Retail Close-out Specialists
Summary by Rachel LoMonaco
Retail close-out specialists deal in all sorts of products from food to coats to rugs to mixers. In order to make the most of this range, you have to be willing to take risks. Marc Perlman, founder of the Ocean State Job Lot, is a master in this category. He and his partner started their business with just $500 each and estimate making over $300 million this year alone. They understood that people work hard for their money and Perlman wanted to provide them with the most for their hard-earned money.
Perlman states that all retailers have to deal with the constantly changing environment more than any other field. In order to be successful, your main objective is to make a profit. Once, retailers would strive to be leaders in service, variety and fashion leadership. This is no longer feasible; you simply have to be the best in one category. For Perlman, this means he must sacrifice continuity of merchandise for the best value.
Retail close-out specialists attempt to sell brand name merchandise at closeout prices. With all the available products to choose from, Perlman listens to his customers for their needs and desires. Although he cannot always guarantee they will be specifically met because of the nature of his buying, he can try to get as close as possible. The customers respond well to this, even when itís not exact, because they know the variance of stock.
Perlman stocks his stores through various buyers concentrating on one area. Because he is not liable to a particular company image, he can allow his buyers to take greater risks for the good of the consumer. In his philosophy, if you arenít making mistakes, you arenít taking enough risks. His company can afford to sell higher priced merchandise at incredibly low prices through various forms of opportunistic buying. Companies go bankrupt, change orders with manufacturers, offer different merchandise in different countries and products go through color changes, pattern discontinuation and broken size runs. In each case, the companies just want to get rid of the excess and unwanted product.
Through all these opportunities, there are still downfalls to Perlmanís business category. He has to deal with limited advertising due to brand name restrictions. His stores do not have appropriate fixtures for apparel and no dressing rooms for consumers to try on apparel. His merchandisers in the soft goods category are not specifically trained in that field. But if you know your sellers and you know your consumers, the battle is half over.
Retail close-out specialists are what make a capitalist economy work. As Perlman states, they Ďclean-upí the economy. Taking the leftovers and finding a new consumer for them, these businesses keep at least some excess merchandise from going to waste. Whereas most businesses sell less product for a higher price, Perlman sells more at a lower price. And he hasnít encountered a problem with that strategy thus far.
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