Glut of goods at Target, Walmart is a boon for liquidators

AP
AP

Summary

  • Off-price chains are awash in appliances, apparel and outdoor furniture that never made it to stores

The excess inventory piling up at large retailers such as Target Corp. and Walmart Inc. is proving a boon for liquidators and other companies that help dispose of the oversupply.

Liquidity Services Inc., Xcess Limited, B-Stock LLC and other companies said they are seeing a glut of kitchen appliances, televisions, outdoor furniture and apparel that major chains are trying to clear out. In many cases, the liquidators are picking up pallets at the ports or from a warehouse without the goods ever hitting store shelves and are selling the items to smaller retailers and individuals who resell them online.

“What’s unusual is the large retailers may not ever touch the products," said JD Daunt, chief commercial officer of Liquidity Services, which operates online marketplaces. “They are asking us to get in front of this earlier than in the past. There is an unusual amount of excess inventory, and it’s affecting so many retailers at the same time."

At the onset of the Covid-19 pandemic when many stores were temporarily closed, retailers canceled orders from overseas suppliers as shoppers huddled at home. Then, as the economy started to open up, supply-chain bottlenecks due to factory backlogs and shipping and port delays left retailers with a dearth of goods to sell. To compensate, they ordered extra and placed those orders further in advance to ensure that products arrived on time.

“They wanted to make sure they’d have stuff to stock on the shelves," said Marcus Shen, chief executive of B-Stock, a software company that helps retailers manage excess inventory by matching sellers with buyers. “In the time it took for that product to get here, demand shifted."

Consumers curtailed purchases of the comfortable clothes and home items that they bought during the height of the pandemic and shifted more spending to dressier clothes as well as travel and entertainment. At the same time, inflation is pushing up the costs of necessities such as food and gas, leaving less money for discretionary items.

The mismatch between supply and demand has left large chains such as Target, Walmart, Gap Inc. and Macy’s Inc. with excess goods they need to clear out. Target warned in June that profits would be hurt as it cancels orders with vendors and offers discounts to get rid of excess merchandise.

Home Buys, a Columbus, Ohio, off-price retailer with eight stores, is selling name-brand washers and dryers at 40% off the regular price. “Before Covid, we wouldn’t have had washers and dryers in our stores," said Brady Churches, the chain’s chief executive. “The market for those items is normally tight, and there isn’t a lot of excess."

Mr. Churches said there is more excess merchandise now than at any time in the past two decades. He has been scooping up lawn-and-garden furniture and apparel, particularly winter sweaters and other cold-weather gear that arrived too late for the selling season. “The secondary market is swimming in apparel," he said.

Norm Rankin, senior vice president of merchandising for Bargain Hunt, a closeout chain based in Nashville, Tenn., with 85 stores, said he has been negotiating with a large retailer trying to unload $30 million of Christmas goods, including artificial trees, decorations and home décor, that arrived after last year’s holiday season.

“The quality is very high, because many of the goods didn’t even make their way into retailers’ warehouses," Mr. Rankin said.

Even though the secondary market is overloaded with excess outdoor furniture, Mr. Rankin said he isn’t buying more because the season to sell those items is almost over. “We don’t want to be overstocked ourselves," he said.

Donna Griffin said she is seeing a lot of furniture and mattresses as well as winter clothing at the Bargain Hunt store near her Cropwell, Ala., home. The 61-year-old retiree said she recently bought several women’s coats on clearance for $2.75 apiece, down from a regular price of $100. “The prices are even lower than usual because the items are out-of-season," she said.

Larger discount chains like TJX Cos.’ T.J. Maxx and Ross Stores Inc. also are benefiting from the oversupply. They often buy overruns directly from manufacturers, whereas the liquidators scoop up excess supply from the largest retailers and resell the goods to smaller chains, mom-and-pop shops, online-auction sites and individuals, who resell them at flea markets and websites such as Amazon.com Inc., eBay Inc. and Craigslist, industry executives said.

Jason Carrick, the owner of Xcess Limited, said the summer is typically a slow time for liquidations, but not this year. His company has been carting away 1,600 truckloads a month of excess merchandise from a large online retailer, including clothing, treadmills and videogame consoles. Xcess Limited recently took 150 truckloads of Easter and spring goods off the hands of another large chain.

This story has been published from a wire agency feed without modifications to the text

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