Worst Inflation In 40 Years. Can Closeout Buyers Weather The Storm?
US prices for just about everything – from cars and gasoline to food and clothing -- are rising at the fastest pace in decades. Overall, consumer prices rose in 2021 at the fastest pace in 39 years, meaning this is the worst inflation experienced by anyone not on the cusp of retirement or older. Overstock buyers and other inventory liquidation companies specializing in closeouts are being affected dramatically. Any business currently wanting to sell unwanted inventory and liquidate assets is in a challenging position.
As those older Americans can tell you, as unwelcome as it is for consumers, today's price increases are nowhere near as bad as they were in the 1970s and early 1980s. It was the recession of the 80's that lead to an increase in inventory liquidation companies and overstock buyers trying to fulfill a need for low priced closeouts and deeply discounted merchandise. Consumers at the time had little extra money and demanded that they get more for their dollar. Thus, the dollar stores began sprouting up like weeds as a great way for manufacturers and importers to get rid of closeouts and sell unwanted inventory cheap. For policymakers trying to deal with today's price hikes, what fed the double-digit prices increases in those days are not a factor today -- nor are they likely to be ever again. Today's inflation is due to various factors including war, supply chain issues and Covid to mention just a few. If you are liquidating a 3PL warehouse and selling surplus stock or closing your Amazon FBA store, high inflation may not help you.
While consumers are seeing prices rise faster than they have in nearly 40 years, the inflation rate is not near the peaks in the 1970s and 1980s. Presidents Gerald Ford and Jimmy Carter, both tried and failed to bring prices under control. Closeouts and liquidation became commonplace as businesses needed to shed inventory quickly to raise cash. Ford's efforts included a "Whip Inflation Now" or WIN campaign, complete with shiny red buttons, that did little to help with prices. Inflation hit 12.2% in late 1974, soon after he took office, nearly twice the annual pace of increase through November of last year. There are many companies that buy closeouts and can help you get rid of excess inventory taking up room in your warehouse. There is probably more liquidation stock for sale now than during the pandemic, because inflation is soaring and sales are slowing. If you want to have an inventory liquidation and sell excess inventory ,you can find buyers in different parts of the country by doing a simple Google search with terms like overstock buyers, sell unwanted inventory, closeout websites, closeout wholesalers, liquidate Amazon FBA, etc.
The inflation rate hit a record high of 14.6% in March and April of 1980. It helped to lead to Carter's defeat in that fall's election. It also led to some significant changes in the US economy and a huge increase in demand for closeouts, liquidation stock for sale, closeout wholesalers and overstock inventory buyers. In the 1970s and 1980s, higher costs could be passed onto consumers in the form of higher prices more readily than now because competition from overseas imports wasn't as great then as it is today. In addition, we didn't have as many outlets as we do today for liquidation merchandise and companies that may have been shutting down 3PL warehouses or going out of business.
Competition from overseas certainly existed then, but in many sectors of the economy, businesses only had to worry about domestic competitors. That's not the case any longer with our huge amount of stock lots and imports coming into the country. There also weren't as many businesses selling old and unwanted inventory as we have today. Businesses often reach out to liquidation buyers if they are making room in the warehouse for new merchandise, downsizing warehouses or trying to sell excess inventory.
A surge in global trade has kept inflation in check in recent decades. Part of today's inflation is being attributed to problems with the global supply chain, which has led to a worldwide increase shipping costs. So that has limited the supply of low-cost competition, which in turn has allowed even leading domestic companies to raise their prices as well. The latest inflation data suggested to some economists that the Fed could raise its key rate again in June by one-half a percentage point, rather than its typical quarter-point hike. This makes borrowing money harder and creates a need to liquidate inactive merchandise taking up room in the warehouse and not generating cash. It is better to get rid of dead stock so it doesn't accumulate dust in the warehouse and lose all of its value. If you have excess inventory to dispose of you can contact inventory liquidators and closeout brokers to help you sell it. You can also list the inventory on closeout websites as a way to sell your overstock.
