How Goodwill is trying to stay ahead of for-profit resale while becoming a bigger player in recycling

However, Preston said that having others bring attention to resale has also made the space “richer and better.” This has helped all players, including Goodwill.

A charitable organization founded in 1902, Goodwill is a federation of 153 independent Goodwill organizations across the U.S. and Canada. It sells donated items in more than 3,300 outlets and retail stores, as well as through online marketplaces. Goodwill uses that revenue — currently $8.5 billion — to create job-training programs and provide resources to those looking to build their careers. In 2023, one out of every 513 U.S. hires was placed by a local Goodwill, according to the organization.

In addition to community resources, sustainability is very much on the organization’s mind, Preston told Modern Retail. Goodwill is facing a very different market than it was even a decade ago. Many shoppers, especially younger ones, are more willing to shop secondhand for environmental or cost-saving reasons. At the same time, fast-fashion companies are churning out huge volumes of clothing and shoes for cheap. Each year, as much as 92 million tons of clothing end up in landfills, per the Copenhagen Fashion Summit.

Going forward, Goodwill is working to position itself as a bigger player in recycling and re-manufacturing. In August, Goodwill announced that it was launching a $2 million traceability study, funded by the Walmart Foundation, to “inform reuse and recycling strategies and help shape industry standards for traceability and product lifecycle stewardship.” In October, Goodwill partnered with Reju on an initiative designed to advance textile recycling in North America. Goodwill’s stores are working with partners, too; Goodwill of Greater Washington now sends plastic bags that people bring in to Trex, a company that makes plastic decking material, per WasteDive.

Preston spoke with Modern Retail about Goodwill’s business model and goals at a time when resale is becoming more popular. Below are excerpts from the conversation, which have been edited for length and clarity.

How do you view the state of the consumer when it comes to resale and secondhand?
The state of the consumer is very good. Number one, there is great value in resale, and I think that has always been a driver of people to the stores. The category is called treasure hunting for a reason… [People] love seeing if they can find that right thing for themselves… It’s also [about] finding a unique thing. People who love to shop our stores are often looking to find something that helps them express themselves in a different way.

The other thing is: The sustainability benefit is something that is very much on the mind of our consumers, especially our younger consumers. That’s really important to us because it’s real. We keep over 4 billion pounds of goods out of the waste stream every year through resale and re-manufacturing and recycling. We are the biggest driver of the reuse economy, and we’re thankful that people understand that. 

The last thing I’d say, which is unique to the nonprofit world, and we’re by a multiple the largest resale player in the nonprofit world, is that people care about their communities… When we do consumer research, we find that sustainability is very important to people, but helping people in their community is even more important. The funding from these stores helps to support people who face really significant challenges in life. And often, those challenges make it very difficult for them to get a job and support themselves… So another reason why many people shop our stores is because they know that they’re doing great things for their community.

Are you seeing any trends in what people are thrifting at the moment?
We have a fairly broad product set. People are always interested in clothing. Children’s clothing is always very hot. Many items of women’s apparel are always very hot. But we also do a lot in household goods. That’s a space where there aren’t a lot of players… That stuff flies off the shelf. That’s a really important part of our offering. And then other things like toys and collectibles and even jewelry, as well.

There are now many different ways for consumers to participate in resale. There are branded resale programs as well as ThredUp, Poshmark and Facebook Marketplace. As a nonprofit competing with for-profit entities, how do you make sure that you stay ahead?
That’s a great question. It is something we focus on all the time, and when you look at our strategic plan right now, that is at the top of the heap.

We have to be as competitive or more competitive than people who are getting a significant amount of capital from the marketplace. And we don’t expect consumers to have a second-class experience when they walk into a Goodwill. We expect them to have a great experience. We expect that we will be able to beat anybody in our space. That’s the way we look at it. We can’t behave in a way that’s any less than the most competitive player out there.

And we are constantly looking at [data]. I can tell you the market share of every one of our competitors in every one of our districts. We know how every one of our competitors is trending. We know what the profitability of our competitors looks like relative to us and where they are focusing. We have a high degree of market comprehension, and we work very hard to drive innovation, to be deeply market-aware, to understand our consumers and continue to drive forward in this marketplace…

The other thing I’d say [is], with a lot of other for-profit entities in the resale space, there have been a lot of players that have actually broadened the market in terms of who participates and how they participate and different channels, different customers, different donors. That has really made the resale space bigger and richer. And as a result, I think it has significantly expanded the acceptance of resale… It trickles up and down the value chain. And I think that’s good for Goodwill, as well.

You mentioned that Goodwill is working to improve circularity through recycling and re-manufacturing. How do those programs work?
We want to make sure that every item that we receive gets to its highest and best use. When you think about the hierarchy of value in the circularity world, the most sustainable thing you can do is lengthen the useful life of an item. So if something gets donated, the best thing is that somebody else buys it in its current state and wears that jacket for another three years…

Right now, over 85% of textiles in this country are thrown away by consumers. We want people to give them to us. It’s one of the reasons why our footprint is so important, because convenience is really important for donating. We have a number of different channels to try to ensure that [an item] sells somewhere, whether it’s online, whether it’s in one of our 3,300 stores. We [also] have by-the-pound stores.

If we don’t sell [something], our stores will work with partners and sell it into the wholesale channel… There are also things that don’t sell in the stores that may be sold into re-manufacturing channels. They may be used for some kind of industrial application or shredded and put into cushions.

When [product that we don’t sell] goes into international channels, it’s a bit of a two-sided situation. It adds a tremendous amount of value in that many local people who buy those goods have their own stores, may have a stall in a flea market, sell those goods for their own livelihood. So in many ways, we are driving local economies in places where people need goods that they can buy for low cost…

What we’ve seen [is], because of the rapid growth in textiles worldwide, the amount of goods being sold into the Global South has gone up dramatically… We’re at a point now where many of those local economies are having a hard time accepting all of those goods. And in some cases, the goods that are landing in those foreign countries really aren’t resellable to begin with.

We are trying to understand what those trade flows look like… and advance traceability for our own goods. We want to begin driving greater transparency for the entire industry and ensure that goods that won’t sell in foreign markets don’t get shipped to foreign markets because many of those markets don’t have the waste or recycling systems that we have today [in other parts of the world]. So, that’s a big piece of work we’re doing.