Any thoughts on opening a retail outlet?

[jbeaches]

I am seriously considering opening a 5,000 - 6,000 sq ft retail outlet in the midwest selling surplus/returned/salvaged goods. I have seen others open these stores and have done very good, mainly buying truckloads direct from Costco on a weekly basis. I have the money to invest but what worries me is if Costco one day decides to change the way they handle returns etc and starts selling the items themselves, I could be stuck in a real estate lease after losing my main supply. If I lost my ability to buy direct and had to buy through middlemen, that would really slash my margins being that I would already have all of the retail overhead to deal with. Some users said in previous posts that they see things changing and more of the large retailers are starting to sell the product themselves. Anybody have any input or advice on opening a retail store sellilng Costco or other retailer's product? All of the posts I've come across refer to people selling online, at flea markets, or wholesaling......I haven't seen any talk about selling out of a storefront. Any comments are appreciated. Thanks!

[SEANHAWG]

I think its a great idea that you are considering this. I say go for it. With the right plan you will succeed. As far as Costco, I dont see them making any sudden moves like that in the near future, but your worry is a worthy worry to have. Therefore you should never put your eggs in one basket and rely solely on Costco returns. As with any investment, you should always diversify and try dealing with other retailers products as well. I know that Costco loads are very clean, but their are other retailers that are pretty clean as well. Sourcing products is a never ending process and you should always be on the lookout for the most direct source that you can get, otherwise you'll be paying thousands of dollars more than you should be to brokers. You will go through alot of trial and error during this process but atleast for now you have your bread and butter Costco loads to help you through it, order them as long as you can and do little test runs with other retailers products and you never know, you may find loads that you like better than Costco.

[kinga2]

words of wisdom   "Don't put your eggs in one basket"  It would be suicide to spend the money you will need to spend to get going, to only have Costco as your main supplier, I have chills thinking about that.  REALLY think hard about it

[Trever99]

Case in point.. Macy's has dramatically changed the way they deal with their overstock and returns.. and absolutely anyone who relied on them solely is likely feeling the pinch right now.  I myself am in that situation.  I was lucky we stocked way ahead but in another month or so I'll be dead in the water if they don't open up the old stuff for purchase.

But I have some other options because I'm small.. only about a 700sq ft store.  We've found good alternate sources for childrens clothing and some decent adult clothing options.  It definitely forces you to be creative.

[indianflash]

"Exactly" everything they say is true you should never rely on one source. I myself rely heavy on Sams Club, and there has been times I have not bought for a month or even two.

Also I differ with not buying direct from source, sometimes its a good thing to work with liquidation companies. They will always get a hold of loads that you might not be able to get. It would be good to work with a few, its like they say "trial and error".

You are planning to do retail. so really its all about what you paid and then what you can sell it for.

Also location will be the most important thing for you if you want to succeed. I recently went to someone local who has a shop near a thrift store, and other discounts stores near. They have done decent and it could because the type of customers that come to that area.

Also why you probably only read about these other methods people are using is because they are working all over. With economy so sluggish its best to incorporte all these methods into your business. Specially in the type of business you are getting into.

If more and more brick and motar stores opened up and it brought effect to these retail giants who sell goods at regular retail prices they would prob use there own way of selling the same goods. If you have noticed many of them already are using ebay, some just dont like the more overhead to sell but times are changing. Online buying is becoming huge due to the fact you can find everything that you find in stores for cheaper online, and you can also find free shipping deals.

hopefully I did not go off from the answer you were looking for.

[jbeaches]

Thanks for the feedback. I do plan to constantly search for other sources but Costco is probably where the bulk of my product will come from. I recently read somewhere that there are some large liquidation wholesalers getting contracts for a whole region of Costco stores. Any idea what is happening to the smaller guy that may have had a contract with one store within that region?

What other retailers are generally known to have clean loads?

Trever I know you have a store, does anybody else have experience selling these products out of a storefront?

And lastly, I came across another posting on here of someone who thought that the part of the country you are in will really determine how good this type of business will do out of a retail store. Do you think this will do better in a more rural area or could it do good in a more metropolitan area or big city like Chicago? Do you think people in certain areas will have a stigma against buying returned products etc?

