The Emergence of 'Value Retail' in the post-COVID Era
Post-COVID era, ‘value retail’, provides value to customers by offering competitive pricing and opportunities to save money. Value retail encompasses various types of retail establishments including clearance businesses, discount stores, outlet malls, online discount retails, thrift shops, consignment stores, and online marketplace for used goods. We will explore how businesses and consumers perceive inventory products in the post-COVID era.
Value Retail and Resale: The Emerging New Distribution Trend post-COVID-19
Inventory has always been an area of major concern for many businesses. Despite consistent endeavors to streamline the “inventory process”, making accurate predictions is often difficult due to the ever-changing consumer demand influenced by various external factors. Poorly marketed products can end up with low sales and occupy warehouse space, and businesses have begun to face new challenges with the recent surge in online shopping. Some of the online marketplaces, such as Amazon, Walmart, Target, etc., offer an “easy to return” policy as part of their marketing strategy. As a result, the returned items due to varying customer wants and needs can potentially lead to overstock in stale inventory, even if the items are in good condition.
Thus, the businesses inevitably are left with a certain level of inventory. When inventory is present, companies incur costs for storing and managing the inventory. The cost of inventory maintenance includes expenses such as leasing or repairing facilities and handling spoiled or damaged inventory. Because inventory represents unavoidable losses for companies to an extent, many businesses have been striving for zero inventory or inventory optimization to achieve efficient business operations.
Since value retail started gaining traction in the face of uncertainty during the COVID-19 pandemic, it’s also important to note the transformation of perception in refurbished or resale products and how it generates new profits. For example, companies facing reduced sales during the economic downturn have found a breakthrough in effectively reducing their inventory assets. Consumers, too, have set their sights on cost-effective and/or heavily discounted products rather than purchasing new items.
Purchasing High-Quality Inventory Products at a Discounted Price
Refurbished products, which involve refurbishing inventory items for resale, are one example of value retail as mentioned above. A lot of online marketplaces have an in-shop store, such as Amazon Warehouse or Best Buy Outlet, with a curated section that showcases various inventory products specifically for refurbished items. In these curated sections, you can find refurbished items, display items, slightly imperfect products with scratches, and products with approaching expiration dates.
Some companies solely purchase and sell corporate inventory. Back Market is a prominent example of sourcing high-quality inventory in excellent condition from global retail companies for resale. It is known for offering all types of electronic devices that are returned in very good condition or refurbished. Secondhand fashion marketplaces such as The RealReal or Farfetch Pre-owned offer luxury goods at huge discounts of up to 80%. Additionally, they provide after-sales service (AS) management, changing the negative perception associated with refurbished or resale products, even after purchase.
It would not be an understatement to say that change in consumer perception has played a significant role in the success of the value retail and resale businesses. As the cost of living continues to rise, purchasing refurbished or resale products have started to be seen as an opportunity to obtain quality products at a discounted price. Previously, the perception was that refurbished or resale products consisted of low-quality or unpopular items, but many consumers now consider them as cost-effective options.
Consumers indulge in the joy of acquiring quality products at affordable prices, known as the thrill of a "great find" and get excited. These products are usually sold only until the remaining stock is depleted, often quickly selling out. With limited supply similar to limited edition items, they possess the allure of being products that only those who act swiftly can obtain.
With the rise of the value retail and resale businesses, there has been an emergence of companies that answer prices on existing products. Consumers have enthusiastically embraced products from these companies, which offer discounts of around 30-50% compared to the original prices. The companies made a business decision to sell regular products at a lower price rather than paying for inventory-related costs: which is a new phenomenon.
Recognized as Eco-Friendly Brands
The value retail and resale businesses are starting to receive significant attention for their environmental-friendly aspects as well. In the past, many companies would dispose of unsold products through incineration or landfill, which was a conventional business practice. The companies made cost-effective business decisions to scrap inventory because the disposal cost was actually less than the storage cost. Moreover, there were concerns about the negative brand image associated with having excess inventory.
However, with the rise of environmental issues, many consumers have criticized companies that handle inventory in such ways. A well-known brand faced severe criticism when the public news breakout that the company disposed of inventory worth billions of dollars as waste.
In this context, the value retail and resale business is considered an effective alternative to inventory disposal. Simply reducing inventory assets is already beneficial, but it also allows companies to gain a positive brand image for their environmental considerations. Likewise, the rise of value retail and resale business has become a catalyst for many companies to embrace the current consumer trend that favors environmentally friendly brands by selling or donating their inventory.
The perception of left-over inventory being business loss or expense has changed. Yet, the fact that minimizing inventory is crucial remains unchanged. If you're eager to explore unique strategies for utilizing inventory, try using the inventory management solution, BoxHero! With BoxHero, you can optimize and manage your inventories, uncovering their hidden values.