Everything Seems To Be Slowing Down. Slow Inventory Turnover = Closeouts.
The American economy is showing clear signs of slowing down, fueling concerns about a potential recession. The liquidation process is heating up as there are more closeouts on the market than at anytime in the past 18 months. As more and more overstock inventory makes its way into the market there will be businesses shutting down 3PL warehouses and bankruptcies. The Federal Reserve is raising interest rates in an effort to slow growth as it seeks to curb persistently high inflation as well as consumer prices that are rising at their fastest pace in more than 40 years. The job market remains healthy — data released Friday showed a gain of 372,000 jobs in June. But consumer spending, which drives the bulk of economic activity in the United States, is losing steam. Inventory sales will continue to slow down, and the inventory turnover rate will also decrease. In this environment liquidation companies and closeout brokers flourish. When there is a lot of dead inventory sitting in the warehouse it is important to find companies that buy excess.
Global growth is expected to slump from 5.7 percent in 2021 to 2.9 percent in 2022— significantly lower than 4.1 percent that was anticipated in January. When a business is shutting down its 3PL warehouse or downsizing warehouses they may turn to overstock inventory buyers who can help reduce inventory. Wholesale liquidators specialize in buying closeouts and working with closeout websites and buyers for surplus inventory. Growth is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn. As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5 percent below its pre-pandemic trend. The liquidation process is fast and when you find the right closeout company they can help you to understand the closeout process and how selling inventory works.
The June Global Economic Prospects report offers the first systematic assessment of how current global economic conditions compare with the stagflation of the 1970s—with a particular emphasis on how stagflation could affect emerging market and developing economies. Stagflation is even worse than inflation and during these periods there are a lot of closeouts, liquidation sales, warehouses shutting down 3PLs and bankruptcies. Overstock inventory and slow selling merchandise are byproducts of stagflation when prices go up and demand for goods goes down. The recovery from the stagflation of the 1970s required steep increases in interest rates in major advanced economies, which played a prominent role in triggering a string of financial crises in emerging market and developing economies. Inventory liquidators specialize in working with businesses in need of reducing inventory and raising cash. The liquidation process is one in which inventory is sold off at a steep discount in order to generate other assets.
The current juncture resembles the 1970s in three key aspects: persistent supply-side disturbances fueling inflation, preceded by a protracted period of highly accommodative monetary policy in major advanced economies, prospects for weakening growth, and vulnerabilities that emerging market and developing economies face with respect to the monetary policy tightening that will be needed to rein in inflation. If your company has too much inventory in the warehouse and you need to make space for new products, consider doing a simple Google search using terms like closeouts, selling obsolete inventory, inventory liquidators, overstock closeouts and closing Amazon business. These are all popular search terms that will help you identify a reputable and capable buyer for excess inventory of any kind.
However, the ongoing episode also differs from the 1970s in multiple dimensions: the dollar is strong, a sharp contrast with its severe weakness in the 1970s; the percentage increases in commodity prices are smaller; and the balance sheets of major financial institutions are generally strong. Consumers are still spending money and buying closeouts online from wholesale overstock buyers, closeout websites and merchandise liquidators. More importantly, unlike the 1970s, central banks in advanced economies and many developing economies now have clear mandates for price stability, and, over the past three decades, they have established a credible track record of achieving their inflation targets. Closeout wholesalers are affected less than traditional businesses because they are in the secondary discount market. Consumers who buy surplus inventory and closeouts are more bargain oriented and not willing to pay full price.
The growing threat of a global recession has raised serious concerns about the future sustainability of corporate profits,” according to a recent note from State Street Global Advisors chief investment strategist Michael Arone. What’s more, global supply shocks “show little signs of abating,” which could put corporate profits under “additional downward pressure.” When profits get squeezed companies are sometimes forced to liquidate inventory to generate cash. This can be done by either discounting inventory and offering closeouts to your regular customers, or the business can use a professional inventory liquidator that understand the closeout process and can sell off inventory in bulk.
Inflation at current levels represents a clear risk for current and future macroeconomic stability and bringing it back to central bank targets should be the top priority for policymakers. In response to incoming data, central banks of major advanced economies are withdrawing monetary support faster than we expected in April, while many in emerging market and developing economies had already started raising interest rates last year. Higher interest rates put pressure on businesses trying to sell inventory because it increases the cost to carry products in the warehouse. If you are managing inventory in a 3PL warehouse it may be better to downsize warehouses than liquidate inventory to make room. The cost of repurchasing goods from overseas may be more today than it was one year ago. Supply chain issues still exist, and this is further contributing to large amounts of surplus inventory and closeouts in large warehouses. Many 3PL warehouses the size of Amazon distribution centers are closing in an effort to cut costs and reduce expenses. The environment has quickly changed from one of scarcity to one of abundance. It was only a short time ago when there was a shortage of inventory; today we are being offered more closeouts than at any time in the past 18 months.
The resulting synchronized monetary tightening across countries is historically unprecedented, and its effects are expected to bite, with global growth slowing next year and inflation decelerating. Tighter monetary policy will inevitably have real economic costs, but delaying it will only exacerbate the hardship. Central banks that have started tightening should stay the course until inflation is tamed. Taming inflation will keep closeouts to a minimum because things will not get too far out of control. If prices spiral out of control and business slows down, there will be consequences of slowing orders, excess inventory in the market, and liquidations of major corporations. Liquidation products do better during recessions and slow periods because consumers look for surplus liquidators who can offer cheaper products. Big box stores like Walmart, Dollar Tree, Ollies and Target can sustain difficult economic times easier than many traditional department stores or specialty stores.
Targeted fiscal support can help cushion the impact on the most vulnerable. But with government budgets stretched by the pandemic and the need for an overall disinflationary macroeconomic policy stance, offsetting targeted support with higher taxes or lower government spending will ensure that fiscal policy does not make the job of monetary policy even harder. One of the best ways to keep your inventory under control is to constantly assess any overstock merchandise or closeouts so they don’t sit in your warehouse too long collecting dust. It is best to take your first loss, get rid of dead products, and liquidate inventory while it has value to the consumer. If you wait too long it is possible the packaging will begin looking old and discolored, and it makes it harder to find excess inventory buyers to take everything.
As advanced economies raise interest rates to fight inflation, financial conditions are tightening, especially for their emerging-market counterparts. Countries must appropriately use macro prudential tools to safeguard financial stability. Where flexible exchange rates are insufficient to absorb external shocks, policymakers will need to be ready to implement foreign exchange interventions or capital flow management measures in a crisis scenario. It is possible to liquidate inventory overseas so it does not interfere with your normal distribution channels. If you are selling slow moving product to a liquidator, the last thing you want is for some closeout brokers to sell your overstock to your regular customers. Be sure to discuss this when working with excess inventory buyers so they understand your needs.
The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one. We went from a shortage of inventory to overstock and excess inventory in most 3PL warehouses around the country. In particular, 3PL warehouses in Southern California are inundated with inventory, creating a surplus of inventory in all categories from toys and home décor to sporting goods and closeouts of housewares. Multilateral cooperation will be key in many areas, from climate transition and pandemic preparedness to food security and debt distress. Amid great challenge and strife, strengthening cooperation remains the best way to improve economic prospects and mitigate the risk of geoeconomic fragmentation.
Merchandise USA has been buying closeout merchandise and inventory liquidations for more than 38 years. We specialize in the closeout process and helping businesses who are shutting down 3PL warehouses, downsizing warehouses or closing Amazon businesses. We are buyers for closeouts of all toys, housewares, sporting goods and housewares. We also buy overstock pet products, closeout lawn and garden, and liquidation stock of all kinds.
