Beware of Bad Liquidation Options

What Not to Do - Avoid These Pitfalls!

Management can be so concerned about image that its decisions unnecessarily cost the company revenues and end up hurting its image. Management may:

1. Sell the inventory to a liquidator, usually well below cost, who conducts a Liquidation Sale using the companies good name and reaps all the profits.
2. Conduct an in-house Store Closing Sale and, because of inexperience, unnecessarily lose profits and often take huge losses.
3. Close the store and pull the merchandise out overnight! Nothing positive comes out of these maneuvers.

There are two reasons to sell to a liquidator — its quick and it's easy. There are two BIG reasons not to sell to a Liquidator. First, the company takes a loss and the liquidator makes all the profit. Second, the company gets a bad name from questionable sale techniques the liquidator uses and inferior merchandise the liquidator adds and dumps on the consumer under your company's name.

When customers find the store closed without warning they are inconvenienced, irritated and even incensed. It's unlikely they will go out of their way to shop a sister store. In fact, they may bad mouth the store because it was closed without warning. No "good will" is salvaged here.

Reasons not to close a store and move the merchandise to a warehouse for redistribution or directly to another store or stores:

1. Cost of a crew to pack up, move, unpack, warehouse and redistribute.
2. The cost of disposing of odds and ends, discontinued lines, dated and out of season merchandise.
3. If moved directly to another store or stores the creation of heavily overstocked departments, lines, sizes, etc.
4. Ties up valuable floor space and makes these stores less profitable.
5. What to do with fixtures? If you have no need for them how do you dispose of them quickly and get a reasonable price for them?
6. Customers are inconvenienced and irritated. They often bad mouth the stores and seldom go out of their way to shop one in the future.

When all expenses of moving a store's merchandise to another store or warehouse are added up it probably equals 60% to 70% of the inventory cost. The only thing worse is to hold an auction.

An alternative is to conduct your own Liquidation Sale. And who's going to work the sale, manage disgruntled employees and handle customer relations. Too often the sale is left in the hands of store employees whose jobs are done when the sale is done. What is their incentive to protect the company's image, not to mention the company's return on liquidated merchandise and fixtures?

» There is a better way, the Wingate Way!