Feb 21, 2011

Presidents Day Marks Unofficial Start Of Second Retail EconomyBy Romy RibitzkyPortfolio.com

Black Friday, the day after Thanksgiving, is known the nation over as the official start of the holiday shopping season. And this President’s Day also marks a retail landmark, albeit a less-known one: the start of the secondary sales.

The secondary-sales economy has always existed in some way, although it’s been a more-watched indicator since the recession. The middle of February marks a tricky time in retail: Inventory that hasn’t sold over the holidays and post-holiday sales is still taking up valuable shelf space while spring lines that are coming in may add a burst of color and newness to a retail floor, but when it’s snowing outside and the weather forecast calls for a week of frigid temperatures, the non-luxury set isn’t going to shell out full price for swimsuits, capris, tanks, and shorts.

This dichotomy presents retailers big, medium, and small with a twofold opportunity—sell excess inventory to secondary retails, and woo the top two percent of the population with a limited-run of sizes.

Most retailers learned in the fall of 2009 that having excess inventory is costly. That season marked the first of the 70-to-80-percent-reduction bins. Back then, stores didn’t have anywhere near the options they do now to get rid of the extras and still eke out a small profit. Today, we have flash-sale sites like designer reseller giant Gilt Group—reportedly gearing up for an IPO; HauteLook, which just sold to Nordstrom last week for a cool $180 million; and dozens of others. Retailers can go the more traditional route of selling to off-brand stores such as Marshall’s, Filene’s Basement, TJ Maxx, Loehmann’s, and others. And then there are those who essentially hedge that a big retailer’s excess inventory is a small seller’s steady income.

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