New Santa Rosa store Falling Prices aims to quickly sell returned goods

It’s been a tough two years to run a business, no less start one. But the pandemic and now rising inflation appears to have been a great time to launch a Santa Rosa venture that sells retailers’ returned merchandise at big discounts.

On Tuesday April 19, Falling Prices opened in a west Santa Rosa neighborhood shopping center anchored by grocer Safeway. The concept is that everything in the store — from pet food and litter to socks to books to toilet paper — is priced successively lower each day: $6 on Tuesdays, $4 on Wednesdays, $2 on Thursdays, $1 on Fridays and whatever is left for 25 cents on Saturdays. The store is then restocked for the next week.

“Every Tuesday is like Black Friday, where people go in and forage through the bins,” said Richard Cawood, who owns the business with his wife, Ruth, and business partner Sam Pierce.

They are independent dealers for RL Liquidators LLC, a 13-year-old Sacramento business with now 24 locations. It has annual contracts with the likes of Amazon, Target, The Home Depot, Lowe’s and Wayfair to buy, sight-unseen, truckloads of returns.

RL Liquidation is part of the reverse logistics industry, which moves products from customer back to the producer or vendor. But increasingly, sellers are opting to sell off the returns rather than restock them.

That’s because the volume of returns has soared, fueled by e-commerce, according to a 2019 report by Deloitte. The return rate of overall retail sales jumped by one-third in a decade, from around 6% to over 9%. The projection was for $573 billion in annual returns by this year, which would be four times total e-commerce sales in 2008, the financial consulting firm reported.

Cawood’s new location, in the 20,000-square-feet former G&G Supermarket space at 1001 W. College Ave., is the second such Sonoma County location for the partners and their fifth overall. They opened their first BidRL.com liquidation auction house in Redding in 2018, a second in Santa Rosa at 1264 Lotus Court in summer 2019, and the third in the Sparks suburb of Reno, Nevada, last year.

In the past four years, sales volume for the partners’ venture has quadrupled, Richard Cawood said, declining to state specifics.

“We were the recipients of a lot of people’s (COVID relief) checks,” he said.

While the BidRL.com online auction business model has been lucrative, it also is labor intensive and limiting in how much can be sold, Cawood said. Four to six truck trailers arrive at each location weekly, and the number of items aboard can range from 10,000 to 80,000. Store employees, which now number 40 across the partners’ five locations, must then triage items as treasure or trash.

The bid model allows about 1,500 items weekly to be photographed and put up for bid, starting at $1 with no reserve. Because of that the store teams have tended to focus on the more profitable items such as TVs, coffee makers and washing machines than the less profitable pet food, bedding and yoga mats.

Also, although the southeast Santa Rosa location is open to look at items up for bid, not many do, Cawood said. But the Falling Prices model requires buyers to actually show up. And RL Liquidation developed a smartphone app to hold a shopper’s place in line to avoid lines forming over days before opening, as happened initially in Sacramento.

With the opening of Falling Prices in Santa Rosa, Cawood’s team is now sorting at that location, shifting the lower-value items to that store, and keeping the higher-value items for the auction house. A second Santa Rosa BidRL.com location is set to open in May next door to Falling Prices.

“It was complete luck the economy is terrible (when it launched), but Falling Prices is goign to help a lot of people,” Cawood said.

Annette Cooper of Keegan & Coppin brokered the lease transaction between Avalon Liquidations LLC, the company behind the Cawood and Pierce venture, and the property owner, an entity managed by Teejay Lowe, whose family sold G&G to Safeway.

Jeff Quackenbush covers wine, construction and real estate. Before coming to the Business Journal in 1999, he wrote for Bay City News Service in San Francisco. Reach him at jquackenbush@busjrnl.com or 707-521-4256.