Optimize Inventory Clearance: Discount Or Off-Price Retailers

Optimize Inventory Clearance: Discount Or Off-Price Retailers
May 7, 2024 | Reading Time: 5 minutes

Discount and off-price retailers are both kinds of stores that sell merchandise at a highly discounted price, but they have some big differences.

Usually, discount stores have the same things all the time and lots of them, so you can expect to find what you need whenever you go. On the other hand, off-price stores have a mix of different things each time you visit, so it’s more of a surprise what you might find.

Discount Or Off-Price Retailers – Which is Right for You?

When deciding which type of discount store is ideal for your surplus inventory, it is important to understand what they typically offer for sale. In this article, we will discuss both types of retailers.

Discount Retailers:

Discount retailers offer products at lower prices than traditional retailers by employing various cost-saving strategies, such as bulk purchasing and limited store design. The following are some key characteristics:

Everyday Low Prices

Discount retailers focus on providing consistently low prices on a wide range of products every day. They strive to maintain low prices as a part of their overall business strategy.

Large Scale and Volume

These retailers often operate on a large scale, with extensive store footprints and high sales volumes. This allows them to negotiate better deals with suppliers and take advantage of economies of scale.

Broad Assortment

Discount retailers typically offer a broad assortment of products, covering various categories such as clothing, electronics, household goods, and groceries.

Brand Variety

They often carry a mix of private-label and national-brand products. Private label products are those manufactured specifically for the retailer and usually offered at a lower price.

Off-Price Retailers:

Off-price retailers specialize in selling brand-name merchandise at significantly reduced prices by purchasing excess inventory from manufacturers or retailers. The following are some key features:

Irregular or Excess Inventory

Off-price retailers sell merchandise that is often irregular, discontinued, or excess inventory from traditional retailers. This allows them to offer significant discounts on well-known brands.

Frequent Inventory Turnover

Off-price retailers rely on a fast inventory turnover model. They acquire products opportunistically and may have a constantly changing selection of items, encouraging customers to make purchases when they find a good deal.

Limited Assortment

These retailers may have a more limited assortment compared to discount retailers, and the availability of specific products can vary based on what is currently in stock.

Treasure Hunt Shopping Experience

Shoppers at off-price retailers often describe the experience as a “treasure hunt” because they can find unexpected and unique products at discounted prices. Inventory at off-price retailers can vary greatly, and the selection is often more unpredictable. Shoppers may find different products each time they visit, depending on the availability of off-price merchandise.

Now that we have covered at a high level the types of inventory these types of retailers carry, let’s focus on this next question.

What Types Of Merchandise Do Off-Price Buyers Purchase?

Off-price corporate buyers typically focus on purchasing merchandise that falls into specific categories, often characterized by irregularities, excess inventory, closeouts, and discontinued items. The types of volumes and styles they purchase can vary, but here are some common characteristics:

Irregulars and Overruns

Off-price buyers often acquire products with minor imperfections or irregularities. These may include items with cosmetic defects, mismatched colors, or minor stitching issues. Overruns refer to excess units produced by manufacturers.

Closeouts and Discontinued Items

Buyers look for products that are being phased out by manufacturers or traditional retailers. This can include seasonal items, outdated styles, or products from lines that are being discontinued.

Excess Inventory

Excess Inventory

Off-price retailers thrive on purchasing surplus stock from manufacturers and other retailers. This excess inventory may result from overproduction, cancellations, or changes in demand forecasts.

Out-of-Season Merchandise

Off-price buyers often acquire out-of-season products that traditional retailers need to clear out to make room for new inventory. This allows off-price retailers to offer discounts on items that may not be currently in demand but can be sold at a lower price.

Name Brands and Designer Labels

Off-price buyers seek out well-known brands and designer labels. They may purchase excess inventory from high-end brands, providing customers with the opportunity to buy these products at a fraction of the original price.

Fast Fashion and Trendy Styles

While off-price retailers may not always carry the latest fashion trends, they do look for styles that have a broad appeal and can still attract customers. This can include trendy items that are still in demand or classic styles that have enduring popularity.

Assortment Variety

Off-price buyers often curate a diverse assortment to create a “treasure hunt” shopping experience. This means offering a mix of products across different categories, styles, and sizes, making the shopping experience more exciting and unpredictable for customers.

Limited Quantities

Off-price retailers often operate on a model of limited quantities. Since they are dealing with irregular and excess inventory, the availability of specific products may be limited, encouraging customers to make purchases when they find something they like.

Want to know the value of your inventory?

Frequently Asked Questions

What’s the major difference between discount stores and off-price retailers?

While both offer lower prices than regular retailers, their approaches differ. Discount stores like Walmart focus on standard merchandise in bulk at wholesale prices, passing on savings to customers. Off-price retailers like TJ Maxx buy irregulars, overstock, and closeouts from brands, offering unique finds at deep discounts.

Are discount stores the same as department stores?

No. Department stores like Macy’s offer a full line of apparel, home goods, and more, often at higher prices with full-service amenities. Discount stores typically focus on essential items at lower cost, with fewer frills.

Are off-price retailers good for selling excess inventory?

Yes! Partnering with off-price stores like TJ Maxx or Ross Dress for Less can help clear excess stock of apparel, home goods, and more, unlocking hidden value and minimizing losses.

How do dollar stores sell items so cheaply?

Dollar stores buy items in bulk from manufacturers who cater to discount retailers, securing lower prices. They cut costs by having small stores, minimal staff, and simple layouts, reducing overhead. These stores sell large quantities of goods at slim profit margins, banking on rapid turnover for revenue and profit.

Which discount or off-price retailers buy closeouts?

Discount or off-price retailers such as TJ Maxx, Ross, Marshalls, Burlington, Big Lots, and Ollie’s Bargain Outlet often buy closeout merchandise.

Conclusion

In summary, off-price retailers and discount retailers have different ways of buying and selling products. Off-price retailers keep things exciting by constantly changing their inventory with discounted items like overstock and irregular merchandise. This makes shopping there like a treasure hunt, where customers can find great deals on unique items.

Discount retailers, on the other hand, stick to a more predictable approach. They buy standard, current-season items in bulk from manufacturers and offer consistently low prices to a wide range of customers. Both models have their advantages, and businesses can work with partners like Overstock Trader to figure out the best way to sell their extra inventory and maximize profits.