Yukon News

Thrift store closure a harsh illustration of economic buzzwords in action

Keith Halliday

Yukonomist Keith Halliday Friday March 10, 2017

Despite occupying a prominent place in the downtown Whitehorse business scene for 40 years, the Salvation Army thrift store announced its closure last week. While unsustainable losses were the immediate cause, it’s worth asking what is fundamentally differenttoday from previous decades that made the business unsustainable.

After all, the interweb is full of chatter about the “sharing economy,” which includes people renting things they don’t use very often to strangers via digital platforms. In a sense, the thrift store took this even farther. You didn’t just rent your old sweater to someone,you gave it to the thrift store and they sold it forever. Usually at a fire sale price.

However, the Salvation Army’s thrift store did not achieve a billion-dollar valuation in Silicon Valley like some sharing economy websites.

The episode is a harsh real-world illustration of some common economic buzzwords in action.

The first is “competition.” The free stores at Yukon dumps — sorry, solid waste management facilities — are popular. My favourite Yukon dump is at Tagish, and the free store there, known as Tiffany’s, seemed sometimes to have more customers than certain MainStreet businesses in Whitehorse. Dump bosses have in some cases closed down or put restrictions on their free stores due to public safety issues or burgeoning piles of surplus stuff.

One often hears Whitehorse entrepreneurs muttering when a government agency starts competing with them. Remember the reaction of private gyms when the Canada Games Centre started offering gym services? In a sense, the thrift store managers were in asimilar bind. They were trying to sell a used pair of work boots for five bucks while the government-run dump at Tagish offered them for free, assuming you could find your size and no squirrels had moved in.

Furthermore, bigger ticket items in the Yukon now trade on the Kijiji online marketplace. Access to the internet is not universal here, but most Yukoners can check Kijiji rather than heading down to the thrift store as they might have done previously.

More fundamentally, you have to ask why we have so much surplus stuff that it can fill multiple free stores and the thrift store to capacity and beyond. Fifty years ago, clothes were considered expensive. Statistics on the number of pairs of pants owned by typicalNorth Americans at the time would shock today’s teenagers. When young couples got married, family members would give them sets of plates and cutlery since these were so expensive. Toasters were valuable enough that people took them to get repaired.

Which leads us to the next buzzwords: “globalization” and “low-cost manufacturing.” With large-scale factories in low-wage countries in Asia and cheap containerized shipping, many items have become amazingly affordable. Teens purchase clothes at H&M at pricesso low they are almost disposable. Closets overflow. You can buy a 16 piece set of bowls and plates for $32.87 at a Whitehorse big-box store. No self-respecting bank would give away toasters if you opened an account these days.

Not only did cheap manufactured goods undercut demand at the thrift store, it created even bigger strategic problems. It led legions of well-meaning Yukoners to deluge the thrift store with donations. Having viewed the donation pile, I would guess that storemanagers weren’t always thrilled by some of the things they ended up with. Sorting this stuff and taking piles of it to the dump costs money.

The thrift store’s competitors didn’t face this problem. If something doesn’t sell on Kijiji, the website doesn’t have to pay to dispose of it. And if something doesn’t get picked up at the dump’s free store, no one has to pay dump fees to get rid of it.

It’s already at the dump.

The next buzzwords are “asset-light” and “scaleable.”

The thrift store had its own building, which costs money to occupy and run. Asset-light competitors like Kijiji don’t have facilities like this. Their customers arrange to meet somewhere and transfer the goods. Tiffany’s at Tagish doesn’t even really exist, so has noexpenses.

In simple terms, a scaleable business is one whose costs don’t go up as fast as its revenue. Internet businesses are like this. Kijiji could double in volume, but the cost of its website would hardly change. The thrift store had to hire people to deal with its growingvolume of donations, even as revenue struggled.

Some government officials may argue with this buzzword, but there may also have been an element of “policy failure.” News stories about the closure noted that organizations like Zero Waste Yukon and Raven Recycling had received government funding for projectsaround managing surplus goods. How much funding was the Salvation Army’s thrift store getting?

A comprehensive policy would have included and supported the thrift store for its role in giving goods a second life instead of filling up scarce space in our dump.

Have the agencies involved done the math on how much waste the thrift store diverted from the dump? Or how much they’ll spend on other programs supporting the 12 Yukoners who have lost their jobs because of the economic buzzwords above?

The closure of the thrift store is not a good thing for our community. It illustrates the relentlessness of economic change. And don’t feel smug because it was the thrift store that closed and not your employer. Someday, someone (or some robot) will be writing acolumn about buzzwords like “artificial intelligence” and its impact on middle-class jobs.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.

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