Thrift Store Business Overview

A thrift store sells second-hand items at discounted prices, ranging from clothing and accessories to furniture and household goods. These stores obtain merchandise through donations from individuals and businesses or by purchasing items from estate sales and liquidations.

The most common business models for thrift stores include:

• Nonprofit Model: Organizations run stores directly, using proceeds to fund their charitable programs and services
• For-profit Resale Model: Independent retailers purchase and resell used goods
• Consignment Model: Stores sell items on behalf of individuals, sharing the revenue with the original owners

Related: Checklist To Start A Business

How Do Thrift Stores Make Money?

Thrift stores create revenue streams primarily through merchandise sales, with profit margins supported by receiving inventory through donations or purchasing items at very low costs. The business model relies on high inventory turnover, with new items constantly arriving and being processed for sale. Most stores price items at 30-50% below retail prices while maintaining healthy margins due to their low or no-cost inventory acquisition.

Industry Statistics

Thrift stores belong to NAICS code 453310 – Used Merchandise Stores. This industry includes retail establishments that sell a variety of secondhand merchandise.

Here are some statistics that show the current state of thrift stores:

Thrift Store Industry Size & Growth: The thrift store industry generated $14.8 billion in revenue last year. The industry has shown steady growth, with an average yearly increase of 3.7% over the past five years. Growth projections remain positive as more consumers embrace sustainable shopping practices and seek affordable alternatives to traditional retail. (IBISWorld)

Number of Thrift Stores: There are 29,457 thrift store businesses operating across the country. The industry remains highly fragmented, with no single company controlling a significant portion of the market. Most thrift stores operate as independent locations or small regional chains, often affiliated with local charitable organizations. (IBISWorld)

Thrift Store Profit Margin: These businesses typically maintain higher gross margins due to donated inventory. However, surplus funds are often put into charitable programs rather than retaining them as profit. As a result, the industry average net profit margin is 4.1%

Also See: Ideas for Naming a Thrift Shop

Costs To Start a Thrift Store

Starting a thrift store could range from $20,000 to $125,000. The lower end represents a small store with basic fixtures and minimal renovations, while the higher end includes extensive fixtures and store improvements.

Here are the main costs to consider when starting a thrift store:

Retail Space ($8,000 – $30,000): First and last month’s rent plus security deposit starts your lease. Basic improvements include painting, lighting, and simple renovations. Space needs proper layout for different departments and processing areas for donations.

Store Fixtures ($7,000 – $35,000): Clothing racks, shelving units, display cases, mirrors, changing rooms, and point-of-sale systems organize the shopping space. Used fixtures from closing retail stores can reduce costs while maintaining quality.

Initial Inventory ($3,000 – $12,000): While many items come from donations, purchasing some initial inventory helps open with adequate stock. Some stores buy bulk clothing lots or estate sale items to supplement donations.

Processing Equipment ($2,000 – $8,000): Commercial washers and dryers, steamers, pricing guns, hangers, and cleaning supplies process incoming items. Storage bins, sorting tables, and tools for testing electronics help manage donations efficiently.

These cost estimates are approximate, and actual expenses will vary based on your business model and scale of operations.

Resources:
Association of Christian Thrift Stores
National Association of Resale Professionals