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November 2015

Inventory Buildup Continues in Q3

According to the Commerce Department report released today, businesses accumulated another $90 billion worth of inventory in the third quarter.  This is an upward revision of the $56.8 billion reported last month.  Over the prior two quarters the total increase is over $100 billion.

This just heightens the importance of this holiday season to retailers and manufacturers.  If consumer spending doesn't materialize as planned, the amount of excess inventory that will be available in the secondary market could be truly epic.  Of course, if spending DOES materialize, the amount of customer returns we will see in January and February will also be off the charts.

Either way, secondary market players are poised for a great few months.  Hopefully, you have been heeding our advice to begin accumulating capital to be prepared to make some major buys this season.  After all, money is made in the secondary market when you buy, not when you sell.  If you can be buying at times of swollen supply you will get better deals and make more money (since the prices to end consumers will be little changed).


Inventory buildup at retailers heading into the holdays

In this article in the International Business Times by Avaneesh Pandey, she points out how inventory levels are rising heading into the critical holiday shopping period.  Just in Q3 in fact, she says that inventory levels at American businesses have grown by $56.8 billion.  She goes on to quote a Macquarie Research report suggesting specialty stores and apparel companies are currently experiencing “a build-up in inventories beyond the natural increase ahead of the holidays”.  The same report also named 10 companies where inventory is growing faster than sales, including Lululemon Athletica, Nike Inc., Under Armour Inc. and VF Corp.

This situation will have very positive implications for consumers this holiday, as the markdowns are likely to happen early and be deep.  Beyond that, if consumers don't show up with their wallets open this holiday season, we are going to see a tidal wave of product hitting the secondary market at year end and in early January.

Starting accumulating capital now so you are in position to take advantage of these upcoming buying opportunities.