The business of running a going-out-of-business sale is booming

Unlike Toys R Us, Bon-Ton’s stores have hardly any product left in the distribution centers, which leads to different inventory strategies.

Bon-Ton’s website is still up and running, but much of the merchandise is no longer available for shipping, and shoppers need to try to locate it in a store. In some stores, the lean inventory could lead Great American and Tiger Capital to bring in merchandise to fill in categories where inventory is low, or missing altogether.

“If you had all socks, but no shoes, we would bring in shoes,” Carpenter explains as an example.

Some vendors that had planned inventory orders canceled as Bon-Ton prepared to file for liquidation, may end up getting their goods into the department stores after all. Great American and Tiger Capital may buy it, but at whatever discount matches the level of discounting the stores are currently running.

There are other vendors that don’t want their merchandise to be part of a liquidation sale. Timing, contracts and bankruptcy court decisions determine whether vendors are able to pull their merchandise in advance of going-out-of-business sales by reclaiming it or buying it back. Rolex, Bose and Apple are among the brands that do what they can to keep their goods out of liquidation sales.

Not surprisingly, cosmetic and fragrance brands have been historically opposed to participating in a going-out-of-business sale. The category rarely participates in discounting during the normal course of business.

“But the more doors that close, the fewer doors cosmetic and fragrance brands have to sell their goods,” Snyder said, adding that is leading the group to make some concessions.

“We’re finding more and more, cosmetic vendors are leaving goods in the sales, though some still aren’t allowing discounts of more than 10-20 percent,” he said.

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