Going Out of Business: Even Fixtures Must Go

NEW YORK (TheStreet) -- What happens when a store goes out of business? Opportunity.

Borders Group (BGP) announced last month that it was closing roughly 30% of its stores in the U.S. and Puerto Rico amid diminished consumer spending, a tough economy and more consumers embracing e-readers.

Store closings can offer good value on everything from shelving to office supplies for nearby businesses.

Business owners may be able to get smart deals by buying secondhand fixtures, furniture, shelving, inventory and supplies, especially if an office supplier goes out of business.

When it comes to apparel racks, shelving, tables, even refrigeration, "those fixtures are likely being sold at the same time the inventory is being sold," says Ken Frieze, a principal and managing director of Gordon Brothers Group. "The idea is to sell the fixtures to small businesses at the same time as selling the inventory to consumers."

Gordon Brothers does significant amount of asset disposition in the retail industry for troubled and healthy companies. The firm also helps retailers with such services as opening stores and real estate mitigation. Its private equity business own such brands as Linens 'n Things, Bombay & Co. and The Sharper Image.

Gordon Brothers is one of four firms that won the bidding on the Borders' liquidation efforts. While Frieze could not talk specifically about Borders, he offered a few tricks of the trade for store closings:

• Pay attention to local consumer advertisements: Business owners should look for consumer ads alerting the public to going-out-of-business sales. Stores may also advertise fixture sales in trade magazines or directly in newspapers. "If you're a small business, pay attention to the consumer advertisements of the store closings ... it is almost certain there are fixtures and other types of equity ready to be sold to small businesses," Frieze says.
• Speak up: Go to the store and ask the manager if there are fixtures for sale. "Feel free to proactively indicate interest on anything in the store," Frieze says.
• Shop around: Business owners can go a store closing locally, but don't forget you might be able to find additional fixtures at other locations being shut down.

Supermarkets and restaurants often have customized floor plans designs, so a premium may be placed on the property and fixtures. Still, customized fixtures are good finds because of the existing narrow market to resell them, he adds. "It can be very attractive for people that know how to use it."

Apparel retailers' racks and shelving come out easily and could be bought at substantially reduced prices. "It's used [but] typically in very good shape. It's a great value for small businesses to go in and find what they are looking for," Frieze says.

For manufacturing plants, industrial sites that are closing and related equipment, auctions are more common because there is typically an active market of buyers, Frieze says.

• Movin' on up: For real estate, get in touch with the landlord or selling agent. Most properties are leased or fee-owned, Frieze says.

Properties with so-called undermarket leases may be able to sell the lease if they have "lease designation rights," which essentially allows the company to find a subtenant.

But landlords are likely to want to find a new tenant quickly -- preferably a similar type of business -- to enter the space. Chains with multiple locations closing could be very attractive for a business looking to expand, he says.

To contact the writer of this article, click here: Laurie Kulikowski.

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