Archive for Friday, December 26, 2008

What happens to all the unsold holiday season merchandise?

December 26, 2008


— Retailers are expected to have one of the worst holiday seasons in years as consumers cope with job uncertainty and the nerve-racking stock market, which lost $10 trillion in value between October 2007 and November 2008.

Understandably, shoppers have been cautious. If that keeps up through the rest of the month, retailers are likely to have plenty of leftovers. From toys to DVDs and terry cloth robes, what will happen to all that unsold merchandise?

Here are some questions and answers about what retailers do with the stuff they can’t sell.

Q: Where does it all go?

A: Liquidity Services Inc. CEO Bill Angrick, whose company operates, said merchandise at traditional retail outlets can end up unsold for a number of reasons. Manufacturers can be stuck with it because orders were canceled, merchandise gets returned by customers, and other items, of course, just sit on store shelves unsold until managers decide to pull them (called a “shelf-pull” in the business).

Retailers and suppliers divert the merchandise to a number of places: discount stores such as TJ Maxx and Marshalls, outlet malls, boutique retailers that buy from wholesalers, and Web sites like

Are shoppers likely to get even more to choose from in January?

A number of retailers have filed for Chapter 11 bankruptcy — from Linens ’N Things to Circuit City Stores Inc. and Steve & Barry’s LLC — and experts predict that January will bring even more filings. That should bring going-out-of-business sales, which means even more discounted goods.

“I’ve never seen anything like this in the nine years we’ve been in business, in terms of the flood of goods we’re getting from retailers,” Overstock’s Byrne said, adding, “I think you’re going to see, in the first quarter, a wave of store closings.”

Byrne and other experts say most retailers will wait to see how they did during the holiday season and, in January and February, make decisions about store closings. Many more closings are likely to be announced later on, and Byrne predicted we will soon see the brick-and-mortar equivalent of the 2000-01 dot-com crash.

What happens to merchandise that even the discounters can’t sell? Does it get dumped in landfills?

Generally there is strong demand for unsold merchandise from American retailers in many export markets. Some liquidators find a place for overflow goods in Latin America, North Africa and parts of the Middle East.

Another option is to give the goods to charity. And yes, some merchandise might end up in landfills.


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