Where Does Stock Go When Retailers Go Bust?

Where Does Stock Go When Retailers Go Bust?

Where Does Stock Go When Retailers Go Bust?

Deciding to close doors can be a defining moment for retail stores. It signals the end of its existence and the beginning of its liquidation process. Businesses use liquidation stock procedures as an exit route to efficiently do away with their leftover stock and pay off any remaining obligations before calling it quits and filing for bankruptcy.

Retail stores undertake liquidation proceedings with one final attempt to inform the public it’s going out of business. The huge closing sign becomes its last-ditch effort to dispose of merchandise for some profit before eventually retiring the business. 

When retailer stores close their doors to the public, they unlock other channels to unload inventory. They no longer sell items in pieces to consumers but instead offer them as package deals and bulk to interested back channels planning to resell them online or in flea markets and thrift shops. 

Where Stock Goes

Retailers who still have a lot of inventory left after their final closing out sale need to dispatch of them as soon as possible as these goods’ value will just continue to depreciate. They also need to remove all of these products before their lease expires, so they use several means to dispose of their remaining merchandise through:

  • Post-Closing Sale 

After customers scour aisles for best deals, hosting a post-closing sale allows retailers to sell inventory in bulk. This way, they can get rid of their merchandise at markdown prices to provide considerable profit. Another difference between the closing out and post-closing sale is that the latter sets a minimum amount for purchases. It also specifies operating hours when the wholesale prices are available.  

Other alternatives for post-closing sales include selling online through the retail store’s website or via e-commerce sites, Craigslist, and Facebook Marketplace. Selling closing out merchandise online can also allow flea market vendors, nonprofits, and thrift stores to take advantage of the discounts and resell them back to consumers for profit. 

  • Liquidation Auction 

If there is still stock remaining, retailers can organize a business-to-business liquidation auction or use this online auctioneer to dispose of it. They can host online auctions for retail liquidation stock and sell them in pallets or truckloads, making disposal quick and efficient. 

  • Employee Shopping Day

Retailers going out of business can also reward their employees and relatives with discounts and allot a special shopping day to enjoy the store’s products. This offer serves as a farewell incentive for staff and a token for their immeasurable contribution to the company.

  • Return Products to Vendors

There are times when vendors allow retail stores to return products. While these sell at prices lower than what retail stores initially paid, selling them back to the vendor is advantageous. It allows retailers to unload part of their inventory while vendors may be more than willing to accept product returns to resell them to other customers. 

  • Contact Competitors 

Contacting competitors is also one way retail stores can dispose of part of their remaining items. They can also offer resale and thrift shops their merchandise and have them place bids for the items they want. This way, businesses can profit from its closing by assuming products they can use in their own companies or establishments. 

  • Donate to Charity

Donating leftovers to charitable organizations helps retailers distribute their products in a humanitarian way. These organizations can use donations of clothes, shoes, and appliances to help impoverished individuals and communities. They can even use your donated items to raise money to support their causes. 

What’s good about donating to charity is that retail stores can obtain receipts from beneficiaries and use them for tax purposes. Apart from the tax break, donations elevate business by helping retail stores fulfill their social responsibility to the community in spite of the closure.

  • Sell to New Owner

There are also instances when retail stores do not close entirely but rather regroup by transferring ownership to another business entity. As one of the steps in dissolving the business, the retailer or owner, under the guidance of a business attorney or an accountant, can sell inventory to the new owner as a part of their turn-over agreement.

Conclusion 

Business closures pose several challenges for stock disposal. Retail stores need to undergo several sales methods to effectively dispatch remaining inventory. 

In-store and online closing out sales help reaps profits despite discounted rates, while post-closing and liquidation auctions provide ways to sell merchandise in bulk. Selling leftover stock to new owners or competitors and returning them to vendors ensures that products are disposed of properly.

Retail stores can also use this opportunity to acknowledge their employees’ immense contributions by holding a special shopping day. At the same time, it can fulfill its social obligation by giving away products and items to support charitable causes.

Retail stocks make their way to alternate market venues despite the physical store closing its doors. Although such events are always sad, products will eventually make their way back to the market as resale items on online sites, flea markets, and thrift shops. 

Now that’s something customers can smile about.     

Where Does Stock Go When Retailers Go Bust?


Where Does Stock Go When Retailers Go Bust?
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Where Does Stock Go When Retailers Go Bust?

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Where Does Stock Go When Retailers Go Bust?
BDC 279. APRIL 2021

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Where Does Stock Go When Retailers Go Bust?