Recycling of Low Grade Clothing Waste - Oakdene Hollins

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© Oakdene Hollins Ltd, Salvation Army Trading Company Ltd Nonwovens Innovation & Research Institute Ltd September 2006 5.3.2 Charity Shops Increasingly the shops are moving into other donated items, such as books, toys and CDs and new products such as greeting cards and fair trade commodities. Oxfam is opening up some ‘books only’ shops. The annual Charity Finance Shops Survey for 2005 reported that sales income of shops surveyed was £469 million, of which new product sales averaged just over 5%. The survey does not, however, report the mix of other items within this sales figure. Industry estimates put the sales of used clothing at approximately 50% of the total shop sales, i.e. £235 million. The Association of Charity Shops confirms this rate of change in the past three years in the mix of sales in the shops. Member returns show that, by value, the percentage of shop sales that was used textiles has fallen from 70% to 51% in that time. The ACS reports that the net profit of shops is a healthy 22%, and this is borne out by the Charity Finance Shops Survey for 2005. However, the profit on sales of used clothing is reported by ACS at only 2% to 4%. Clearly the costs of operating the shops are spread across all ranges. It is, therefore, not meaningful to estimate operating costs that relate solely to used clothing sales. The charities benefit from low rate premises, typically at 20% of the local business rate, and considerable volunteer labour. Indeed, published profit statements from leading charities such as Oxfam confirm that the sector would suffer heavy losses if all volunteers were replaced with salaried labour. However, many costs are increasing at or above inflation. In particular, employment costs are increasing, with many shops reporting difficulty in getting sufficient volunteers. The Charity Finance Shops Survey for 2005 reported that the number one concern across the sector is the shortage of volunteers. It is also accepted, however, that the shops must recruit and train professional, salaried staff for both support operations and shop management in order to maintain competitiveness with the wider retail sector. The Children’s Society, for instance, has approximately 50% salaried shop staff and this figure is increasing. Legislative changes, such as the recent increases in National Insurance contributions and the minimum wage, further add to the burden of employment costs. The Charity Finance Shops Survey shows that salary costs as a percentage of sales income have risen from 21.8% in 1995 to 30.5% in 2005. Waste disposal costs are also increasing above the level of inflation due to the Landfill Tax escalator, escalating the per tonne price of landfilling by £3 per year above inflation, and due to an increasing volume of unsuitable donated materials. The Association of Charity Shops estimates that their members expend £4.5 million annually storing, sorting and disposing of unusable items. Oxfam recently announced that it spent £500k in disposal For Defra Page 42
© Oakdene Hollins Ltd, Salvation Army Trading Company Ltd Nonwovens Innovation & Research Institute Ltd September 2006 costs last year and that this figure had increased by £60k (14%) since the previous year. An appeal was made to both over‐generous, but misguided, donors and to the ‘fly tippers’ who leave unsuitable bags of textiles on charity shop doorsteps out of trading hours. This is not a message which charities would want to broadcast regularly, since any suggestion that the industry does not welcome donations would discourage donors of quality items as well. 5.3.3 Merchants Estimates of the trend in the main costs experienced by the merchants are set out in the Table 11. Table 11: Operating Cost Trends Operating costs, per tonne 1990 2005 % Increase Collection from nationwide bank £110 £155 41% Collection from local bank £80 £115 44% Door-to-door collection nationwide £250 £300 20% Door-to-door collection local £210 £260 24% Sorting into 140 grades £80 to £105 £150 to £200 90% Notes: 1. Door-to-door costs include the cost of bags and literature. 2. 1990 sorting costs estimated from 2005 costs using ONS earnings indices and estimates of landfill cost escalation. None of the above costs include contributions to a charity or council No historical data are available for sorting costs, but as for the charities, key elements of these will be employment and disposal costs, both of which have also risen in real terms in recent years. From earnings indices and from landfill cost changes it has been possible to calculate likely sorting costs for 1990. When compared to inflation of c.52%, as measured by the RPI, collection costs appear to be reducing in real terms. Given above inflation increases in fuel and employment costs, this is thought to have occurred largely as a result of the efficiencies of scale that have occurred over the period. The 2005 RRE‐USE report suggested that, across Europe, sorting costs have increased by 25% in five years and, except in Poland, the number of recycling enterprises has been declining by 10% to 20% per year. For Defra Page 43
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