RESALE

Harder to Find Than a Charmin 24-Pack

Shoppers blinked and the latest video game consoles from Sony and Microsoft disappeared from virtual shelves last week. 

• Walmart and Best Buy sold through their online inventory of both the Playstation 5 and Xbox Series X/S consoles within minutes.
• Subsequent PS5 restocks on Walmart.com crashed its website.

Some context: New consoles are only released every few years and draw huge crowds. But Covid-19 made them even harder to find: Supply chains are constrained while demand soars from Twitch stars in training. Meanwhile, retailers feared in-store promotions would discourage social distancing—so they mostly limited the frenzy to their websites.

But retailers’ miss = resellers’ gain. “Sold out” notifications, many caused by resale bots, brought a flood of devices to eBay’s marketplace. After new consoles became available on November 10 (Xbox) and November 12 (PS5)...

• eBay tallied ~97,300 PS5 listings and ~38,500 Xbox series X/S listings on its platform during the period ended November 18, the company told Retail Brew.
• The platform sold ~55,000 PS5 devices and ~27,500 XBox X/S devices during the same time frame. 

Leveling up 

Managing an influx of coveted listings is nothing new for the team at eBay, said Ashish Chhabra, VP, Head of Consumer to Consumer Selling. Shoppers are accustomed to shopping on eBay for hard-to-find items, he said, and unlike traditional retailers, the site generally doesn’t crash.

What does happen? Authentication and price management can be concerns for customers; one eBay seller listed the $499 PS5 console for $32,000, CBS reported. 

Those listings are exceptions, even for big ticket items. “I think this is one of the places where we believe that the free market takes control,” Chhabra told me. “We step in when we find things suspiciously off.”

• As for authentication, “we took a pretty proactive role in managing the platform to make sure the listings that went up were healthy listings.” 

Halo Infinite effects: Shoppers who can’t get their hands on the latest and greatest launch may settle for a dated device. “Even since these releases happened, you’ve seen a new surge of people selling their older consoles,” Chhabra said. 

• Game sales on eBay have also grown 130% YoY; controller and attachment sales increased 116%. 

Zoom out: Whether on resale sites or standard retailers, this segment’s bound to top gift lists. U.S. shoppers will spend $13.4 billion on gaming consoles and their various accoutrements this November and December, per NPD Group data. 

BANKRUPTCY

Teardrops on My Guitar Center

You know the words to this one. Guitar Center filed for chapter 11 bankruptcy on Saturday evening, days after sharing it had secured restructuring financing. 

Familiar melody: Pre-pandemic, Guitar Center racked up $1.3 billion in debt following a private equity buyout. It also lost ground to online leaders like Amazon—despite being the largest musical instruments retailer in the U.S.

• Covid-19 sealed its fate: Local officials didn’t consider fresh guitar picks essential goods, meaning spring store closures reversed Guitar Center’s recent sales upswing. 

New harmony: Unlike with other 2020 bankruptcies, shoppers won’t see the cost-cutting measures in action. Guitar Center will use its fresh financing to whittle down its debt. 

• It’ll still meet outstanding financial obligations, including payments to its roughly 10,000 employees. No layoffs have been announced.
• The company is “pleased” with its store footprint, but it’s hired A&G Realty Partners for a second opinion. 

Looking ahead...Guitar Center expects to exit bankruptcy by the end of the year. It could be one of the lucky ones: Retail experts anticipate an uptick in Chapter 11 filings after the holiday season.

STORES

War of the Words

There are two types of retailers in 2020: essential (grocers, pharmacies, and home improvement purveyors) and nonessential (everyone else). Retailers in the second group are demanding a recount as Covid-19 cases rise, CNN reports. 

Retailers’ argument: It doesn’t matter whether a store stocks canned beans or cardigans. If it’s following science-approved safety protocols—required masks, social distancing, and store cleaning—it should stay open this time around. 

• Macy’s CEO Jeff Gennette said the department store has done a “great job” maintaining store safety. 
• Gap called the essential/nonessential nomenclature “arbitrary and outdated” in a statement to CNN.

State officials’ response? Only New Mexico has a statewide policy requiring nonessential retailers to close their doors. Otherwise, restrictions across state lines are largely limited to store capacity caps. 

• To keep it that way, Gennette said Macy’s has tapped lobbying groups like the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) to coordinate with local and state leaders. 

Temp check: Do you think stores should still be categorized as "essential" or "nonessential"? Cast your vote here.  

WHAT ELSE IS BREWING

• Macy's officially signed the 15 Percent Pledge. It's the largest retailer to commit to the pledge yet.
• Visa halted plans to raise swipe fees for some retailers.
• Walmart is acquiring parts of peer-to-peer delivery service JoyRun. 
• Shopify said restaurant and CPG brands are flocking to its platform.
• Brands are still hiring for customer experience workers ahead of a digital sales surge.

SPONSORED BY SPLITIT

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SWAPPING SKUS

Inventory management stories are usually the dentist appointments of retail news. Not this week.

• At major retailers, the days of offering 14 color combinations for one can opener or Coach bag are ending. Guess why. (WSJ)
• Some returns just can’t be resold on their original shelf—so this firm is peddling excess stock to eBay sellers on retailers’ behalf. (Fast Company)

FROM THE CREW

Introducing: Sidekick

I interrupt today’s retail updates for one retail-adjacent update. 

Back in April, the Brew Crew started a quarantine newsletter called The Essentials. Now it’s November, and the pandemic hasn’t gone away...but The Essentials is transforming into something bigger and better. 

Meet Sidekick, a revamped recommendations newsletter that arrives Monday and Thursday evenings. If Retail Brew’s your must-read for your retail career, Sidekick’s your trusty companion for all the other parts of your life. Sidekick has...

• Trusted recs from all over the internet, including recipes, DIY projects, and cool brands. 
• Ideas for leveling up your professional life or winding down with a new book.
• An author, Rachel Cantor, who’s been dubbed the “tab queen.” 

Prepare your browser to be overrun with links you’ll want to save for later. The first edition of Sidekick arrives in just a few hours.

Sign up.

ICYMI

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