding for our vast array of social-service programs,” Stutts said. “Simply put, participation in the retail space was a natural fit for The Salvation Army, as we raise money critical to transforming lives each and every day.”
Stutts said those Family Stores have helped The Salvation Army build its brand in areas where it may not otherwise have a presence, and as a result, more people interact with and support The Salvation Army.
Along with The Salvation Army, the Smithsonian Institution and its various museums and zoo are also big players in the nonprofit merchandising space. Not only does the Smithsonian have gift shops at its museums and a standalone brick-and-mortar store in Washington, D.C., but it also has a comprehensive online store encompassing all its entities. In addition, the Smithsonian has a licensing division, another revenue-generator for the organization dedicated to the arts, history and animal welfare.
And while the money the Smithsonian generates through its retail sales is significant, there are additional benefits to merchandising.
“It puts the mission and brand in front of more people, whether visiting our brick-and-mortar store at the mall or the online store,” explained Ed Howell, senior vice president of the Smithsonian’s retail group.
“Merchandising also allows us to communicate with people at a deeper level, sometimes,” added Carol LeBlanc, senior vice president of consumer and education products at the Smithsonian. “People may see something at the museum, and our products allow us to add more educational details and highlight things that can’t be on display. Merchandising allows you to extend your reach in a way that is not possible through just a museum.” Of course, there’s a whole lot more to successful nonprofit merchandising than just clicking a few buttons to set up an online shop or obtaining the real estate to open a storefront. There must be a strong strategy in place.
The merchandising guide
Before implementing a strategy, however, an organization has to determine if merchandising is even a viable option, and a key part of that is remaining true to the nonprofit’s roots.
“Fellow nonprofits considering adding this element to their operations should make every effort to ensure that doing so will in no way detract from their mission, but will rather enhance their ability to serve those in their care,” said Stutts.
Once it’s been determined that embarking on a merchandising division won’t inhibit the mission, the next step is to get the entire organization on board. Howell noted that everyone must believe strongly in merchandising and not be embarrassed about the organization’s efforts to raise funds this way.
“Don’t bury your store in the back. Let it stand out,” Howell advised. “A lot of research we’ve done, the retail experience is the second most popular reason people come to our museums. So believe in it from the top down, mold it into the mission of the organization, and don’t hide the fact you’re looking to raise funds by providing merchandise to visitors.”
Howell and LeBlanc also said that, from there, the key is to run this retail/merchandising division like a business. That means operating with a normal profit and loss statement, inventory management, assortment planning and more. For instance, the Smithsonian builds each business element for each individual store—a budget, a profit and loss statement, product categories, profit and income level. It’s an intensely involved process, not an addition that you can put in place and forget about. Investments must be made, and management takes real resources.
LeBlanc laid out two critical merchandising steps:
- Have a realistic understanding of capacity and timeline.
- Create a standardized approach to going to market.
The first part requires taking a step back and having a strategy in place that tackles all the details. A nonprofit must understand the product categories and areas it would like to be involved in and the type of retail environment that will attract its target audience. It also needs a plan for buying and selling merchandise.
“Do the research up front,” said LeBlanc. “You have to have real buy-in across the organization, because it will take you at least 24 months to start to build a program from the time of strategizing to talking partners, vetting them, developing products and getting to market.
“You have to remind people this is a process that has to take this long, and you have to make sure people are committed to the process—the right process—and not asking in six months why products aren’t in the market.”
The second part centers on standardizing all aspects of this process. Develop templates for the proper partners, products and contracts—as much as possible to be fully prepared.
“It’s a retail business. It’s hard day in and day out,” Howell said. “You have to have a never-ending focus on serving the individual the right merchandise at the right price. It’s not a slam dunk.”
That’s why Howell recommended that any nonprofit considering entering the retail space talks to a consultant, studies retail trends and understands the real opportunities for the nonprofit.
Working with partners
Once you put a plan in place and your team has bought in, the next step is working with the right partners. This is true for any retail business, but it’s especially critical for nonprofit organizations that rely on the generosity of donors.
Working with suppliers, consultants or other vendors that see their reputations sputter due to improper practices could mean a public- relations nightmare for your nonprofit. That’s why every nonprofit must be diligent in its vetting of partners.
The Salvation Army has an internal evaluation process for any partners and opportunities it considers taking on, and part of that process is seeking out partners that share its vision, core values and desire to make a positive impact on the world, Stutts explained. That’s something every organization must do—and something the Smithsonian takes seriously.
“Protection of the Smithsonian brand is first and foremost,” said LeBlanc. “Make sure you’re always protecting the brand. Due diligence is to research them and look into whether or not there are any practices that would be inconsistent with the mission.”
In addition, there are more specific, retail-centric principles nonprofits must look for. Howell suggested looking for people in the business who have a reputation for quality and the ability to consistently deliver your needs at a fair price. In addition, use references in the marketplace, and test out a campaign with a provider.
On the licensing side, the Smithsonian looks for partners who can develop products on its behalf and sell those products to retailers, so it focuses on partners that have a track record of developing and distributing products.
And as with anything in the business or nonprofit world, the right partnerships are mutually beneficial. As LeBlanc noted: “If only one side is winning, it can’t be successful.”
That means building a relationship over time and working to make sure both parties make a fair profit, Howell said.
“To approach it in a different way is not very good business sense,” he added. “To continue to change vendors for a lower price is not something we’d chase.”
Building and maintaining these relationships takes work, of course—work that can catch many nonprofits off-guard. The number of man hours it takes to manage these relationships is significant. “People sometimes underestimate the time and resources needed to appropriately manage relationships so they reflect the brand and message of the organization,” LeBlanc explained. “They look at the dollar amount, but are not really factoring in the time.” That’s something every organization should note.
Of course, relationships can always change—and your partners may not operate the same way in the future as they did when you started with them. That’s why the Smithsonian builds clauses into its vendor contracts that allow it to exit the relationship if it feels its brand could be harmed. It’s also why the Smithsonian spends a lot of time selecting the right partners, and talking to multiple people and divisions across the organization, including the legal team, public affairs and museum staff. “It’s an ongoing challenge,” said Howell. “You have to be diligent on a regular basis. You can’t let it go. You must look at it constantly to make sure your partners are not shifting their manufacturing practices.”