Goods Are Piling Up. Which Retailers Have The Most Excess Inventory?
Retailers are facing a growing problem of overstock merchandise and excess inventory. This is due to a number of factors, including the COVID-19 pandemic, supply chain disruptions, and the war in Ukraine. As a result, retailers are having to resort to closeouts, overstock sales, and even destroying unsold merchandise in an effort to clear stock from the warehouse and keep inventory moving.
The Problem of Excess Inventory, closeouts, abandoned stock and overstock.
Excess inventory, closeouts, liquidation stock and overstock inventory is a major financial liability for retailers. It ties up working capital, takes up space in warehouses and stores, and can lead to discounts and markdowns. In some cases, retailers may even have to destroy unsold merchandise. Consumers are always looking for good deals on closeouts, but they don't want to shop in stores that are overloaded with too much inventory.
The Causes of Excess Inventory.
There are a number of factors that can contribute to excess inventory, including:
- The COVID-19 Pandemic: The pandemic caused a disruption in the global supply chain, which made it difficult for retailers to get the inventory they needed. This disruption lead to companies importing much more inventory than they really needed in an effort to catch up. When the containers finally arrived in the U.S., warehouses were overloaded with too much inventory and they were forced to liquidate excess stock and get rid of overstock inventory because there wasn't enough space to store everything.
- Supply chain disruptions: Natural disasters, political instability, and other factors can disrupt the supply chain and lead to excess inventory. When this happens there are companies that will come in and assess the inventory. They will often make an offer to liquidate the entire inventory in one fell swoop. This is the best option for liquidating the entire inventory from the warehouse.
- The war in Ukraine: The war in Ukraine has caused a disruption in the global energy market, which has led to higher prices for goods and services. This has made it more difficult for retailers to afford inventory. Consumers are not buying overpriced or even regular priced goods. They are looking for special deals on closeouts, excess
- Changing consumer preferences: Consumer preferences are constantly changing, and retailers may be left with excess inventory if they don't accurately forecast demand. Closeout housewares and home goods and excess inventory of lawn and garden are still consumer staples. If you are having a liquidation sale and getting rid of overstock inventory, make sure your customers know about it so they can take advantage of your closeouts.
- Poor inventory management: Retailers that don't have a good understanding of their inventory levels are more likely to end up with excess inventory. Good inventory management is the key to success when it comes to not having too much old inventory sitting in the warehouse. Liquidation buyers can help you if you need to clear stock out of the warehouse, but keep in mind you will be selling closeouts below cost to get rid of inventory. They will help you with the closeout process if you have never liquidated inventory before.
The Impact of Excess Inventory.
Excess inventory can have a number of negative impacts on retailers, including:
- Financial losses: Retailers may have to write down the value of excess inventory, which can lead to financial losses. Keep in if a retailer is dumping inventory below cost, it will eventually catch up to their bottom line. Profits are key and getting rid of old inventory below cost can be a dangerous proposition if retailers are not also selling inventory for a profit.
- Damage to brand reputation: If retailers have to resort to discounting or destroying unsold merchandise, it can damage their brand reputation. If it becomes necessary to liquidate old inventory it is best to find a discrete way so the closeout process doesn't interfere with everyday business.
- Loss of sales: Retailers may lose sales if they don't have the inventory that customers want. This is the reason some retailers like Cosco and Dollar General have a low SKU count, and concentrate only on items consumers really want. This way they don't have to stock huge warehouses with excess inventory that isn't moving.
- Increased operating costs:Retailers may have to pay higher storage costs for excess inventory. If retailers have inventory stored in 3PL warehouses, the cost of keeping old inventory can be staggering. It would be better to liquidate old inventory and clear stock from the warehouse if it isn't selling. If you need to sell your old inventory and need a closeout buyer, a simple online search may help. Try using search terms like these: closeouts, excess inventory buyers, shutting down operations, clear stock from warehouse, inventory liquidation buyers, overstock inventory buyers, liquidate excess inventory.
- Reduced cash flow: Retailers may have to use their cash reserves to finance excess inventory, which can reduce their cash flow.
How retailers can deal with excess Inventory and overstock merchandise.
There are a number of things that retailers can do to deal with excess inventory, including:
- Improve forecasting: Retailers can improve their forecasting by collecting better data on consumer preferences and demand. Find what consumers are buying most of and carry more of these items. Eliminate dead stock, slow selling inventory and unwanted products.
- Reduce lead times: Retailers can reduce lead times by working with suppliers to improve the efficiency of the supply chain. Clear old stock from the warehouse and make it easier to quickly access and distribute popular closeouts and discounted items.
- Negotiate better terms with suppliers: Retailers can negotiate better terms with suppliers, such as longer payment terms or lower prices.
- Use consignment: Retailers can use consignment, which means that the supplier owns the inventory until it is sold. This is another way to get rid of excess inventory and unwanted inventory without having to go through the liquidation process.
- Run closeouts: Retailers can run closeouts, which are sales of discounted merchandise.
- Destroy unsold merchandise: In some cases, retailers may have to destroy unsold merchandise. This is a last resort only when warehouse space is desperately needed and there is too much stock taking up room in the warehouse.
Excess inventory is a major problem for retailers. It can lead to financial losses, damage to brand reputation, and lost sales. Retailers can take steps to improve their forecasting, reduce lead times, negotiate better terms with suppliers, and use consignment to deal with excess inventory. In some cases, retailers may have to destroy unsold merchandise.
In addition to the above, here are some other tips for retailers to deal with excess inventory:
- Consider donating excess inventory to charity. This can help to reduce the environmental impact of waste and also provide a tax deduction for the retailer.
- Partner with a liquidator to sell excess inventory. Inventory liquidators can help retailers to sell excess inventory quickly and at a good price.
- Use technology to track inventory levels and optimize inventory management. There are a number of software solutions available that can help retailers to do this.
- Be proactive in managing inventory. Retailers should regularly review their inventory levels and take steps to reduce excess inventory before it becomes a problem.
Merchandise USA is an inventory liquidator in business since 1984. We specialize in buying overstock inventory of closeout housewares, closeout home décor, excess inventory of lawn and garden products, closeout pet products and unwanted inventory of toys and sporting goods. We can help you with the closeout process if you are having a liquidation sale.