What will happen to remote work in a recession?

shutting down 3PL warehouse

In a period of economic growth, the comfortable bottom lines for most companies give traditionalist executives significant leeway to default to their intuitive personal and selfish preferences and intuitions for in-office work. As one such executive wrote in a recent op-ed, “There’s a deeply personal reason why I want to go back to the office. It’s selfish, but I don’t care. I feel like I lost a piece of my identity in the pandemic…I’m worried that I won’t truly find myself again if I have to work from home for the rest of my life. Closeout brokers that specialize in liquidating inventory have probably learned by now they can buy overstock merchandise from anywhere. It really doesn't matter if they are at home or in the warehouse. However, shipments of closeouts and obsolete stock rarely arrive at the warehouse the way they are supposed to. There can be anything wrong from shipping the wrong item, wrong quantity, closeouts that were meant for another liquidation buyers, etc. This makes the case for overstock merchandise buyers spending more time at the warehouse. There’s no question that a focus on profits over personal preferences will benefit remote work. Once a recession hits, executives will need to show more discipline. Rather than trusting their gut they’ll need to rely on the hard data of what makes the most financial sense to the bottom line of buying and selling closeouts and salvaging inventory.

Extensive evidence shows that remote work is more productive. A Stanford University study found that remote workers were 5% more productive than in-office workers in the summer of 2020. By the spring of 2022, remote workers became 9% more productive since closeout companies learned how to do remote work better and invested in more remote-friendly technology. You can make online sales presentations showing off your newest closeouts and you can even send blast emails liquidating inventory. A new study from the National Bureau of Economic Research found that productivity growth in businesses widely relying on remote work grew much faster than that of industries in which in-person contact is needed. Indeed, Applied Materials, a technology and manufacturing Fortune 200 firm gained a substantial boost in team productivity in the form of collaboration and innovation from remote-first techniques. Selling overstock merchandise used to require travel and in person meetings. But today customers and closeout brokers alike understand how to buy and sell excess inventory online or using WhatsApp or Zoom. In a sense, liquidating inventory is easier than it used to be thanks to technology.

Remote workers are willing to work for less money. Another NBER study found that remote work decreased wage growth by 2% over the first two years of the pandemic because employees perceived remote work as an important benefit. Working from home can be better than going to the office because it saves employees commute time, dealing with other employees, small talk around the office, etc. In my opinion we are able to sell closeouts faster and have a broader reach by setting up FaceTime or Zoom appointments with our customers. Buyers are interested in deals, and as long as our warehouse is always receiving discontinued inventory and closeouts, the customers will work with us. As long as we have merchandise we want to get rid of at discount prices below regular cost, we can sell overstock goods.

Remote work improves retention, nearly two thirds of respondents to an ADP Research Institute survey reported they would consider looking for a new job if forced to come in full-time. And flexibility ranked only behind compensation for job satisfaction in a Future Forum Survey, because over 85% of its employees preferred full-time remote work, the Jaeb Center for Health Research decided to adopt a home-centric model to improve retention. Closeout brokers can easily work from home if they are disciplined enough to make phone calls looking for obsolete inventory and overstock situations. Working from home can be more relaxing and enjoyable, which may lead to finding large closeout inventory buyers.

Further financial benefits stem from the decreased need for office space and associated expenses such as utilities, cleaning, and security. But this will not eliminate the need for warehouses to store imported and overstock inventory. An NBER report found that regions with more remote work experienced the biggest decline in demand for commercial real estate and consequent rents. Indeed, both Amazon and Meta recently announced halts on office space construction projects because so many of their employees worked remotely. Of course, the most forward-looking organizations will still invest in office space for their employees: namely, their home offices. For instance, the University of Southern California’s Information Sciences Institute provided a wide range of home office technology and furniture to its staff to improve productivity. It’s a wise investment even in a recession.

If you have closed the business and need to empty out your warehouse consider an inventory liquidator. These are closeout companies and closeout brokers that specialize in liquidating your inventory if you are out of business and no longer selling the merchandise. Overstock buyers can also help if you have a shipment at a warehouse that is a canceled order. If you are keen to liquidate excess inventory you can sell everything in one fell swoop to a closeout company.

