Auction house booming after going online-only
One effect of the novel coronavirus is the increase in retail goods being sold at auction.
Another is the increase in new auction participants since Able Auctions went to 100 per cent online auctions March 28 after COVID-19.
“It’s about three times our normal amount,” said Jeremy Dodd, owner and CEO of Able Auctions. “A lot of those people would have attended in person in the past, but still probably 25 per cent of that increase is firsttime bidders at every auction.”
The auction company, which has been around since the early 1980s, began holding online auctions 15 years ago and as lately as two months ago sold 65 per cent of its merchandise online.
“This hasn’t been a difficult transition for us,” Dodd said. “But these are difficult times for everybody and it’s difficult for us as well. There are more products to sell, but there’s less money out there.” He’s not complaining, but he said staff are working twice as hard to bring in the same income as in the past.
And he’s seen a big increase in retail goods, anything from toys to clothing to consumer electronics to beauty products, joining more traditional items such as equipment for restaurants, metal or wood shops, and warehouses (forklifts, for instance).
Whereas a retail store that’s gone out of business might get 30 or 40 cents on the dollar in liquidation, that drops to 10 to 30 cents in unreserved auctions, Dodd noted.
“If a $300 dress has a top bid of $5, that’s what it sells for.”
David Ian Gray of Vancouver-based national retail advisers DIG360 said there was a wave of retail bankruptcies in the first two months of the year and that there will be many, many more because of COVID-19.
There’s been a misleading notion of a “retail apocalypse,” that online sellers such as Amazon had suddenly forced all stores to close and legacy retailers out of business, he said, but it may actually be upon us now.
“The truth was most shopping was still in-store,” Gray said. “The top Canadian malls were doing record business.
“Overnight, within weeks at least, there are different plausible scenarios, mostly dictated by the duration of consumer isolation. Regardless of best-case or worst-case, the retail landscape will be much different post-COVID.”
Other than groceries and other essential goods, consumers aren’t buying. Landlords are calling for their rents, non-essential stores are closing and laying off staff, mom-and-pop stores are particularly vulnerable.
“Even for chains, this can be disastrous if it goes on much longer,” Gray said.
There will be winners, he said, those that find opportunities with weakened competition. But most retailers aren’t set up to profitably deliver online orders en masse.
“Many will be out of business,” he said.
Dodd, too, thinks we’re in for a long haul of retail bankruptcies.
“I think it will be the trend going forward,” he said. “And I think it will be for some time.”