ODD-JOB HARVESTS A CASH CROP FROM DUDS
Byline: Faye Brookman
NEW YORK — By simply changing some numbers, Clarion has become a winner.
The Procter & Gamble cosmetics line may not have been a big hit with drugstore shoppers. But since being discontinued last year, the products are being snapped up by throngs of customers at Odd-Job Trading, a 14-unit chain of closeout units based here.
A Clarion lipstick had retailed for $5, for example. Now, Odd-Job sells it for $1.29.
Clarion is on the shelves with a host of other beauty items with high-profile names that apparently didn’t cut it in traditional retail outlets. Chanel’s Egoiste deodorant and Revlon’s Clean and Clear shampoo are two of them.
There are also items that represent excess inventory, such as Coty’s Exclamation fragrance gift sets, as well as products bought back from retailers and manufacturers. Often the original price tag is still on the product and it is not uncommon to find labels ranging from Wal-Mart to Bloomingdale’s.
“Sometimes, it is a discontinued product; others may be a buy-back or a package change. We even sell the gifts from the gifts-with-purchase,” said Izzie Horowitz, president of the 14-store closeout operation. A buy-back is a practice in which a manufacturer purchases the goods of a rival company from a retailer to make room on the store’s shelves.
“We love it when an original sticker is on an item with the original price because it’s proof of our value,” Horowitz said.
Odd-Job is only one of hundreds of closeout retailers across the nation that serve as a clearinghouse for marketer and retailer mistakes.
Often, just an adjustment in price can turn a blunder into a value. Tactical Retail Solutions in New York estimated that the closeout industry comprises as much as 5 percent of the total U.S. retail spending of $1.5 trillion.
The budding closeout business spawned an industry in the Eighties, with a number of chains sprouting up around the country. A shakeout ensued late in the decade, however, with much of the impact felt in New York. Retailers like Job Lot Pushcart and Odd-Lot closed their doors.
The 20-year-old Odd-Job also has exhibited staying power against the stores charging $1 and less for merchandise.
Although shoppers can get anything from pots and pans to Samsonite luggage, beauty products play an integral role in the stores.
“It’s an impulse category and one that people use up so they are always in need of picking up something new,” said Horowitz, who added that cosmetics and health and beauty aids are one of his three top categories, along with housewares and toys. Industry sources estimate that the beauty category produces between 10 and 15 percent of Odd-Job’s total volume.
Even a somewhat less popular color lipstick or nail enamel sells at Odd-Job.
“With more than 8,000 people into our stores a day, you find someone who likes a certain color,” added Howard Snyder, vice president.
The retailer has sales of $50 million, or almost $4 million per store, according to sources.
Stores average between 8,000 and 9,000 square feet in size and are packed with 2,000 stockkeeping units. Of those, about 200 sku’s are beauty.
Beauty is also situated on a perimeter wall of the stores, near the checkout register. Products are in bins or shelving.
There are bins of Revlon’s skin care products such as Moon Drops and European Collagen Collection, as well as Almay skin care — all of which are discarded original versions of products that have been repackaged. Retailers don’t want to confuse shoppers in their traditional chain stores with old packaging, so the products became available for closeout.
Other beauty items include Revlon’s Downtown Girl fragrance, Polo Crest from Ralph Lauren, Paloma Picasso’s Minotaure shaving cream, Glorious fragrance from L’Oréal, Revlon’s Air Blush and Maybelline’s Shine Free Trial Sizes.
Special promotion packs such as L’Oréal cosmetics with a $2 coupon imprinted on each package are sold.
“Once that coupon isn’t good, they can’t sell the package,” said Snyder.
Snyder and Horowitz also said product proliferation can result in an abundance of goods for them — something they are currently seeing with bath products.
Some recent softness in consumer demand for beauty products, coupled with major repackaging by many cosmetics firms, has resulted in an abundance of jettisoned beauty products.
Savings are enormous. The original price on a Revlon corrective nail enamel was $4.25. At Odd-Job, it is $1.99. Glorious was originally $26; Odd-Job’s price is $6.99. Almay’s Clean Mask retailed for $6, but at Odd-Job, it is $1.99.
Egoiste deodorant, previously marked $18 at retail, is $3.99 at Odd-Job.
The chain also offers secondarily sourced prestige fragrances such as Elizabeth Taylor’s White Diamonds, Fragrant Jewels and Passion and Ralph Lauren’s Safari.
Elizabeth Arden’s Visible Difference and a few select sku’s of other prestige skin care brands are also available in the glass cases situated near the checkouts.
“Our prices on these aren’t as good as closeouts, but they give our stores an image of having quality merchandise,” said Snyder.
While many mass market retailers are complaining about their soft beauty sales, Odd-Job isn’t one of them. On a recent Monday afternoon, customers clawed their way through bins of a trial-sized Prescribed Care treatment product from Almay, a line that suffered from high price points, according to retailers. The item originally retailed for $2.50. Odd-Job sells it for 49 cents and it is now perceived as a good bargain.
What keeps customers coming back is the fact that all the merchandise, representing entire brands, is changed every three to four weeks, as the owners broker new deals for fresh goods.
Snyder said there are market sensitivities. For example, Odd-Job would not sell an item in a certain store if the manufacturer was upset that the location was near Saks Fifth Avenue. “We can be discreet,” he said.
“And, we don’t sell wholesale. What we buy, we put into our stores,” he added, stating that Odd-Job doesn’t divert merchandise.
Odd-Job has been able to sell a wide variety of items. A china set that was priced at $1,500 at Fortunoff blew out at Odd-Job, with a price of $750. A vodka dispenser, designed to look like an IV rig, was another hit. A total of 9,000 of those sold in 10 days at $15 each, according to Snyder.
In addition to the hits, however, there have been beauty blunders, such as a product called Tanit that was supposed to be a spa treatment.
“It had tar and turned the tub black,” recalled Snyder.
He agreed the chain has had to overcome some negative impressions that have developed in the closeout business thanks to some unscrupulous operators not paying bills and diverting merchandise.
“We pay our bills and respect our suppliers,” said Snyder.
Odd-Job was founded 20 years ago. It currently operates five units in Manhattan, one in Brooklyn, two in Westchester County, five in New Jersey, and one on Long Island.
Four buyers work with major manufacturers seeking the marketing “mistakes” that can be reborn as bargains. Closeout retailers also deal with middlemen who have access to large quantities of closeout merchandise.
Snyder and Horowitz are known for their use of walkie-talkies on trade show floors to alert each other to hot deals. The team often has to sniff out the bargains.
“No company in the world likes to admit it makes mistakes, but all do,” Snyder said.
He maintained that the chain’s typical shopper is a middle-class customer with high-class tastes.
“They want to buy Chanel. If I had the choice of buying a fragrance sold in Woolworth for 99 cents, versus Chanel that usually retails for $50 and we could sell for $19.99, I’d take the Chanel,” he said.
Concluded Horowitz, “We look at an item and say, ‘Would my wife wear it?”‘
The continued success of the Naturistics brand at Del Laboratories, as well as the growing acceptance of its new Sally Hansen professional nail care products, all contributed to the firm’s recent third-quarter results.
Net sales for the quarter, ended Sept. 30, were $49.6 million, up 17.2 percent over the $42.3 million reported for the same period in 1993.
Earnings for the quarter were $1.6 million, a 42.7 percent gain over the $1.1 million reported in the same period the year before.