Here are common myths I hear from retail store owners and liquidation firms.
I can save a lot of money doing the sale myself. Perhaps, but unlikely. Even with fees, hiring a retail liquidation consultant will put more money in your pocket, save you time and definitely reduce the stress of conducting a going out of business sale.
The going out of business liquidators are not qualified- Most of the consultants with store liquidation companies were a retail store manager or former store owner for many years.
The time the liquidation company has been in business is important. What matters is the experience the consultant has in conducting store closing sales. Larger companies are constantly hiring and you are much more likely to end up with a liquidation consultant with less experience. Most of the companies doing retail store closing sales have a great process to liquidate your store, but the experienced consultant can put additional money in your pocket, and reduce expenses.
Auctions are the best way to liquidate a store. It is if you don’t like money and just want to close your business. I can manage retail Liquidations in 60 days or fewer most times with a much larger rate of return.
Liquidation companies that work on percentages are more concerned watching everything go thru the register. This one is laughable. The only concern I have about the register is to make sure your employees handle the discount properly and do not undercharge the customer. The same company that posts that myth, their liquidation consultant gets an extra 30% to his pay for any extra weeks of the sale. Unfortunately, some sales take a little longer. I have on occasions extended a sale a few days without the owner having to pay an additional base fee, unlike other liquidation companies.
Flat fees are better than percentage fees. It depends on the sale. Flat fee sales could run additional weeks. Many retail store owners do not have what they think in inventory and pay less in percentage sales and if they have more, they are glad to pay a few pennies on the dollar.
Having a prize contest generates a lot more sales. I have worked for a company that used the prizes and one that does not. The additional revenue generated by the prize contest does not equal the cost of the prizes and the cost to hire a contest desk person or have the consultant spend a lot of time keeping up with the contest.
Everything will sell at half off- You will sell a lot of merchandise by the sale is thru the half off pricing. The key to a successful sale is to maximize revenues for the remaining inventory. Inventory the day after the sale ends is not worth much and sometimes cost you money to clean it up and move it.
Cost matters during the sale- It matters until the 1/2 off pricing starts. At that point, if it is not selling, the only thing that matters is what someone will pay to liquidate that inventory.