In almost every market, the number of traditional antiques stores continues to dwindle while other marketing channels — estate sale companies, auction companies, consignment stores and online venues — continue to grow.
One reason is that traditional antiques stores are expensive to operate and entail considerably more financial risk than alternative marketing channels. Another reason is that traditional antiques stores are less responsive to the social needs of the marketplace than competing companies.
These two business cornerstones — financial risk and social necessity — should compel antiques dealers to regularly re-evaluate their business models to determine if their financial risks vs. rewards are in balance and if their businesses are responsive to the social needs of their market.
Profits are paramount; they pay the bills and drive growth. But, profits aren’t possible without sales, and dealers who move beyond being “just another retailer” and embrace the social needs of the marketplace will discover that their phones ring off the hook and they make more sales than ever.
You see, society is feeling the pain of a huge demographic shift. In 1995, the death rate in America was about eight per 1,000. By 2016, the death rate in America is predicted to be 26 per 1,000. Antiques, collectibles and second-hand consumer goods will be dumped on the market at an alarming rate. Estate executors and administrators will have their hands full disposing of all that estate property.
As Ruth Stafford Peale (wife of the Rev. Norman Vincent Peale) said, the key to success in any enterprise is to “find a need and fill it.” Dealers who can solve the estate property problem for executors fill a growing social need, and those dealers will prosper.
There is a tsunami of estate business on the way, but few antiques dealers are directly involved in estate liquidation. Most prefer to shop estate sales for inventory rather than become involved in the hassles of liquidating an entire estate. Dealers will soon find — if they haven’t already — that the abundance of estate property on the market has driven their prices so low that it is impossible to make a profit. When that gets to be the case, I say if you can’t beat ’em, join ’em.
Successful dealers aren’t stuck in the “I own an antique store” mindset; they employ multiple marketing channels to move their goods, and the most promising channel today is the estate sale business. The fastest growing resale business in America is the estate sale (a.k.a. “tag sale”) company, and for good reason: Such businesses have low financial risk and fill the growing social need for estate liquidation.
Ann Roberts, marketing director of the Atlanta-based Georgia Estate Sale Network, has witnessed the growth of estate sale companies in her area.
“Atlanta has seen lots of foreclosures and downsizing. More and more executors are turning to estate sale companies,” she said, “because they get the job done.” Antiques dealers and auction houses don’t want to deal with run-of-the-mill consumer goods; they want to cherry pick the best items from an estate and leave the rest behind. That leaves executors in a tough spot when they have to empty a house full of property.
Roberts believes that it’s the glut of certain types of estate property — Victorian furniture, crystal, china and silver-plate in particular — that has driven the growth of estate sale companies in Atlanta.
“Antique dealers aren’t buying them anymore, and sellers are afraid of the low prices they might receive at auction,” she says. “With an estate sale, the seller has more control over the pricing.”
Who buys the china and silver? According to Roberts, it’s “older people who are missing pieces from their set, or collectors who want to compete a set.”
Some consumers prefer the laid-back atmosphere of an estate sale to the fast pace of an auction. Although you’ll find dealers at estate sales as well as auctions, estate sales in general attract a different crowd than an auction. More consumers are comfortable with the wheeling-and-dealing of estate sales and garage sales (negotiating from a high price to a low price) than the auction format (competitive bidding from a low price to a higher price).
At the end of the day, estate sale companies are able to sell virtually all the estate property and hand the executor an envelope full of cash.
Auctioneers make the argument that auctions bring better prices for some types of merchandise. That’s true. A good crowd of collectors bidding against each other for popular collectibles will certainly drive up prices on some — but not all — items. On average, gross dollars from a typical estate sale will equal gross dollars from auctioning a similar estate.
Although estate sales don’t have the fast-moving action of an auction, they do have the element of time pressure that makes auctions successful. When an estate sale is over, it’s over. Unlike an antique store, where most inventory items tend to linger from week to week, estate sale buyers realize that if they don’t buy an item now, they won’t get a second chance.
It’s easy to see why estate sale companies are becoming a popular business model for antiques and collectibles dealers. Estate sale companies don’t require expensive retail leases; sales are held on the estate premises. Most estate sale companies have no lease expenses at all, since the business can be based at home. Companies that lease warehouse space for equipment and signage can do so inexpensively and month-to-month at a self-storage facility. Estate sale companies don’t invest in inventory, either; they sell what’s on the premises. There is no inventory risk associated with estate sales; since there is no cost of goods, every item sold generates a gross profit for the estate sale company. Plus, selling an executor on the idea of an estate sale is relatively easy. The combination of pricing control, complete liquidation and cash at the end of the sale is appealing.
Of course, the estate sale business is not all a bed of roses; it has challenges just like every other type of business. But low financial risk and fulfillment of a compelling social need sounds like a good business model to me.
Previously published in Antique Trader Magazine