That also points to a noisy few months for inflation data. Prices could cool in some sectors and heat up in others, reflecting lags in how inflation manifests. All of that makes it more difficult to tell whether and when inflation has truly hit its peak. “If people expect inflation in the future, they will behave differently in the current, and that is how inflation in many cases can go from being temporary to more permanent,” says Brent Schutte, chief investment strategist at Northwestern Mutual. “When it becomes more permanent is when people think it will be more permanent.” Selling closeouts during an inflationary period can be difficult and challenging as consumer demand for low-priced goods may deteriorate. Liquidation auctions and closeout wholesalers may have some tough months ahead. It may take until Christmas before there is demand again for closeout toys, overstock housewares and excess inventory of seasonal goods and home accents. Excess inventory may have to pile up for awhile before it begins selling again.
Markets, lawmakers and President Joe Biden are calling on the Federal Reserve to intervene. Officials are likely going to make it more expensive to borrow money at their next rate-setting meeting in June, and they’re also expected to signal that it’s the next in a long line of “steady” hikes this year”. Free money made it easy for the consumer to spend on closeouts and surplus inventory but the party is coming to an end. Major retail chains including Target and Walmart had a very disappointing quarter and these are big box stores selling closeout home goods and closeouts of housewares and toys and sporting goods. Those cumulative rate increases could take interest rates back to 2019 levels, while officials’ plans to stop growing the money supply by mid-March should also tap harder on the economy’s brakes. The economy no longer needs or wants the very highly accommodative policies that we’ve had in place to deal with the pandemic and the aftermath,” Fed Chair Jerome Powell told lawmakers during a January hearing. “It is really time for us to begin to move away from those emergency pandemic settings to a more normal level
Another significant change in the US economy is that the government is much less involved in setting prices than it was in the 80's. Deregulation of industries such as telecommunications, airlines and trucking all started partly as a response to the high prices of the 1970s and 1980s. Government-controlled prices generally limited competition and kept prices and services offered to consumers artificially high. Although the actual changes in the law didn't take effect until after the inflation dragon had been slayed, the deregulation has worked to keep prices for many of those goods and services lower than they likely would have been otherwise.
Companies are now forced to reduce overhead, downsize warehouses if possible, shut down 3PL warehouses they are not properly utilizing, and liquidate excess inventory for cash. It is important during these times to get rid of old inventory and make room in the warehouse for new merchandise. Getting rid of dead stock that isn't selling is better than doing nothing and throwing away the inventory.
Inflation finally did come under control after the 80's thanks largely to the Federal Reserve under chairman Paul Volcker jacking up the federal funds rate to a record 18.9%, sparking recessions in both 1980 and another in 1981-82. By the time the second recession ended, the inflation rate was down to 4.5% and it wouldn't hit 5% again until 1990. Another significant change in the US economy is that the government is much less involved in setting prices than it was then. Gasoline prices were the chief inflation culprit, jumping 18.3% and accounting for more than half the overall rise in costs. Today, gasoline prices are over $5.00 per gallon and the consumer has little money leftover for buying deals, closeouts, surplus wholesale inventory, and liquidation stock. Average unleaded gas set a record according to AAA. Pump prices are up 48% from a year earlier. Russia’s invasion of Ukraine stoked last fall’s inflation surge by reducing Russian oil supplies and intensifying supply chain bottlenecks, especially for energy, wheat and other commodities shipped from the region. Meanwhile, worker shortages in the U.S. are prompting companies to boost pay sharply to attract job candidates, leading them to lift prices to maintain profit margins. Excluding volatile food and energy items, so-called core prices rose 6.5% annually in March, the largest advance since August 1982.Grocery prices increased 1.5% from the prior month and are up 10% over the past year.
Wholesale liquidators buy slow moving inventory and closeouts from businesses that want to liquidate old or dead stock. Many companies of this nature have been in business for decades with strong track records of being able to liquidate large amounts of inventory quickly.
Merchandise USA buys closeouts and can help you dispose of inventory from your 3PL warehouse or shut down your Amazon FBA account. We buy closeout home goods, housewares, sporting goods, toys, lawn and garden and other closeouts. We are one of the largest closeout wholesalers in the U.S.
