Expansion and Scale

At the September meeting of the Social Enterprise Network, the group discussed the ideas of expansion and scale.  Staff from The Green Institute's ReUse Center hosted this meeting, discussing their experience with replicating the center.

Notes from Expansion and Going to Scale

The Green Institute established The ReUse Center in 1995.  Before launching the venture, The Green Institute conducted a feasibility study to determine whether or not the market could support a business selling salvaged materials.  At the time, the Twin Cities was the 5th largest remodeling market in the US and there was high demand for affordable building materials.

Since its inception, The ReUse Center has undergone some changes, adding locations and products, as well as scaling back in other areas.  What worked, what was less successful, and what are the lessons learned?

Expansion Overview

  • In 1998 the ReUse Center launched the Deconstruction Services Program, which helps them secure more reliable and higher quality salvaged materials to sell
  • In 2006-2007 opened two additional locations
    • Maplewood
    • Osseo (now closed)
  • Incorporated volunteers and partnered with nonprofit employment training programs
  • Changed inventory
    • Began to sell FSC certified wood products
    • Become more selective about accepting donations
      • Some products are hard to sell
      • Some products require special handling or are subject to restrictions
  • Goals for future expansion:
    • Larger role in recycling
    • Work with municipalities around policy for using reclaimed building materials in new construction
    • Greater integration with other Green Institute programs
    • Any expansion is based on ability to correctly manage demand and inventory

Deconstruction Services

Incorporating this program changed how The ReUse Center obtained materials and improved the quality of those materials.

  • Before launching this business line, all materials were donated
    • Contacted businesses looking for surplus materials
    • Building contractors and DIYers dropped off materials
    • Still receive donations, but now just a fraction of the materials sold
  • Although it does not generate significant revenue, it provides 90% of materials sold at the different ReUse Centers
    • Relatively low cost operation, the only significant expense is workers comp
    • Also provides jobs/job training, which is part of the mission
  • Deconstruction is a one stop shop
    • Also operate a pickup service for contractors to remove materials
  • 3 years ago they did 50-60 jobs/year, now it's 120 jobs/year
    • More than doubled the materials available for sale
      • Increase in materials led to creation of new locations

Stores

  • Osseo
    • Looked for a location with the same characteristics that make the Minneapolis store a success
      • Close to transit station
      • Access to recycling services
    • Did not correctly assess the market
      • The suburbs is a different market with different needs
      • Did not have the same connections to building and construction contractors
      • The ReUse Center brand was not established
    • As a result materials did not sell and the store had to be closed
  • Experience in Osseo helped crystallize the ReUse Center's primary audience and a plan for future successful expansion
    • Main audience is building and construction contractors, some DIYers.
      • Strong relationships with contractors are the main source of customers. Many of the donors and buyers are the same core of regular customers, dropping off materials from one project and later picking up materials for another.
        • Takes time to build these relationships
      • Different from the Green Institute's audience - more interested in affordable building materials than a green lifestyle
      • The ReUse Center may not be a good fit for a one time project
        • Easier to go to and pick up exactly what you need or want from Home Depot or Menards
        • May not even be aware of the option of using reclaimed materials or the existence of the ReUse Center
    • In the suburbs, the market is different.
      • The buyers are not also donating materials, they are probably not contractors.
      • The most important thing is visibility from the highway and ease of access - helps to establish brand identity
  • Maplewood
    • Prioritized different things when selecting the location - especially visibility from the highway
    • This store is much more successful because it meets the needs of a suburban audience

Reconsidering the Inventory Mix

  • Green Institute reduced the size of the Minneapolis store, and the ReUse Center wanted to minimize the impact on sales
    • Decided to devote the same amount of space to their top sellers - cabinets, doors, hardwood floors make up 70-80% of sales
      • Dramatically reduced space for lighting, plumbing, etc
    • Despite a significant decrease in overall space, the monthly sales figured only saw a slight decrease
  • Added FSC Certified Wood Products
    • Contractors were buying many materials from the ReUse Center, but not flooring because they could not get the FSC products
    • Sought out this product because it meet the needs of their audience and in line with the overall Green Institute mission
    • Very successful product - it has brought in new customers, including builders who now regularly purchase additional materials
  • There are materials the ReUse Center does not accept
    • Appliances that don't meet efficiency standards
      • Make some exceptions for vintage or antiques - but this is a judgment call
    • Not allowed to sell liquids
    • Materials that are hard to sell
    • Some materials require special tools to test for lead paint and training for re-sale
    • There may be expansion opportunities around some of the materials the ReUse Center does not currently sell
    • If they are dumped, then the ReUse Center must pay for removal

Employee Training Programs and Volunteers

  • Part of the mission is to provide living wage jobs for people who face barriers to employment
    • Requires training and education
    • Some great success stories of individuals who have been able to get better paying jobs in the construction/deconstruction industry, also many challenges 
  • Originally did not use volunteers or outside employment programs.  As they expanded, re-thought the use of employees - could they continue meet their mission and sales goals, while decreasing costs?
    • Pursue partnerships with nonprofit employee training programs, such as AIOIC, Goodwill/Easter Seals, and Conservation Corps
      • Built relationships with organizations that had funding for job training
        • Mutually beneficial - decreased ReUse Center costs and provides value to those organizations
      • Work with these programs when hiring new staff
      • Managing those relationships takes time and work
    • Use volunteers for projects, such as organizing the stores, so that staff time could be devoted elsewhere
    • Now about half of the work is done by volunteers or in conjunction with other organziations
  • Cost savings invested back into the ReUse Center 

Lessons Learned

  • Give customers with what they want - Deconstruction Services and adding FSC products increased the amount of desirable materials for sale
  • Look for win-win partnerships that build on your expertise
    • Job training programs
    • Working with municipalities around how to incorporate reclaimed materials in new construction
  • Understand your market
    • Understanding the needs of the suburban audience has made the Maplewood store successful

About the Host

The ReUse Center is a program of The Green Institute.  Its mission is to decrease waste, improve the physical and economic environment in the Phillips neighborhood and provide quality jobs to people facing barriers to traditional employment.  The ReUse Center aims to be a self-sustaining enterprise.