by Matt Koonce
Surprisingly, the retail store industry has long roots in investment recovery. However, participation with the Investment Recovery Association is a relatively recent development in retailers’ efforts to manage surplus operational assets for optimum positive bottomline impact.
Beyond investment issues relative to consumer goods inventory
Meeting the investment recovery challenge in retail has included everything from forklifts to restaurant equipment, to point-of-sale fixtures, to buildings and facilities, to trailers and technology assets. As the retail industry has evolved and become increasingly more competitive, so have investment recovery priorities. Decreased margin on commercial goods, as well as the need to adjust market presence through store relocation, has put more pressure on the bottom line—and has caused retailers to become more cost conscious and innovative throughout their operations. Investment recovery has been a big part of that, with several retailers developing investment recovery programs managed through specialized departments since 2000; others have had programs for over 15 years.
In an age of takeovers and large mergers, inventory and assets are being liquidated daily across the United States. Consequently, the benefits of planned, well-directed, effective surplus asset management have a higher profile.
Primarily driven by large- volume sales of a diverse range of lower-dollar assets
Retailers tend to have more narrow application equipment and supplies than their industrial counterparts, such as energy, manufacturing and pharmaceuticals.
  • They have many specialty items with a lower secondary-market value. This can have several negative impacts on the overall recovery; especially since retailers constructing new stores in the marketplace generally opt for new, rather than recycled, facilities and equipment.
  • There are several marketplace challenges at work:
  1. The market can become quickly saturated, driving the recovery return value down.
  2. Logistics are a major factor in determining if value can be recovered after freight is considered.
  3. Not many buyers can handle the volume of assets generated by one project, forcing the retailer to conduct several individual sales for one project, which increases the cost of sales.

Retail investment recovery continues to grow and evolve

Retailers are always trying to outdo each other with new presentation and technology in their stores and distribution centers; changing and expanding  dry goods, grocery, restaurant and other service offerings. Considering the constantly changing face of retail, 2007 looks to be yet another strong year for retail asset recovery. As retailers focus more on the benefits of effective surplus asset recovery operations, the Investment Recovery Association provides a solid business assistance vehicle, with tools and opportunities to support and enhance these efforts. Being a strong resource for professional development, information exchange and marketplace services—the Association likely will see increasing membership interest from the retail sector.

Reprinted from ASSET 2.0, the Investment Recovery Business Journal, Vol. 2, 2007

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