[premieronineretail]

Hi,
I started with just a wholesale company and I had so much stuff coming in that I had to find another "outlet" to move the stuff through.So i opened a surplus store.It works out well since I get so much in there is enough to provide wholesale customers great merchandise and the customers at the store the same.The community loves that they can save money on name brand products-used or not.It takes alot of advertisement rather you open in the city or in a rural area.That is the key advertisement!!(word of mouth from regular customers is good too) :)
I agree with the previous comment "dont put your eggs all in one basket"having different kinds of merchandise from a FEW select liquidators or a liquidator that carries several different stores is a plus.Be careful on some of the prices some liquidators want for their pallets-shop around!If they want OVER 30% OF the value it is not that great of a deal especially returns because there is no guarantee on what works! Bill of lading or manifest is always helpful too.
One more thing,there are also loads that are for the most part still new overstock.Being that we are going into a new year there will be alot more merchandise available. Hope this helps - Good Luck!

[SEANHAWG]

How do you like wholesaling premieronlineretail? To me, it seems like the inventory would move slowly but I never really took a dedicated shot at it. Do you wholesale your pallets locally or nationwide?

[premieronineretail]

Right now I have alot of local customers but open to nationwide.The wholesale buisness is alot of work.Some weeks are better than others.With the amount of merchandise that comes in there has to be more than one way to sell it or there will not be any room to move around the warehouse :) I keep my prices lower than other places so that helps move more too.So are you going to stick w/ just ebay or possibly opening a store too?

[SEANHAWG]

Right now just Ebay and a little Craigslist action. I dabbled with a warehouse sale a few months back and had pretty decent success even with my horrible retail location which is inside a warehouse community that is across the RR tracks. I had a truck of Sears stuff come in and I advertised the sell in a few newspapers and people showed up in droves, I sold 1/2 the truckload that day. I am trying to get some debt paid off from opening this business as well as saving a big sum so if I do plan on opening a store I'll have enough funds to do it right. I dont really want to go into a long term debt situation anymore so I have to go through the boring process of saving, LOL. I hit up our local flea market a few times with a little bit of Sears and Kmart stuff and it sold like hotcakes, so it makes me think the market is here, just got to market the business properly in order to bring people in.  But that will be a little while down the line. Since I have compiled some pretty good contacts over the years, I thought about brokering and wholesaling some loads but I dont like getting chewed out too much from people who have never dealt with customer returns before, do you ever have problems like that?

[premieronineretail]

Yeah I've had a couple people want the customer returns that never dealt with them before.We just are upfront and tell them that hey,not everything is going to work and basically you have to work it out piece by piece.Also if I have a customer looking at a pallet wanting it for just one item on the pallet I don't suggest to buy a pallet based on 1 or 2 things because you never know if it is going to be working!
The overstock pallets are nice for people who have not delt in customer returns and that don't want to.What made you stop selling truckloads?What state are you in?You can email me at flowprocessing@yahoo.com if you want.

[juststuffdiscounted]

Jbeaches

My family and have recently opened a retail store in Chattanooga, TN. We are selling Costco goods. We have been working on a limited budget and have not gotten any contracts with a Costco store yet. A similar store in Georgia that is friends of my mother is helping us with merchandise until we can afford to get contracts with the stores directly. The store in Georgia has contracts with about 14 different Costco stores. They receive 2-4 truckloads a week. They only deal with Costco and have been extremely successful. Costco does have very clean stuff. But in dealing only with them you are stuck with whatever they send you. For example , they may send you an entire truckload of one item. It is just not possible to move all that merchandise in a retail store. You would need to find another outlet to get rid of the product. I would also suggest as others have to continue to search for other outlets to buy product. We have found a few other things here and there but nothing consistent for us. With your finacial situation it should be easier. In working in industry I find that for us it more difficult to acquire merchandise from multiple sorces because of shipping. Though the price i would pay for the merchandise would be worth it, with shipping added on it is not feasible. I am not in the position to purchase truckloads so it hurts me. Our business has done extremely well. Far beyond our initial expectations with little to no advertising. Your location will be key to your success. The only thing holding us back is our financial immaturity. We need to find a financial source. I hope that some of this will help you.