(WXYZ) — Many large retailers are finding themselves drowning in inventory as products stuck at sea make their way onto shore and into shelves.
But, what's bad for stores could be good for you.
Big box stores are slashing prices in an effort to try and move products out the doors. It's impacting both local businesses and your budget.
“It’s what’s known as the bullwhip effect,” said Janell Townsend, the chair of the Management and Marketing Department at Oakland University.
She says companies over-ordered and misinterpreted consumers' desires post-pandemic.
“Everyone was at home more, so everyone was investing in things, in their homes,” Townsend said.
But their shopping habits have been shifting as people begin going back to work. Unsold home goods are piling up, so to get stock out the door, stores are selling wholesale to businesses like Asset Logistics and Liquidation in Warren.
“We get a little bit of everything. We get over-stock, we get damaged boxes, open boxes” said Arthur Ramsey, who is Asset Liquidation’s warehouse manager.
He says they have contracts with major retailers and sell products by the truckload, the pallet, and by the item.
"We stock the shelves just like the big stores do. We just sell at 50% to retail,” Ramsey said.
Fifty percent to retail means air fryers for $25, and dinnerware, toys,r and furniture for pennies on the dollar.
The deals are so good that many people will purchase pallets, just to re-sell them at a profit. In one instance, a pallet that had a total MSRP of $1,200 was sold for $400.
Ramsey says even if you sell everything at 50%, you still make a profit. In the last two years, he's seen his company turn into a multi-million-dollar business from selling a few dozen pallets.
Another tactic that stores are using to get rid of overstock is slashing prices.
In June, Target announced big markdowns on home goods and decor, but the tactic isn't fairing well for everyone.
“I’m not really making money like that,” Moe Saad, who owns Moe’s Liquidation, said.
Saad buys overstock from Walmart. Usually, his merchandise is 30% to 40% cheaper, but lately, he says they will buy a product and then Walmart will cut the price in half at their stores, eliminating his margins.
“That affects me because the customers think we are trying to raise the prices,” Saad said.
Saad says he is always willing to price adjust and hopes the dip in prices doesn’t last.
It's not expected to last forever, according to Townsend. She said companies will get their inventory ordering back in line again.
So what items are the most heavily discounted right now? According to Townsend, they include outdoor furniture, appliances, home décor and loungewear.
The best places to shop are liquidation stores and online distributors, but don't wait long because the deals will eventually end.
