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Retailers suffered through a dismal holiday season, as you know if you saw those ads offering three-for-one products that you ignored. And for many the trouble is far from over. But that is actually good for one kind of business, those that specialize in getting rid of excess inventory. NPR's Tamara Keith reports.
TAMARA KEITH: You might say that Enable Holdings is in the after retail business. They take on the items stores don't sell, and they market the stuff themselves, often at a major discount. At Enable's leased warehouse in Naperville, Illinois, forklifts move around merchandise stacked almost all the way to the ceiling.
Mr. PETER GAYTON (Project Coordinator, Enable Holdings): Anything that you see on the market, it's going to be here.
KEITH: Peter Gayton is a project coordinator with Enable Holdings. He says more than $2 million worth of electronics comes into this warehouse pretty much every week.
Mr. GAYTON: Mitsubishi, Nokia, LG. Let's see, there's Yamaha and pretty much a lot of brand names.
KEITH: Right now there are a lot of flat-screen TVs. Enable Holdings gets the products either directly from retailers or from the manufacturers that supply them. Jeff Hoffman is the company's CEO.
Mr. JEFF HOFFMAN (CEO, Enable Holdings): Let's say the new model comes out, and they've got a whole bunch of boxes full of last year's model still in a warehouse. They need to sell those, get that asset off the books. And they need to clear out space in the warehouse to take shipment of new product. So there's a lot of reasons that they can't afford to have this stuff just pile up in a warehouse somewhere.
KEITH: Enable Holdings turns around and sells the products direct to consumers through its Web sites, ubid and redtag.com. It also holds warehouse sales and sells to discount retailers. Hoffman says that once the post-holiday sales wind down, his company will be very busy. And if predictions about retail bankruptcies become a reality, he expects to get calls from suppliers left in the lurch by stores that are shutting down.
Mr. HOFFMAN: And then suddenly you have all these creditors that suddenly own warehouses filled with inventory. So we're getting flooded with inventory from all sides in the retail world right now.
Mr. HOWARD DAVIDOWITZ (Retail analyst, Davidowitz & Associates): This is liquidation time.
KEITH: Howard Davidowitz is a retail analyst, and he's been one of the loudest voices predicting store closings and bankruptcies in 2009.
Mr. DAVIDOWITZ: In January and February, we'll see lots of announcements, and it'll be very ugly.
KEITH: And that's where liquidators like Hilco come in. It's a different business model from Enable. The way Hilco works is the company comes in and takes over a store that's set to close. They keep the employees on and rapidly try to sell everything in the store, right down to the fixtures. Hilco is currently closing down 150 stores for Circuit City and wrapping up the liquidation of Linens 'n Things. Cory Lipoff is co-owner of Hilco Merchant Resources.
Mr. CORY LIPOFF (Co-Owner, Hilco Merchant Resources): It is great to be in the liquidation business in the sense that we're going to have a lot of business.
KEITH: But he's nervous about how the lousy economy is going to affect the liquidation industry. Hilco hires people to hold signs out on street corners advertising liquidation discounts. The discounts start out small and work their way up as the merchandise thins out. But these days Lipoff says consumers are ultra price-conscious, and they aren't responding to sales the way they have in the past.
Mr. LIPOFF: If you see a sign that says 30 to 60, historically that's a tremendous discount on wonderful items, and in many instances it still is.
KEITH: But almost every store in the mall is offering discounts like that, or better. So liquidation sales aren't as much of a draw. Lipoff says even the market for fixtures, shelving, and cash registers and the like is weak because there are just so many store closings now. Tamara Keith, NPR News, Washington.
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