BCBusiness

6.9% Average rent increase for Metro Vancouver in 2016, versus the 2.6 per cent allowable hike set by the province dECEMBER/JAnuARy 2018 BCBusiness 17 In addition to returns, Big Box Outlet Store buys case lots that have been opened or are missing some contents and sells the items (bottles of water, tins of food, rolls of paper towels) indi- vidually. A ‚ve-pack box of, say, underwear that only contains four pairs will be discounted. The company also deals in discontin- ued, clearance and new goods, like furniture, which is pro‚table because it's high-margin. Funk sees a bright future for reverse logistics, or return- ing products to the supply chain. Chain retailers and big box stores have found working with reverse logistics special- ists an important component of asset recovery, especially as the cost of handling the item in reverse can be four times what it cost to get it to marketplace, Funk explains.‡"We're kind of unique. We process and retail at the same time." While most in the industry move goods on to resellers, Big Box Outlet Store is the largest in Canada that has its own stores and a direct relation- ship with the initial retail chain. Funk got his start in 1985, when he and Todd Friesen, then both 20 years old, borrowed from their fathers to acquire HB Distribu- tors in Surrey for $80,000. The company had contracts with Canadian National Railway Co. and Overwaitea Food Group to buy and resell damaged merchan- dise. Within two years, they had F or most retailers, sales peak in November and December, accounting for 20 per cent or more of annual revenue, according to the U.S.- based National Retail Federa- tion. But for B.C.'s Big Box Outlet Store, Christmas arrives later. "The volume in January and Feb- ruary goes up by 50 per cent," notes co-founder and president Mark Funk. "It's the busiest two months of the year for us." Funk's company purchases unwanted products—clothing, housewares, appliances, tools and more—from major retailers and resells them in its stores (12 in B.C. and three in California and Washington State). After the holidays, some are seasonal clearouts, but most are gifts returned by customers. Returns make up half of the business the rest of the year, too: merchan- dise shoppers didn't want or that was damaged—for example, a lawnmower that doesn't work properly. The repair staž will ‚x it or harvest parts. Many Happy Returns RETAIl repaid their dads and expanded the number of stores. Funk bought Friesen out 10 years ago, although he remains with the company. Renamed MTF Price Mat- ters in 2006 and Big Box Outlet Store in 2014, the operation now spends about $12 million a year on purchasing. Processing is labour- intensive. Boxes piled high with assorted products arrive at the 85,000-square-foot distribution centre in Langley, where some of the 192 warehouse staž enter the contents into the system, place it in trays and send it along a conveyor belt to be packed into boxes for shipment to Big Box's retail outlets. Two trucks deliver to the Lower Mainland stores, and a semi-trailer to the Interior locations. Waste is minimal. "Most of what we throw out is packaging," says operations manager Jon Mackie. "If we deem something is not sellable in one of our retail stores, we'll send it to a secondary auction"— like several treadmills that have been set aside. They're a tough sell, Mackie admits. "Treadmills have one month of sales, and that's about it—it's January." TREASURE CHESTS Containers of products wait to be sorted and sold how B.C.'s Big Box Outlet store keeps other retailers' unwanted merchandise out of the landfill by Felicity Stone 15,000 Expected short- age of workers in the B.C. restaurant industry over the next ‚ve years 2,000 Number of appli- cations to rent one of 97 units in a new apart- ment build- ing that opened in Surrey last September $2,500 Projected aver- age monthly rent for 500 square feet in Vancou- ver by 2021, according to Vancouver-based research ‚rm Goodman Report sTUFF iT! how many purchases u.s. shoppers take back to the store sOuRCEs: 2015 COnsuM- ER RETuRns in ThE RETAil indusTRy, nATiOnAl RETAil FEdERATiOn annual sales returns: 8% holiday sales returns: 10% Gift recipients who returned at least one item in 2015: 38% US$260.5 billion Value of merchan- dise returned annually US$63.05 billion Value of holiday merchandise returned CAnAdA MORTGAGE And hOusinG CORP., CBC nEws, GOOdMAn REPORT 500 ft 2

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