The cost savings and productivity improvements associated with remote work, combined with less leeway for personal preferences due to the discipline imposed by the recession, will result in more and more traditionalist executives supporting their employees working remotely most or all of the time. The best leaders are courageous enough to change their minds when the facts change. Timider, second-rate leaders fall into confirmation bias, the tendency to look for information that confirms their personal beliefs. They also suffer from the ostrich effect denying negative facts about reality. As a consequence, their companies will under perform in comparison to more flexible liquidation companies, and such leaders will eventually be forced out for denying reality and be replaced by more savvy leaders who endorse remote work. If you want to understand the closeout process a Google search for these terms will be helpful: sell surplus inventory, liquidation process, closeout brokers, closeout websites, shutting down warehouse, liquidating entire inventory, and sell discontinued Amazon stock.

But there is another possibility. Sometimes, a trend that seems inevitable turns out to be a fragile creature of circumstance. For example, throughout the 2010s, a fleet of consumer-tech companies took venture-capital money to provide subsidized services—including Uber and Lyft for ride-shares and DoorDash and Postmates for food delivery. As I wrote this month, these companies were beneficiaries of a low-interest-rate environment, in which investors were eager for firms with world-conquering ambitions to burn cash and grow. Then the party ended: Interest rates rose along with nominal wages, investors demanded profits, and now an Uber from here to the end of the block costs about $100. When a company is shutting down operations it may need to liquidate inventory from it's own warehouse or a 3PL warehouse. Too much dead stock on hand is bad news for the bottom line and profitability. If you are shutting down your warehouse the best thing to do is get rid of all the inventory at one time. The pandemic has been hard on many businesses and since business is slow they have decided to close the warehouse.

Recently, I’ve been wondering whether the work-from-home revolution might suffer a similar fate. Clearly, the pandemic and the brisk economic recovery helped remote work in several ways. The corona virus closed offices, and the ensuing tight labor market gave workers power to quit jobs, fight for more money, and reject the purgatorial tradition of a daily commute. But just as the Uber-for-Everything revolution relied on a specific set of economic conditions that shifted very quickly, remote work might be sensitive to brisk economic changes. To understand where I’m going with this, we unfortunately have to talk about the U.S. economy, which is not much fun. Inflation is stubbornly clinging to a 40-year high, and nominal gas prices have set a record. Some companies are liquidating inventory because they sent too much stock to Amazon and there were long term storage fees. Others have new seasonal product arriving and need to make space by getting rid of obsolete stock. There is liquidation inventory on the market for many reasons. The Federal Reserve is trying to cool down demand by jacking up interest rates, even as energy prices are rising largely because of global factors, like the war in Ukraine constricting the supply of oil. Although a downturn isn’t inevitable, the Fed does risk destroying so much demand that the U.S. tips into a recession in the next year or two. And even if growth doesn’t turn negative, rising interest rates will almost certainly produce less investment, less growth, layoffs, and rising unemployment. This is bad news for the retail sector as consumer demand fades away, and wholesalers and importers get stuck with inventory. It will force some into going out of business by end of the year. Many others will have the need to move out excess inventory and move on to new products.

Companies have reluctantly gone along with remote work policies. Some, like Apple, have tried to bring workers back on multiple occasions just to reverse the decision. Other companies like Deloitte have tried to use the situation to attract talent by embrace flexible work arrangements. If you have closed your business and need to empty out the warehouse, consider listing excess inventory on closeout websites or contact closeout wholesalers who can buy everything in one fell swoop.

The battle for remote work is now at a standstill. The pandemic isn’t over but changing conditions are weighing in favor of companies. The cooling of the housing market in Boise is one of the many factors that are giving companies more leverage to recall their employees back into the office. Other factors like layoffs at big tech companies give employers ammunition in their battle against remote work. As a result, employees who felt emboldened by labor shortages may rethink their positions in the hope of keeping their job. There are a limited number of closeout companies buying up obsolete inventory taking up warehouse space. If you sell closeouts for a living you need a large closeout company behind you, one that can handle any size liquidation and has been in the inventory liquidation business for decades.

We’re already getting little glimpses of how a bleak economic situation might burst the WFH bubble. Several weeks ago, Elon Musk told his employees to return to the office or else lose their jobs. This initially looked like a straightforward threat by an eccentric CEO with a passion for office-based proximity. But days later, Tesla announced that it would likely have to lay off 10 percent of its workforce, suggesting that Musk was using the threat of return-to-office to get some of his workers to quit on their own, without the indignity of announcing a large layoff.

Merchandise USA is a closeout specialist in business more than 38 years. We are buyers for excess inventory, overstock merchandise and obsolete inventory. If you are downsizing or shutting down operations we can help you for any of the following reasons: Going out of business by end of the year, excess stock in FBA warehouse, closing down Amazon seller account, shipment in warehouse that is a canceled order, not enough time to deal with the day to day operation.