Pittston, PA — Once upon a time, it was difficult to find a bike when parents struggled to occupy their children during a pandemic blockade. But today, a huge warehouse in northeastern Pennsylvania offers new shiny Huffy and Schwinn at a significant discount.
The same applies to patio furniture, garden hoses and portable pizza ovens. With a home spa, Rachel Ray’s non-stick pot, and a backyard fire pit, we promise to make “everyday memories.”
The warehouse is operated by Liquidity Services. The company collects surpluses and returns from major retailers such as Target and Amazon and often resells them for $ 1. The facility opened in November last year and is in very high volume at this time of the year.
Warehouses provide a window to the retail industry and broader economy-wide calculations. A nasty hangover has taken hold after a two-year surge in consumer spending, supported by government checks and ease of e-commerce.
Retailers are now plagued by more inventory than they need, as consumers are cutting discretionary purchases due to high inflation. Overall spending recovered last month, but some major retailers said they were reducing the amount of clothing, gardening and electronics that shoppers buy, and instead focusing on basics such as food and gas. Stated.
In addition to that excess, there is everything that people bought during the pandemic (often online) and then returned. National Retail Federation (industry association) and Appriss Retail (software and analytics company.
Retailers may not always be able to resell themselves Last year’s revenue was a total loss of $ 76.1 billion in sales. That exceeds the US Department of Defense’s annual budget, as the Retail Federation has pointed out.
It is becoming clear that retailers are terribly misunderstanding supply and demand. Some of their miscalculations were due to supply chain delays. This has allowed companies to secure their products far in advance. Then there is the natural cycle of the boom. Whether optimistic or greedy, businesses rarely withdraw before it’s too late.
JDDaunt, Chief Commercial Officer of Liquidity Services, said: Interview at the Pennsylvania warehouse earlier this month.
“You’ll think you have enough data and enough history to see it a bit more clearly,” he added. “But it also suggests that the times are changing and they are changing faster and more dramatically.”
Strong consumer spending may have saved the economy from the ruin during the pandemic, but it also led to enormous excesses and waste.
Retailers are starting to reduce the price of in-store and online inventories. Wal-Mart issued the latest warning in the industry last Monday that it would cut prices due to oversupply of general merchandise, resulting in a significant drop in operating profit this year.
Many companies can’t afford to keep discounted products on the shelves because they need to reserve space for new season products and the essentials consumers currently prefer. While some retailers discount in-store surpluses, many retailers make big sales themselves for fear of damaging the brand by conditioning buyers to expect significant price cuts. I want to avoid maintaining it. Therefore, retailers turn to liquidators to do their dirty work.
In addition, industry executives say the excess is so great that some retailers may run out of space to accommodate everything.
“This is unprecedented,” said Chuck Johnston, a former Wal-Mart executive and now Chief Strategy Officer of goTRG, a company that helps retailers manage their revenues. “I haven’t seen the pressure of overstock, as I’m seeing now.”
As a result, much of the industry’s wreckage and wreckage has been washed away in such warehouses on the outskirts of Interstate Highway 81, with several exits on the President’s hometown of Scranton’s President Biden Highway.
The huge facility is part of the industrial complex that was built Above the reclaimed strip mine It dates back to the days when the region was a major coal producer. Today, the local economy has dozens of e-commerce warehouses covering huge spaceship-like hills, pouring goods into the densely populated areas of New York and Philadelphia and its surroundings.
Liquidity Services, a publicly traded company founded in 1999, has decided to open a new facility as close as possible to the major e-commerce warehouses in the Scranton area.
Returns were a major issue for retailers, even before the overstocking occurred this spring. The huge surge in e-commerce sales during the pandemic (more than 40% year-on-year increase in 2020) is just that.
The National Retail Federation and Appriss Retail calculate that more than 10% of last year’s returns were fraudulent. This includes people who wear clothes and return them, or steal goods from stores and return them with fake receipts. But more fundamentally, industry analysts say that increased revenue reflects consumer expectations that everything can be regained.
“It’s getting worse,” Johnston said.
Some returns and overstock will be donated to charity or returned to the manufacturer. Others are recycled, buried in landfills, Incinerate in incinerator Produces electricity.
Liquidators say they offer more environmentally friendly options by finding new buyers and markets for unwanted products, both returned and not purchased from the beginning. “We are reducing carbon dioxide emissions,” said Tony Scialrotta, executive director of the reverse logistics association, an industry group. “But I still go to landfills too often.”
Retailers will probably receive only a small portion of the original value of the item from the liquidator, but it makes more sense to take the loss and move the item off the store shelves quickly.
Still, clearing can be a delicate topic for large companies that want their customers to focus on “A product” rather than failure.
Sciarrotta calls it the “dark side” of retail.
On a tour of warehouses in Pennsylvania, Mr. Dont and warehouse manager Trevor Morgan said they were not allowed to discuss the origin of the product. But it wasn’t difficult to understand.
The 85-inch flat-screen TV still had an Amazon Prime sticker on the box. The bathroom vanity came from the Home Depot. From Wal-Mart’s Return Center there was a “home theater” memory foam duvet with a built-in cup holder.
Many of the unopened boxes on the warehouse floor had the familiar target Bullseye logo on them. Barbie’s “Dream House” air fryer, stroller and towering stack with swimming pool, elevator and home office. (Even Barbie seems tired of working from home.)
The company was a Wall Street darling when Target sales exploded in the first year of the pandemic. But in May, retailers said they were plagued by an oversupply of certain products and their stock price plummeted by nearly 25% in a single day. Stock prices of other retailers are also falling.
Target stumbling was an opportunity for people like Walter Crowley.
Crawley regularly rents U-Halls to drive from his home near Binghamton, NY to the clearing warehouse.
Crowley, who will turn 54 next month, focuses primarily on discounted home refurbishments. It was initially $ 14,000 and is resold to local contractors, including multiple pallets for discontinued garage door openers that were purchased for $ 600.
However, on a hot and humid day earlier this month, he stood outside the warehouse in the U Hall and loaded items from the target.
“I saw the inventory in the tank,” said Crawley, a cigarette that hangs from his mouth and sweats down his face. “It’s an ugly situation for them.”
He bought some cribs, a set of sheets for his home, and a pink castle for a girl in his neighborhood who was just five years old.
“To be honest, I would give much of it to my neighbors,” he said. “Some people are barely passing through.”
Buyers bid on goods through online auctions, drive to the warehouse and receive prizes.
It’s a diverse group. In the Haiti and Jamaican community of New York, there was a science teacher hoarding class plastic parts and a woman planning to resell what she bought (neon green igloo cooler, table saw, baby pajamas). She ships other items to Trinidad.
The Pennsylvania Warehouse, one of the eight warehouses operated by Liquidity Service nationwide, employs approximately 20 workers, some of which are temporary. The starting wage is $ 17.50 per hour.
Charles Beninkasa, 39, is a temporary worker who recently did a number of “warehouse storage” jobs at the Chewy Pet Food Distribution Center in nearby Wilkes-Barre.
Beninkasa said he has become accustomed to returning many of the items that his friends and family have purchased online. However, he is worried about the economic implications of seeing boxes piled up in the Liquidity Services warehouse.
“Companies are losing a lot of money,” he said. “There is no free lunch.”
