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by Romy Ribitzky
Portfolio.com

Black Friday, the day after Thanksgiving, is known the nation over as the official start of the holiday shopping season. And this President’s Day also marks a retail landmark, albeit a less-known one: the start of the secondary sales.

The secondary-sales economy has always existed in some way, although it’s been a more-watched indicator since the recession. The middle of February marks a tricky time in retail: Inventory that hasn’t sold over the holidays and post-holiday sales is still taking up valuable shelf space while spring lines that are coming in may add a burst of color and newness to a retail floor, but when it’s snowing outside and the weather forecast calls for a week of frigid temperatures, the non-luxury set isn’t going to shell out full price for swimsuits, capris, tanks, and shorts.

This dichotomy presents retailers big, medium, and small with a twofold opportunity—sell excess inventory to secondary retails, and woo the top two percent of the population with a limited-run of sizes.

Most retailers learned in the fall of 2009 that having excess inventory is costly. That season marked the first of the 70-to-80-percent-reduction bins. Back then, stores didn’t have anywhere near the options they do now to get rid of the extras and still eke out a small profit. Today, we have flash-sale sites like designer reseller giant Gilt Group—reportedly gearing up for an IPO; HauteLook, which just sold to Nordstrom last week for a cool $180 million; and dozens of others. Retailers can go the more traditional route of selling to off-brand stores such as Marshall’s, Filene’s Basement, TJ Maxx, Loehmann’s, and others. And then there are those who essentially hedge that a big retailer’s excess inventory is a small seller’s steady income.

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