Jubran Tanious: Yes, great question, Mark. No, your intuition is right. Several of the locations that we’re looking at for 2024, and by the way, some that we opened in 2023, are making use of that increased degrees of freedom, if you will. We are able to look at more boxes because of the freedom that that gives us, exactly to your point. And that will be the case in 2025 and beyond as well. It really serves as an unlock for us and just kind of widens the top of that funnel of possibility of new stores for us.
Mark Walsh: Yes, Mark, this is Mark. It’s really accelerating our strategy of new store growth, and it’s giving us the opportunity to look at more locations. We’re seeing that play out, and it’s been a big win for us.
Mark Petrie: Okay, got it. Thanks for all the comments and all the best.
Mark Walsh: Thank you.
Jubran Tanious: Thank you.
Operator: Thank you. Your next question is from Robert Drbul from Guggenheim. Please ask your question.
Robert Drbul: Hi. Good afternoon. I was wondering if you could talk, a little bit about sort of the wage pressure, wage trends that you’re seeing, in the stores and, I guess, labor availability, and managers as you think about, I think, the 22 stores that you’re opening.
Jubran Tanious: Yes. Hey, Bob. It’s Jubran. Fair question, we watch this pretty carefully. Just like everything else, we’ve got all the necessary metrics that give us a good snapshot as to what’s happening in every market that we operate. At an enterprise level, I would tell you that the labor market has really improved over the last 6 to 12 months or so in the markets that we operate in. We’ve been pretty aggressive in terms of keeping up with competitive wage rates. From an overall wage rate perspective, we’ve grown 5% to 6% year-on-year, and we’re seeing things settle down. I mean, at a country level, we’ve seen significant year-over-year improvement in turnover rate. Vacancy remains in the low to mid-single digits across all three countries.
So, all-in-all, we feel very good about staffing levels in our stores as we think about new store locations. Again, all of these new store locations are operating in infill markets where we are able to leverage management pipeline, team member pipeline. I think the people services team along with our field operators do a very good job of getting out ahead of that curve in terms of cross-training, hiring fairs that happen well in advance of the grand opening of a new store. So, you put all that together, Bob, and I’d say we feel very good about labor in both our comp stores as well as the new stores to come.
Robert Drbul: Great, thank you. And any commentary around the Second Avenue stores, how the M&A pipeline availability is, or if you’re looking at anything there? Thanks.
Mark Walsh: Yes. So, from a 2nd Avenue perspective, the team’s done a great job of moving that initiative forward. We continue to see business contributions increase at a pace that we’re very, very pleased with. So, that was the fundamental part of that strategy as we continue to move that two-way business forward. In terms of M&A, no news to report on this part of our strategy, it remains geographic infill with a strong supply base, solid brand locally, a stable workforce. But we’re going to – we’re very judicious in our approach. And obviously, when the opportunity creates and fulfills itself, we’ll be reporting it to the street.
Robert Drbul: Great. Thank you very much.
Operator: Thank you. [Operator Instructions] Your next question is from Mark Altschwager from Baird. Please ask your question.
Mark Altschwager: Good afternoon. Thanks for taking my question. I wanted to touch a bit more on supply. I was hoping you could give us a little bit more color on the flow that you’re seeing across the delivered versus on-site donations versus the GreenDrop and what you’re seeing from a quality of supply standpoint with those various vectors.
Jubran Tanious: Yes. Hey, Mark, Jubran. From a quality perspective, I would tell you we’ve not been able to detect any meaningful changes in the average quality of supply that we see from each of the channels. What we’ve talked about in the past, we do know that the on-site donation by and large brings a higher quality supply than typical delivered. We do know that. In terms of how we modulate the amount of supply, on-site donation is the always-on superior source of supply. We’re always saying yes to the donor. As we mentioned, we’re seeing very robust performance and growth and on-site donation in all three countries, frankly. The flex lever in that is the delivered supply. That’s the one that we are able to manipulate over long periods of time, where if we’re seeing very outsized on-site donation growth, we’re able to flex for that by modulating delivered.
So, from an overall quality standpoint, not seeing anything meaningful that we can detect, no changes. But from modulating the amount of supply that we acquire, that’s really how we do it. Hopefully, that’s helpful.
Mark Altschwager: That is helpful. Thank you. And then just as a follow-up, I think it was mentioned in the prepared remarks, you’re expecting slightly higher product costs this year. Is that a function of the mix or is that a function of rates that you’re paying your non-profit partners? Just what’s driving that expectation for the higher cost of materials?
