DEL.ICIO.USMetro Atlanta liquidators hurt by retail plunge
The Atlanta Journal-Constitution
Sunday, November 30, 2008
These would seem like great days to be in the business of liquidating failed stores, restaurants and other retail firms.
After all, lots of eateries and shops are going out of business, making plenty of surplus merchandise and store fixtures and restaurant equipment available.
Vino Wong/vwong@ajc.com
Machinery fills the 20,000-square-foot warehouse of Phoenix Store Fixtures and Auctions in Conyers, which specializes in salvaging and selling used grocery store and restaurant equipment.
Vino Wong/vwong@ajc.com
Ricky Lunsford, a co-owner of Phoenix Store Fixtures and Auctions, plans to recycle parts of this refrigerator unit.
But there’s a big problem, people in the business of selling close-out inventory and used store fixtures will tell you.
To whom are you going to sell the stuff?
That’s the situation Charles “Ricky” Lunsford and Brooks Cunard find themselves in lately at Phoenix Store Fixtures & Auctions, a small company in Conyers that specializes in salvaging and selling used grocery store and restaurant equipment.
The men say they’re getting lots of calls from failing business owners, but few customers want the equipment to start new businesses.
“We’re probably getting two or three calls a week from people that are closing down. It’s very sad,” Lunsford said. “I could fill up a 100,000-square-foot warehouse, but people are so scared to start anything.”
The dismantling and sell-off of retail stores and their fixtures is another sign of how a once fired-up economy has flamed out. The economic activity over the past five years or so was built around consumer spending. The more shoppers went shopping, the more builders built.
Once the spending slowed, business closures were inevitable.
“Largely, this was an economy that was very dependent on the consumer,” said Christian Weller, associate professor of public policy at the University of Massachusetts in Boston. “Once the consumer stopped [spending], there was nothing else that could step in to take consumer’s place.”
According to the International Council of Shopping Centers, 15 retail chains filed for bankruptcy and retailers announced plans to close 4,632 shops in the first nine months of the year, topping the full-year total for 2007.
However, that number reflects only announced store closings, usually by large retail chains, a fraction of the actual number nationwide, the ICSC said in a recent report. Including closings of small independent stores, the trade group projects that 148,000 retail establishments will close this year — the highest tally since 2001.
Retail casualties include Linens ‘n Things, Value City, clothing retailer Harold’s and department store Mervyns, which all went into bankruptcy and liquidation this year. Circuit City, which filed for bankruptcy in November, said it will close 20 percent of its stores, including all its Atlanta-area stores.
Usually, surplus equipment firms such as Phoenix Store Fixtures and close-out merchants such as Big Lots step in to pick up the pieces and sell them at big discounts.
But a forecasted severe recession and the credit crunch are slowing the rate of business launches and expansions, making it harder to sell used store fixtures. Likewise, customers are pinching pennies even in close-out stores, said Wayne Rautio, who manages the Internet Marketing Association of Surplus Dealers, an online market for about 200 close-out dealers. Conventional retailers also are competing by deeply discounting merchandise earlier than they used to.
“Usually when things get tough, our business flourishes,” said Rautio, who owns American International Marketing, a company in Portland, Ore., that buys and resells surplus hardware and building supplies. But lately, surplus goods are flooding the market and sales are slowing, allowing buyers to drive hard bargains.
Rautio said he’s adjusting to the tougher conditions by accepting smaller profit margins to sell truckloads of merchandise as quickly as he can. But he has also shortened the time period that he offers credit to his customers, typically independent hardware stores or other small businesses.
Likewise, the owners of Phoenix Store Fixtures have been hunting for ways to re-tool their 4-year-old business, which has a 20,000-square-foot warehouse full of display cases, refrigerators, meat saws and other equipment.
The firm has been busy this year auctioning equipment from former Piggly Wiggly, Save-A-Lot, Albertsons, Kroger, Farmer Jacks and other grocery stores in Georgia, South Carolina, Louisiana and Michigan.
Still, Phoenix Store Fixtures’ revenues have fallen over the past year, partly because fewer mom-and-pop entrepreneurs — typical customers for used store equipment — are starting up small grocery stores catering to Hispanic and Indian immigrants. The business suffered another setback when sales of scrapped stainless steel counters and other metal fixtures — up to half the company’s revenues in recent years — plunged with the drop in demand from China.
“The scrap business has really kept us going for the past year, and now that’s crashed,” Cunard said.
To compensate, Cunard and Lunsford have been cutting expenses and spending much of their time trying to drum up new customers. The company halved its staff over the past year to 12 employees.
“It could be two or three years before we get out of this,” Cunard said. “The [companies] that are left will be the ones that are smartest with their money.”
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