Has Value Village Fooled Us?

Community Donations Mean High Profit Margins 
for Thrift Giant

by Ella Gage

*Editor’s note: Savers Value Village did not respond to questions via a media inquiry email (they don’t have a corporate phone number, only for the individual stores).

Bellingham’s branch of Savers Value Village (VV) is a vital local resource for sustainable shopping within the lower-income community. However, the company’s glossy veneer of local charitableness is so misleading that the State of Washington spent eight years and $4.3 million trying to sue them over public deception. (1)

The question of their business ethics is complex. On one hand, the multinational thrift giant diverts 700 million pounds of reusable goods from landfills each year, reducing the steep environmental cost of the fashion industry. (2)

On the other hand, VV has paid as little as 5 percent of revenue for the community’s donations to their charity partners,while banking off of the image of being charitable. (3) Over 2024, the company netted an estimated $1.54 billion in revenue.(29, 30)

As consumers, how do we reconcile with that? We’ve donated to a business that — by all optics — seems to be a viable charity, complete with a “Community Donation Center” and blown-up photos of in-need children plastered across windows. We sift through racks stuffed with $30 jackets the company obtained for next to nothing, (3) trying to rationalize the noticeably lofty thrift prices: Are they inflation-adjusted? Compensating for a well-paid workforce? Donating extra generously to charitable causes?

That’s the billion-dollar catch, printed as a tiny disclaimer on VV’s website: “Shopping in our stores does not support any nonprofit. TVI, Inc. is a professional fundraiser where required.” [TVI, Inc. is a thrift store chain that operates under the name Value Village Stores.]

The state’s long-running lawsuit against Savers Value Village quietly concluded in 2023, and, to this day, even the most in-the-loop Bellingham locals and justice-oriented college students are largely unaware of the company’s for-profit status.

Where Your Donations Go

“We are the busiest [Value Village] store on the entire West Coast, and the sixth busiest in the world,” said Bellingham Value Village’s Production Manager, Marion Rowlan. Savers Value Village has over 300 stores across the United States, Canada and Australia. (4) Altogether, the company hit an estimated $3 billion in sales between 2023 and 2024. (5, 29)

“In an average day, we put out anywhere from 10,000 to 12,000 items,” said Rowlan. “As production manager, I have 60 people working under me every day … my job is to make sure the production room is running efficiently and we’re always stocked with product.”

The production room is a narrow segment of the building behind the drive-through Community Donation Center, lined with ceiling-high stacks of boxes. On the production floor, employees from each department — textiles, books, housewares, and more — casually chat with their co-workers and inspect items in their pod-like department sections. Massive piles of books, trash bags of clothing, and boxes of furnishings surround them as they sort through the day’s donations.

“Every department in production has a certain goal each day, whether pricing X amount of items, sorting X amount of items, or putting X amount of items out onto the floor,” says Grace Seeseman, a part-time Value Village employee and college student. “Each manager of each department has quotas to reach, which I think higher-ups set, but I’m not sure.”

Specific quotas and portions of revenue that go to charity partners remain murky and inaccessible on the company’s website — purposefully so. If you follow the corporate ladder up, Value Village is owned by the Bellevue private equity firm TVI, Inc., which is subsequently owned by Ares Management Corporation. (7) As private equity companies, they are not required to disclose this information.

“We process what [the community] donates right here in the building, and then purchase those items from our nonprofit partner, which is currently Northwest Center,” said Rowlan. Upon receiving donations, production weighs out the products and pays Northwest Center (NWC) an undisclosed perpound rate, rushing to push out troves of donated goods on the sales floor the same day.

A 2015 article from local news nonprofit InvestigateWest cites: A vintage women’s blouse acquired for 10 cents goes on sale for $9.99; a purse gotten for a quarter retails for $12.99; a piano acquired for 3 cents might retail for $99.99. The profit margin between what Value Village pays charities for goods and the prices they retail at is staggering.

No updated rates are publicly available as the Northwest Center declined to comment on its contract with the company, and Savers Value Village did not respond to an inquiry.

I stood under the production room’s fluorescent lights, watching employees of all ages and walks of life sort, haul, organize, and price the largest, most chaotic mass of sellable goods I’d ever seen in one space, I couldn’t help but think: this business model is absolutely, undeniably genius.

The community can feel good about donating en masse to “charity,” while the company’s material production costs are virtually nonexistent. They pay a tiny percentage of retail profits to charities themselves, then turn around and sell thousands of uber-cheaply obtained bulk goods to the community each day at a massive upcharge.

