Goodwill Invests In Retail To
Compete With Big Boxes

July 9, 2007
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WYOMING — Goodwill Industries of Greater Grand Rapids Inc. is mid-way through a plan to renovate or rebuild 12 retail outlets in six West Michigan counties to better compete with other retailers and expand its revenues, the nonprofit's chief operating officer said last month.

"As government funding becomes less and less to support our mission, there is a lot more dependency on the retail side to financially support the mission," said COO Dave Brinza. "That's why the stores exist. We have found out that as we build the stores and make them more efficient, more customer-service-friendly, we actually make more money."

Goodwill Industries was established in Grand Rapids in 1966 to help people with disabilities or other barriers to employment learn about the world of work and take steps toward employment. The organization sells donated used and some new clothing and household goods to support its job training and employment programs.

Goodwill has two stores in Kentwood and two in Grand Rapids, as well as one each in Big Rapids, ComstockPark, Greenville, Ionia, Jenison, Lowell, Mt.Pleasant and Wyoming. The Grand Rapids stores on

29th Street SE
and Alpine Avenue NW and those in Ionia and Lowell have already received updates, Brinza said.

Goodwill is in the process of replacing the

Plainfield Avenue NE
store in Grand Rapids. The Kentwood store at
5452 S. Division Ave.
will be next on the update list, as Goodwill plans to move to a new development being planned across the street, said Tex Graham, executive vice president for finance. Graham also said Goodwill is planning to open a store in Walker's Standale area, although he said the timing depends on working through "red tape."

Graham said Goodwill has invested about $5 million so far in its retail updating effort. Several stores have coffee bars, and the stores on

29th Street
and on South Division have leased optical departments.

"We're trying to have things within our stores that will grow more customers and provide better service and more service," Brinza said. "We're continuing to grow, continuing to figure out what's new, what's out there and our niche in the retail market."

"We can't look at our competition as being dollar stores and Salvation Armys, or we won't make any money," Graham added. "We have to try to compete with them (traditional retailers) on their level. It's getting very difficult because Meijer and WalMart, they drop their prices pretty low. It's hard to stand toe-to-toe with them. We think we're doing a good job."

Growth in the number of stores and in sales per location fueled a 30 percent increase in retail revenue from 2001 to 2004, as reported on documents filed with the Internal Revenue Service, Graham said. Retail revenue at the end of the 2004-05 fiscal year was $9.3 million.

Goodwill is in the process of purchasing the PlainfieldSkatingCenter,

1655 Four Mile Road NE
, from a Florida company, Brinza said. The nonprofit plans to tear the rink down and replace it with a new, 14,000-square-foot store, making a total investment of $2 million in the land and new building. Brinza said Goodwill plans to sell its 6,600-square-foot store around the corner at
3630 Plainfield Ave. NE.

Like the other renovations, the new store will have updated colors and designs, an optical department and a donation center and processing area, Brinza said. Goodwill is decentralizing the processing of donations, which used to be handled primarily at its administrative headquarters and warehouse at

3035 Prairie St. SW
in Wyoming. With in-store processing, items get to the store floor faster, Brinza said. It also frees up space at the
Prairie Street
location for subcontract work for companies, such as assembly and packaging. Goodwill has closed its UrbanCenter in downtown Grand Rapids and its BeckwithSchool location on the northeast side, and has consolidated those and other operations at the former St.JamesSchool on the northwest side.

"It has less to do with the actual clothing and donated goods part of the business as opening up space for our contracts business at Prairie," Brinza said. "Our mission is to help people with barriers to employment find and keep jobs. Contract work gives our folks job experience and training."

According to the IRS documents, government grants for Goodwill Industries of Greater Grand Rapids increased by 143 percent between 2001 and 2004, the last year for which the filing is available. Government funding went from about $1 million to $2.57 million. Graham said most of that increase is attributed to two large grants.

The documents also revealed that income from subcontracts slipped nearly 13 percent from 2001 to 2004. A couple of contracts, such as assembly for Bissell Inc.'s flag kits, disappeared, and the nonprofit has moved from several large customers to "a couple dozen customers" for that part of its business, Graham said. "We are slowly building back up again," he added.

In that same time period, total revenue was up 31.4 percent, from $14.2 million to $18.7 million. Net assets rose 20 percent to $5.5 million, from 2001 to 2004.     

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