Goodwill sales climb as chain tries to shine up dusty image. (Up Front).

It's been a tough year for department stores, but one little-noticed chain is holding up pretty well.

It's Goodwill Industries of Southern California, the non-profit organization that relies on personal donations of old clothes, appliances and knickknacks to stock its shelves.

While sales at Macy's and Robinsons-May have slipped every month this year, Goodwill has seen its same-store sales climb nearly 12 percent this year through July.

In 2001, Goodwill's sales in L.A. County totaled $23.1 million, a 12 percent increase over 2000.

It's only natural that Goodwill would see a spike in sales as the economy flounders. In lean times, thrift-conscious consumers search for better bargains to stretch their pocketbooks.

But the economy isn't the only reason. Goodwill Industries of Southern California, the nation's second-largest Goodwill retail chain, has taken a new approach to its staid marketing strategy, launching an advertising campaign for the first time in its 86-year history, and sprucing up its stores.

"I have noticed they have made some major changes in their look, and they are upgrading." said John Nieto, general manager for competitor Out of the Closet thrift stores in Los Angeles. "They do look a lot nicer."

New Image

This year, Goodwill carved out an advertising budget of $250,000 -- a bit more than 1 percent of sales -- to draw customers into its 31 L.A. County outlets. The ad campaign supports Goodwill's prior efforts to shed its image as a dingy, musty-smelling place where only poor people shop. "This is an organization that has a tremendous amount of potential," said Tracy Powers, vice president of retail services.

The flagship store in Los Feliz, for example, is in a bright, modern space. Goodwill also has been opening stores closer to more affluent communities. At the store in Canoga Park, for instance, sales average $188 per square foot per year -- the highest for a Goodwill store in Southern California.

That's at the low end of what a typical retail store would average, but nearly twice the amount of the average Southern California Goodwill.

These days, Goodwill faces heightened competition on all sides. Big-box discounters such as Wal-Mart and Kohl's are rapidly opening stores, while a plethora of 99 Cents Only and Big Lots Inc. (formerly Pic 'N' Save) stores are targeting the same cost-conscious customers. Meanwhile, there's the traditional competition: the newer Out of the Closet thrift store chain sponsored by the AIDS Healthcare Foundation and the older Salvation Army.

"There is more competition out there' said Christine Nyirjesy Bragale, a spokeswoman for Goodwill Industries International in Bethesda, Md. "There are more thrift store operators out there as well as discount stores."

Goodwill has taken a learn-by-doing approach to its ad spending. It first bought spots last fall on all local prime-time TV stations. The ad spots featured "Temptation Island" host Mark Wahlberg urging consumers to check out the bargains.

But a few months later, Powers decided to scrap the TV ads because they were costing too much and not reaching the prime Goodwill client.

At the beginning of this year, ads were placed in the Penny Saver, a free classified ad publication that can better reach consumers mostly likely to shop at Goodwill.

"It was the most cost-effective way to get the message out there, and we could target customers by zip codes," said Powers, former chief operating officer of The Boston Stores, a small department store chain once based in Carson.

Getting customers through these doors, however, is just the first piece of the puzzle. Next comes making sure inventory is well displayed, neatly sorted and gets on and off the floor quickly.

In January, it stopped accepting donations of computers because it already has 5,500 unsaleable computers sitting in a warehouse. Computer prices have fallen so drastically and software changes so quickly that no one wants to buy the vast majority of Goodwill's machines.

Also, to move inventory faster, Powers has tweaked his incentive program for store managers. In the past, they had to increase sales two to 10 percent over the previous year's numbers to get a bonus. Now they only have to increase sales over last year's volume.

Consequently, store managers are working to process donations faster, placing merchandise on the floor more rapidly and culling slowselling items within a week or two.