Why do there seem to be so many Going Out of Business and Liquidation Sales in the furniture industry?
Liquidation and Going Out of Business Sales are a huge and highly profitable business.
There seems to be something irresistible to the general public about these types of sales. There is an almost universal expectation that there will be genuine deep discounts available.
These Sales are not just for unprofitable stores getting ready to go out of business and shut the doors forever.
Any change of ownership will almost inevitably lead to a GOB or Liquidation Sale.
The object of these sales is not to sell the left over merchandise from the old merchant. Those items are merely a nuisance to the liquidators. They need to clear out the old stuff before bringing in their own product assortment.
Whether the retailer is closing down forever due to bankruptcy or is just selling out the business for a huge profit,the remaining stock is sold to a professional liquidation firm. This is usually for a fixed percentage of the cost that the retailer originally paid for the goods.
There is a highly competitive environment in which several liquidators may be bidding against each other for the right to conduct the liquidation event.
The result is that the retailer may get paid a surprisingly high percentage of his remaining inventory value in return for granting the rights to conduct the GOB Sale.
For the Liquidation firm, the primary value (and profit) is not in disposing of the remaining stock that has been purchased from the departing retailer.
Left over merchandise is quickly disposed of at a slight profit. Then the real sale begins.
The liquidation firms bring in their own inventories of inexpensive new furniture that has been purchased in huge quantities at highly competitive prices.
Frequently this furniture comes with pre-set “manufacturer’s suggested retail pricing” which allows the liquidators to show high percentage discounts while still selling at full markup.
The liquidators make their profits by selling massive amounts of the new merchandise that was never part of the store’s original inventory.
They use hyper advertising and promotion techniques that have been carefully perfected over many decades to provide a huge influx of customers greedy for the “bargains” they assume they will find when a store is closing down.
The liquidation firms hire teams of expert salespeople, many of whom may work for them full time, who travel from city to city to work these temporary liquidation sales.
Most of these sales people are highly trained professionals, the “best of the best.” Often they are among the most highly compensated salespeople in the furniture industry.They know how to close sales quickly and then move on to the next customer.
The result is astonishingly high sales in the limited time period allotted before the company moves them on to the next liquidation sale in another town.
Once upon a time GOB (Going Out of Business) Sales could keep going on and on without the store ever closing.
That is no longer the case. State and local governments have cracked down on phony “Liquidation” and “Going out of Business” sales where the store remains open indefinitely.
Laws now limit the amount of time a store may stay open once a GOB Sale has been announced. The time allowed for these sales varies from location to location.
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