Discount retail chains’ struggles highlight the need for a diversified secondary market strategy

In the past few months, Big Lots, Channel Control Merchants, and American Freight have each announced bankruptcies. The near future looks different for each organization. Although this development was somewhat expected by those in the know, it is nonetheless surprising for companies in the consumer goods resale, discount and discount store sectors. The same goes for retailers or brands that rely on discount retailers to bulk purchase returned and excess merchandise.

Big Lots, Channel Control Merchants and American Freight All Announce Bankruptcy

In early September, Big Lots was unveiled, a national chain of more than 1,000 discount stores across the United States. It declared bankruptcy and sold to a private equity fund.. Many stores that resell closed and excess stock profitably will remain open, but the financial restructuring will result in the closure of more than 300 stores nationwide, with additional closures possible in the future.

Channel Control Merchants, the parent company of Dirt Cheap and Treasure Hunt stores, is a secondary market retailer selling overstock, customer returns, liquidation and out-of-season items in eight Southern states. Company leadership after a period of poor profitability Bankruptcy announced in mid-October And it will immediately close all of its stores to pay off debts to creditors, including many of the nation’s biggest retailers.

Finally, American Freight is a chain of 370 stores in 40 states that sells furniture, mattresses and appliances at discount prices.It was announced that it would cease operations in early November. After its parent company Franchise Group (aka FRG) went bankrupt. Under deals struck in recent weeks, creditor debt will be converted into equity, allowing the business to be restructured. For now, the future of American Freight and its affiliates Pet Supplies Plus, Thevitamin Shoppe and Buddy’s Home Furnishings is uncertain, although operations will continue.

What is behind this discount struggle?

Although inflation is cooling, it has still been a difficult few years for American consumers. Ongoing economic uncertainty is affecting many people. And there’s plenty of evidence that it’s random low-cost products that they’ve decided to cut their budgets for.

Analysts note that at Big Lots, the “crowded and confusing product mix” harms the shopping experience and doesn’t always offer significant savings compared to more closely managed stores like Walmart. The company itself has also noted that its core customers are developing new habits and spending less on household goods and seasonal products, which are the chain’s main sales drivers.

Likewise, in a press release about American Freight’s problems, FRG explained that the company “is suffering from persistent inflation and macroeconomic challenges facing the bulk durable goods sector.” Going forward, FRG plans to lean on chains that offer a more focused selection of vitamins, pet supplies and more. This may perhaps indicate that the traditional appeal of discount stores, such as a wide and unpredictable mix of inventory, may no longer be an advantage.

Retailers and brands need to diversify their reselling strategies.

While it’s difficult to pinpoint the exact cause or determine whether there is a broader, longer-term trend here, we recommend that retail leaders monitor headlines like these and seriously think about whether their existing inventory reduction channels are sufficient if they occur. . This could include an economic downturn, a business outage, or a liquidating partner going out of business.

News articles and business concerns like these highlight the importance of developing a resilient, diverse, and carefully managed B2B resale strategy to handle returns, unsold, and slow-selling merchandise.

This is where online B2B resale platforms, powered by technology and data, and offering multiple channels for selling inventory, can help solve the problems of returns, excess, and overstock. Some of today’s largest retailers and brands are leveraging B2B resale platforms to serve as a centralized hub for all their secondary market resale needs. By moving everything to a single online platform, these companies have a single system of record and can handle processes that have historically been fragmented and extremely manual (such as selling to discount retailers or liquidators). You can also provide:

confidence in price

Whether you’re selling to one buyer or thousands, it’s important to know your product’s fair market value and factors that affect it, including condition, inventory type, and sales channel. B2B resale platforms that have years of pricing data on these various variables provide a more accurate view of pricing. The best platforms can compare the different ways goods are moved to secondary markets (resale through open markets, fixed-term contracts, or private one-to-one transactions) and the performance of resale across these channels.

Reach motivated buyers

There is a thriving and growing secondary market of buyers for returned goods of all categories, quantities and conditions. The ideal B2B resale platform has a network of thousands of buyers (including online resellers, empty store owners, discount stores, exporters, and reprocessors) who provide consistent demand and competitive prices. You can also easily onboard existing buyers or conduct targeted marketing to specific types of buyers.

Speed ​​and scalability of inventory reduction

B2B resale platforms offer a variety of channels to sell your surplus products, making it easy to scale your resale operation. With a variety of sales channels and efficiency-oriented features, you can sell as much inventory as you have at any time.

brand management

Controlling where and how inventory is resold is key for brand-conscious businesses. It’s up to you to decide how to resell your inventory through an online B2B resale platform and who can view and purchase your inventory. Establishing these kinds of restrictions, including geographic restrictions, label removal requirements, and indications for in-store or online sales only, will help you avoid conflicts with your primary sales channels and protect your carefully built company image.

Automated sales and performance tracking

An established, technology-based B2B resale solution can manage the resale process from start to finish. This includes setting up an online resale store, providing listing recommendations, pre-setting auction start times, processing payments within the platform, and automatically sending invoices. We also maintain detailed records that are important to ensure accurate bookkeeping, tax reporting, regulatory compliance and meeting buyers’ resale requirements.

Strategic advice based on proven data

Whether your goal is recovery, speed, or brand management, a company that has years of B2B resale data at your fingertips can be a game changer. By carefully analyzing your data and adjusting your strategy accordingly, you can achieve much better results. For example, you can group your inventory by category or SKU to make it more attractive, target your marketing to specific buyer profiles, or improve manifest accuracy.

B-Stock: Your Best Recommerce Partner

B-Stock, the world’s largest B2B recommerce platform with over a decade of secondary market and resale data, has been providing these exact benefits for years to its customers, including some of today’s largest retailers and brands.

To learn more about why leading global brands and retailers trust us to help them handle billions of dollars in returns and overstock, Visit our site. Or, if you’re ready to get started today, you can: Contact us for a live platform demo today.