The irony of the “production” room is not lost on me. Nothing is being produced or assembled from scratch. There are no supply chain delays or shipping costs. Goods are simply sifted through, weighed, and tagged in a price-generating computer system by scantily compensated employees after the public delivers their daily “product” right to their doorstep. (20)

 

The Sustainability Aspect

“Everything in a market system is consumer-driven, so if a customer stops purchasing a good, the company stops producing it,” said Dr. Shawn Knabb, an associate professor in economics at Western Washington University (WWU). But Value Village follows a different model: the consumers are the producers. They purchase copious amounts of stuff, get rid of it through donations, and then treasure-hunt through other people’s copious amounts of stuff on the sales floor.

Being charitable aside, there is a valid argument to be made for Value Village’s role in sustainability.

According to the UN, the average person buys 60 percent more clothing than 15 years ago and keeps items for half as long — resulting in one garbage truck dumping textiles into landfills or burning them every second of every day. (8) Every year, an inconceivable 26 billion pounds of textiles are thrown away according to Value Village. (9)

“It’s imperative to have a sustainable future,” said Rowlan. “One of our goals is to make second-hand second-nature by doing our part in keeping items out of the landfill, contributing to sustainability, and passing those values down to customers and the community.”

Savers Value Village is helping to reduce the steep environmental consequences of the booming fashion industry — which accounts for 2-8 percent of global carbon emissions, 215 trillion liters of water, and 20 percent of industrial wastewater pollution each year. (10, 11, 12, 13). They’re like a large-scale recycling program that provides consumers an alternative to buying new — which, in turn, lowers demand — subsequently reducing the environmental consequences of mass production.

In our culture of over-consumption and excess, it is vital to have upcycling and consignment businesses like VV to foster reuse. Their popularity — especially with younger generations — is not just a trend. It’s a step towards a more sustainable future.

The Problems: Pricing, Pay and Revenue

Sustainability is not the reason the State of Washington had an axe to grind with Value Village. Unsurprisingly, the money is the issue: in 2017, the state argued the company’s brand image deceived customers into believing it was a charity that directly benefited charities through its sales. (1)

“In most people’s minds, it’s in the same category as Goodwill or other thrift stores,” said Lily Howard, an environmental science student at WWU. Unlike nonprofits such as Goodwill or Salvation Army which are legitimate 501(c) nonprofit charities, Savers Value Village only donates between 8 percent and 17 percent of its yearly revenue, though this is not something they’re transparent about. (3, 14)

In 2017, Attorney General — now Governor — Bob Ferguson filed initial charges against the company for “hiding its for-profit status behind a veneer of charitable goodwill.” (15) Thus began a $4.3 million consumer protection lawsuit that dragged on until 2023, State of Washington v. TVI, Inc., d/b/a Value Village. (16)

“I think there is purposefully a lack of transparency for Value Village so they can continue to market on a platform of virtuousness and community building,” said Howard.

Despite the support of 14 other state attorneys general in Washington’s lawsuit, the state’s Supreme Court decided their misleading banners, posters, signs and ads were fully protected as charitable free speech for a commercial fundraiser. (16, 17)

They’re not only under fire for their marketing, but their pricing system as well. In a CBC expose, Value Village employees confirmed the computer system for evaluating the cost of items sometimes set price tags higher than their initial retail price. Multiple employees admitted they were instructed to remove original price tags in order to upcharge the products. (18)

“Their pricing is absolutely unethical. They get most of their products [basically] for free, and then price-gouge those same items,” said Samantha Leff, a Bellingham resident.

They’re capitalizing on revenue as opposed to keeping their prices low in order to actually support those who rely on thrift stores for living essentials.

“I see a lot of older people, families with young children, high schoolers, college kids, and we do get a lot of homeless people looking for basic necessities, so a pretty wide range of people,” said Seeseman in reference to the main customer demographics she sees on her shifts.

Lower-income families, college students working for minimum wage, retirees living off social security, and Bellingham’s sprawling homeless population comprise the demographic of people who genuinely need access to fairly priced recycled clothing. Th e City of Bellingham cites that one in four local families are unable to afford basic necessities. (19)

“We get pricing complaints frequently … a lot of customers will come up and say they found the exact same shirt, but one is $7.99 and the other is $12.99,” said Seeseman. She said that, if customers feel as though a price is unfair, this is an issue to be taken up with a manager — some of whom are flexible with discounts, while others are not.

