EVEN LIQUIDATORS ARE SINGING THE MARKDOWN BLUES FOR YULE
Byline: Rich Wilner
NEW YORK — Twenty-five percent off isn’t what it used to be.
That’s what liquidators are finding out this holiday season as they struggle to keep their going-out-of-business sales from getting lost among the sea of deep discounts offered at other retailers.
“We have to work twice as hard as we did five years ago to maintain the same sales pace,” Fred Marech, president of Fox Promotions, Cranford, N.J., said Friday, “and have to take deeper discounts quicker in order to stand out and attract shoppers.”
Marech points to the GOBs Fox is running for the 126-unit Sycamore Stores. The sales, which started last week, had initial markdowns of 30 percent off current winter and holiday merchandise.
“This inventory is deep and wide, and would have been offered at 20 percent to 25 percent off in the first week of a GOB five years ago,” he added.
At the root of the liquidators’ problem, of course, is the spate of deep discounts being offered this Christmas season as retailers of every stripe and in every level of financial health battle a listless retail environment with deep discounts that seem to start at 25 percent off and go up — way up — from there.
During this Christmas season, in addition to Sycamore Stores, Hastings Group, Jamesway Corp. and The Icing will liquidate their entire operations. Also, Edison Bros. Stores, Petrie’s Winkelman Stores, Elder-Beerman’s Margo Stores and El-Bee Shoes, Clothestime, Merry-Go-Round, Charming Shoppes and Gateway Apparel will close money-losing stores as part of restructurings.
Besides taking more aggressive discounts, liquidators are being forced to:
* Deal with tighter margins due to widespread discounting and competitive pressures to pay retailers higher prices for sotck.
* Fine-tune advertising, including expanding promotional dollars to other than print media to combat the heavy inserts in Sunday papers nationwide.
* Undertake extensive market research to pinpoint consumers.
* Remerchandise the stores holding the GOBs to make them more shopper-friendly, including expanding displays.
Robert Sager, president of Gordon Bros. Partners, Boston, said widespread discounting among retailers has forced his firm to apply higher markdowns at first, cutting his margins.
“We are paying considerably more for inventory today than five years ago, but under more pricing pressure due to the higher markdowns,” said Sager, whose company is liquidating more than $500 million in inventory at GOBs at 770 stores.
Sager called the level of discounting “unprecedented” in the 10 years Gordon Bros. has been operating GOBs. In 1995, Gordon Bros. will liquidate more than $2 billion in inventory.
While liquidators said it is a lot harder to attract customers to the GOBs, most said they were generally meeting or exceeding projections.
“That’s because the phrase ‘going out of business’ still is magic to the consumer,” said Steven Buxbaum, of Buxbaum, Ginsberg & Associates, Encino, Calif. “Consumers know GOBs mean everything is marked down, not select merchandise. So, while we have to tweak our advertising and markdown approach, the urgency of the situation still has a pull on the consumer.” — Fairchild News Service