The Dark Side Of Department Store Overstock Merchandise
Department store overstocks occur when a department store has too many back stock items. In some cases the merchandise is excess from what is available in the store. The store cannot move the product, so they have to put it on the sales floor or in storage. When you visit a department store you may notice an overstock area or you may not. For example, Macy's has its Last Call section, where the retailer sells its remaining merchandise from a previous season, or what is called overstock merchandise in the wholesale trade.
An overstock situation like this can be embarrassing for a department store, since it sends a message to customers who are trying to shop for a specific item that the store carries unsellable or unpopular merchandise. In some cases, customers get frustrated because they cannot find what they want, and perceive the merchandise in the clearance section as old or unwanted items. Having too many clearance items for sale can tarnish the image of a department store, which is why many of these retailers will sell their excess merchandise to liquidation channels such as closeout warehouses, such as my business, or through online channels like Bstock.com and Liquidation.com. Some stores have been hit hard because of their department store overstocks. Macy's, Nordstrom's, and Bloomingdale's have had to downsize or close some of their locations due to slow sales which were resulting in heavy amounts of inventory on their sales floors.
Remember, not all department store overstocked items sell well. There are cases where products do not sell because customers simply did not like a style, or a brand fell out of popularity. Retailers who are considering purchasing pallets of overstock merchandise should be very familiar with the types of products that the department store carries, and the types of merchandise that are included in their liquidation pallets. For example, Macy's might buy so many high end designer and brand name dresses, that its liquidation pallets can contain a nice assortment of high end dresses, while Walmart might only choose to liquidate products that can no longer be sold in new condition.
Sometimes an overstock situation occurs because the store was unable to sell the items. They tried to put the items on the sales floor, but they just did not have enough room. When the store tried to add more to the sale, they just pushed the items into storage instead of putting them on the sales floor. As a result, they lose money on both sales and storage. It takes time to change the inventory to make room for new items.
Another reason why a department store can have an overstock situation is because they switched from full-time to part-time sales. Part-time employees work fewer hours so they do not earn as much. When there is a big order for a particular item, the store puts all of their merchandise in storage. Then when the item sells, they place the excess inventory into production. This means that they will only sell the item to other businesses if they have enough of it.
If the store has a large inventory, they will need to downsize. In order to do this, they will need to hire more employees or provide some other method of replenishment. At the same time, they need to put the merchandise on display. Either way, they are at risk for losing money on the sale. Part-time employment for many retailers is not ideal, but a department store can't afford to lose money if they have merchandise that doesn't sell.
If a store sells products where most customers buy just one item from then there is no point in having a large inventory. A retailer only needs a small percentage of merchandise to sell in order to break even. If the store has too many items, they won't sell and they will have to sell items on credit. This is not a good situation for either the store or the customer.
Most department stores offer some sort of return policy on their merchandise. If a department store overstocks merchandise they offer the option of returning the items to the seller. This allows them to recoup the cost of the merchandise without having to pay more for it than what they spent. Most sellers accept returned merchandise. If a department store receives a lot of returned merchandise they will eventually sell it for cheaper, or stop buying it from their supplier. When purchasing overstock merchandise, especially apparel and footwear pallets, you should expect a large assortment of different brands, styles, colors, and sizes, as opposed to multiples of the same items. A pallet of handbags might have related items such as clutches, wallets, and totes, since the department store will generally create pallets based on departments.
Overstock pallets can offer retailers the opportunity to buy brand name merchandise for as low as 10% of the original retail price, but the contents of the pallet are even more important than the exact discount, since customers generally will pay more for merchandise that they desire. When purchasing a pallet, try to obtain a manifest so that you can see what the contents of the pallet are. If a manifest is not available, your wholesale cost should be lower than a comparable pallet that is not manifested, since you are taking a bigger chance when purchasing the pallet.
I would like to leave you with the most important advice that I can ever give you on this topic:
You Are Almost Always Better Off Buying Overstock That Comes From A Top Department Store, As Compared To Buying Pallets Of Low Priced Generic Merchandise From A Budget Retailer.
In other words, when you can afford to do so, you are better off buying pallets that contain merchandise from department stores such as Macy's, Bloomingdale's, JCPenney, Dillard's, and Nordstrom.
There is a reason why shoppers love shopping at high end department stores, and that is because they know that the merchandise is brand name, or designer, and definitely very high quality. When it comes to purchasing pallets of overstock merchandise, make sure that you are buying from a wholesaler who can supply you with merchandise from well known and popular department stores.