A consumer sociologist, Markus Giesler, argued that checking pricing for fairness should not be the responsibility of Value Village customers. (18)

Money is not an issue unique to customers: based on 4,361 Indeed ratings, a mere 32 percent of employees think they are paid fairly at Savers Value Village. (20) In Washington state, hourly pay for the company’s retail associates currently averages $17.57 per hour, less than a dollar above the state’s current minimum wage, $16.66. (21)

If employees are being compensated little over minimum wage, charity partners are receiving so little that the company was embroiled in a long legal battle with the state over consumer deception, and product manufacturing and shipping costs are next to zero due to their in-house “production,” where is the bulk of the revenue going? Straight to the top? Due to lack of transparency, consumers can only speculate.

It’s not as though there aren’t context clues. TVI, Inc. President John Bacon and his wife Debra Bacon — the daughter of one of the Savers founders — own a Medina mega-mansion on Lake Washington. (22) Th e Savers heirs’ opulent residence gained traction on Instagram Reels, garnering nearly 2 million views and a comment section filled with Seattleites shocked they were paying $12 for donated Value Village tees while the owners lived in a mansion estimated to be $43 million.

The Ethical Dilemma

“We live in an economy where everything is so costly that people need to find a way to afford clothes and basic necessities,” said Josh Kutzke, a Bellingham resident. “Th e fact that Value Village is raising their prices isn’t right, because we need more affordability.”

Bellingham’s ballooning cost of living means that it is vital — now, more so than ever — for the company to keep costs low for consumers. Though they are a for-profit company, their low prices are a crucial public resource amidst inflation. (24)

“Sustainable accessible practices should not be co-opted to serve the rich since thrifting has historically been an avenue for low-income people to get quality clothing in their price range,” said Howard.

The chain company’s prowess as the largest thrift store in Bellingham detracts customers from supporting legitimate retail nonprofits such as Goodwill, the RE Store and Ragfinery. (25, 26) However, they do have significant value in terms of fulfilling the need of sustainable retail.

“Our store recycled 1.7 million pounds of product in the last year alone,” said Rowlan.

A long-haired boy in his early 20s waved at us across the production floor as he loaded up a heaping pallet of “unsellable” clothing due to quality or wear-and- tear, thus qualifying it for recycling. It was likely being shipped off to a less-developed nation overseas — as to where, employees couldn’t tell me due to corporate rules.

At least, the clothing was going to people who needed it rather than to a landfill, I thought. Even if the most charitable aspect of Value Village is those who donate their stuff rather than the company’s contributions to charities — or compensation for their employees — the company provides access to sustainable, affordable retail in our community and overseas.

“Thrift and upcycling stores definitely play an important role [in our economy] by providing resources to those who can’t afford them, especially with costs being what they are,” said Knabb.

Are Value Village’s pricing and marketing predatory to consumers? Yes. Is needlessly price-gouging to turn a profit in a community with high costs of living and low per-capita income unethical? Yes. (27)

“But will I keep shopping there? Yes,” said Howard.

Will the company’s sustainability, relative affordability, and accessibility weigh out over the shady corporate business model hinged on public deception? That’s up to you to decide.

_______________________________________
Ella Gage is a journalism-public relations student at Western Washington University with a longstanding interest in environmental conservation, social issues, and the ways in which they intersect.

Sources Cited

1. https://agportal-s3bucket.s3.amazonaws.com/uploadedfiles/Another/News/Press_Releases/2017_12_20Complaint_%20%28002%29.pdf
2. https://www.genevaenvironmentnetwork.org/resources/updates/sustainable-fashion/
3. https://www.invw.org/2015/10/28/the-thrift-store-chain-thatdressed-up-like-a-charity-and-got-sued/
4. https://www.kxly.com/news/charity-or-business-some-consumers-still-confused-by-value-village/article_ffd27ebe-ef7f-11ed-9757-f347e2a2894a.html
5. https://ir.savers.com/news/news-details/2024/Savers-Value-Village-Inc.-Announces-Preliminary-Fourth-Quarter-and-Full-Year-Net-Sales-and-Participation-in-the-ICR-Conference/default.aspx#:~:text=Comparable%20store%20sales%20for%20the%20fourth%20quarter,4.4%%20compared%20to%20the%20prior%20year%20period
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22. https://www.zillow.com/homedetails/8925-Groat-Point-Dr-Medina-WA-98039/48838639_zpid/
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27. https://www.bellinghamherald.com/news/local/article292435979.html
28. https://www.savers.com/about-us
29. https://www.stocktitan.net/news/SVV/savers-value-villageinc-announces-preliminary-fourth-quarter-and-6yqvoytqb-5pn.html