Will Closeouts Be Popular Sellers in 2023 Or Is The Party Over?

shutting down operations

In the closing months of 2022, there seem to be more questions than answers about the direction of the U.S. economy. Closeout brokers and overstock inventory buyers are trying to figure out what direction the economy will go. Getting rid of inventory may be more difficult and moving closeouts and dead inventory a challenge. A mix of developments – from spiraling inflation to a dramatic shift in Federal Reserve (Fed) monetary policy to the fallout from Russia’s invasion of Ukraine, and persistent issues related to COVID-19 – fanned concerns that a recession may be on the horizon and the market will be flooded with closeouts and overstock or excess inventory.

While recessions are difficult to forecast, the economic environment in 2022 is markedly changed from 2021. Companies will likely be faced with getting rid of inventory taking up space in the warehouse. You may need to liquidate inventory due to canceled orders or having sent too much to Amazon but in any case, liquidating inventory will be much more commonplace in 2023. Business will be tougher and as a result, there will be overstock inventory and dead stock taking up space in the warehouse. Closeout brokers specializing in buying and selling dead stock will have new opportunities as will liquidation companies and buyers for closeouts.

As measured by Gross Domestic Product (GDP) growth, the economy in 2021 grew at an annualized rate of 5.7%, the fastest rate of growth in a calendar year since 1984. It may not have been necessary to sell bulk inventory to liquidation companies during this time, but as the economy slows there will be surplus inventory accumulating in warehouses that will be disposed of. Companies that liquidate inventory are often busier when the economy slows and there are closeouts for sale due to canceled orders, slow moving inventory, leftover seasonal goods, warehouse closures, etc. In the first quarter of 2022, GDP declined by an annualized rate of 1.6%, followed by a 0.6% annualized decline in the second quarter. The economy showed some resiliency in the third quarter, rising at an annualized rate of 2.6% but this wasn't enough improvement to stop sellers from liquidating excess inventory and getting rid of inventory. Throughout the year, consumer spending remained solid and corporate profit growth was generally strong. Warehouse management is the key to reducing excess inventory and keeping obsolete merchandise to a minimum. If you have too much inventory in your warehouse and need to make room for new products, you may consider reaching out to closeout brokers and overstock inventory buyers who can help with the liquidation process.

Given the persistence of higher living costs, the Fed made a dramatic pivot in its strategy. In March, it raised the primary interest rate it controls, the fed funds rate, for the first time since 2018. In November, the Fed set the target fed funds rate to 3.75% 4.00%, up from near zero percent before the March rate hike. Businesses that borrow money should closely examine their excess inventory and get rid of dead stock by converting closeouts into cash. If you have too large a 3PL warehouse consider liquidating excess inventory and downsizing your warehouse. Wholesale liquidation companies are experts when it comes to helping you reduce inventory and clear stock from your warehouse. If you are an Amazon seller with too much inventory you can sell your excess inventory in one fell swoop and liquidate business inventory for cash. The Fed also ended its bond buying program and began reducing its bond holdings. The Fed’s altered strategy is designed to push interest rates higher in the broader bond market as a way of tempering the pace of economic growth. The Fed has made clear its first target is to soften inflation. The Fed’s new policy direction is aimed at bringing the inflation rate back to its 2% target range, while the Fed’s 2% target goal may not be reachable before 2024.

If you are looking for closeout buyers you can try a simple Google search using terms like overstock inventory, closeout brokers, closeouts, closeout buyers, sell your inventory, overstock liquidation wholesale and excess inventory liquidators. Any of these should result in many different selling options for you. Investors have justification to be concerned about the risk of persistently high inflation, says Eric Freedman, chief investment officer, U.S. Bank. He’s closely monitoring whether “we’ll continue to see higher commodity costs as well as higher borrowing costs structurally trickle into the economy and stay there for some time.” He thinks investors need to remain cautious about the impact of that potential development. There is no way to know if we will be in a recession soon, or if there will be a recession at all. But discount big box stores like TJ Maxx, Dollar Tree, Ollies, Dollarama and Marshall's will do well in a slowing economy because they sell closeouts, obsolete merchandise, slow selling products and closeout liquidations.

The U.S. economy grew faster than expected in the last quarter, the government reported Thursday, underscoring that the United States is not in a recession despite distressingly high inflation and interest rate hikes by the Federal Reserve. The S&P 500, Dow, and Nasdaq are all in bear market territory, having fallen 20% or more from their peaks. Treasury yields are on a steady march higher as the Federal Reserve continues to raise rates by leaps, rather than little hops. Mortgage rates, meanwhile, have more than doubled this year and are at a 20-year high. Consumers have less cash in their pockets than a year ago, and they are shopping for closeouts and bargains where they can get more bang for their buck. Holiday sales may disappoint as more money is being spent on food, gas and housing. Online liquidation sales and closeout websites will continue to dominate successful retail selling, and shoppers will be attracted to sellers of surplus inventory, closeout toys, overstock housewares and deals on discontinued inventory where prices are offered at 50% discounts or even more. Yet for all the bad news, there’s plenty of uncertainty about whether the United States actually is in a recession—or even whether we will be. The National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” Closeout buyers and overstock inventory liquidators can still be successful in a recession. As many major brands are offered for closeout, there will always be customers to scoop us good deals on overstock inventory, closeout merchandise for sale and business liquidations. The GDP has already shown two quarters of negative economic growth, but unemployment is low. There’s a lot of nuances at play, so to get a better idea of what lies ahead for the economy and how long the tough times might last, it helps to get the opinions of the experts. And while, admittedly, there’s not a lot of optimism in the short term, not all of the leading minds in economics think a recession is a certainty just yet. If you have closeouts for sale, consider working with closeout brokers or excess inventory buyers and liquidation buyers with experience.

Merchandise USA is a liquidation wholesaler in business more than 38 years. We are surplus inventory buyers specializing in closeout housewares, closeout toys, and overstock lawn and garden products. We also buy closeouts of pet products, sporting goods, domestics and warehouse liquidations of all kinds. If you are downsizing your business or shutting down operations we are buyers for all your excess inventory.