The coronavirus pandemic has caused businesses to rethink the way they operate. Some businesses have flourished, adjusting on the fly to keep up in a rapidly changing environment. Others haven’t been as fortunate.
But, what about the auction industry and what the future looks like in a post-coronavirus world? Louis Dakil, who owns Dakil Auctioneers, Inc. with his wife, Susan, recently shared his thoughts about which trends he’s noticed since reopening in May and what might happen in the coming months and years.
Before the coronavirus hit in early 2020, Louis shared a common belief that brick-and-mortar stores would give way to an online-centric business model. The last few months have expedited this course of action.
“This coronavirus has caused the evolutionary process in the auction business — as well as banking, online retail, and online food delivery services,” he says. “Everything is accelerated to where people who wouldn’t normally do this are forced to do it. I don’t think it’s turning back.”
At the onset of the pandemic, online services were the solution out of necessity. Many Americans sheltering in place throughout the country were limited to visiting essential businesses. Moving forward, this trend will continue out of convenience.
Generally, at least 50% of our auction clients have come from online bidders. People under the age of 50 serve as the primary buyers and sellers in the digital space, while in-person bidders are primarily 60 and older.
More than a month into reopening Dakil Auctioneers, Louis has seen more and more people over the age of 50 and 60 use the online auction system. A majority of bidders are flocking to the internet, regardless of whether those auctions are online-only or live in-person events.
So far, there haven’t been complaints with a move toward internet bidding.
“During the pandemic, they love it because they can stay safe and practice social distancing by not having to be around anybody,” Louis says.
Even with the online push, we’ll still stick to our roots with a live auctioneer. Other online auctions may have you bid against a clock, but we have an auctioneer who you can see and hear whether you’re in Oklahoma or halfway across the globe.
Aside from a spike in online auctions, real estate auctions have become a point of emphasis thanks to high demand.
Louis outlined three coronavirus-related factors aiding real estate interest. First, interest rates are minuscule, perhaps the lowest we’ll ever see. Second, keeping your money in the bank (even online banks are slashing rates due to the economic downturn) won’t net you much, so there’s incentive to turn to other opportunities instead of saving pennies. People want real assets and real value. Lastly, the oil industry is struggling, especially in Oklahoma, and the stock market is a roller coaster for investors nationwide. So instead of pumping money into funds, many businesses and personal investors are turning to commercial, industrial, and residential real estate.
“We’re selling a large volume of commercial and residential properties,” Louis says. “They’re going as much or more at an auction compared to a traditional real estate sale. We recently sold three pieces of property that went for appraisal or 30% above appraisal. We set the comps in most areas. It’s a real phenomenon now. It’s fantastic.”
The real estate trend should only continue. The erosion of brick-and-mortar establishments is real. More than 50% of shopping mall department stores will go out of business by January 2021, according to CNBC, which could lead to more businesses seeking out auctions to liquidate their assets.
Plus, the coronavirus caused many businesses to move employees to a work from home schedule that may turn permanent. Just 5% of Americans worked from home before the coronavirus pandemic, according to a 2018 U.S. Census Bureau survey. A recent economic study found employees could perform at least 35% of jobs while working from home.
“You’re going to see many office vacancies come up. Employers are finding out they’re more productive and don’t need to rent office space,” Louis says. “With Zoom and other electronics, you can do anything from your home. You don’t need to go to the office and burn gas in your car. The internet is in the palm of your hand now.”
New FDA guidelines call for discontinuing operations that require customers to use common utensils or dispensers. For now, this means businesses with salad bars, buffets, and self-service beverage service stations must readjust their strategies.
Some businesses may fold as a result, leading to an uptick in restaurant auction liquidations.
“We’re doing many restaurant auctions. The restaurant industry is bouncing back in a V, but buffet-style restaurants are the ones hurting that haven’t reopened yet,” Louis says. “They’re gone because people don’t want to pick up utensils after somebody else has used them. The coronavirus has changed the restaurant industry to where people have to sit spaced out and everyone is wearing masks and gloves when serving food.”
As some restaurants close, others have reopened or want to expand. In the past, restaurant liquidations have helped many local restaurants get their start by buying equipment from liquidation auctions.
Dakil Auctioneers has changed with the times for the past 39 years. This latest historical pandemic is no different. Online auctions will continue to grow. Beyond that, our day-to-day operations won’t experience upheaval.
Why? More than 50% of our business deals with entrepreneurs who retire and need to liquidate their assets. No matter the state of our country, early retirements will exist due to competition, restrictions, economic reasons, and other uncontrollable things such as the coronavirus.
As an example, the oil and gas industry is amid a period of historic lows. Businesses are seeing their commodities turn to nothing and becoming a liability in the process. That cycle has caused layoffs and plant closures, which in turn has led to an increase in truck auctions.
Keep tabs with our upcoming auctions page to see what’s next on the calendar. We update our calendar regularly with new additions. Contact us today, or call directly at (405) 751-6179, if you have general questions or specific inquiries to our upcoming auctions. Subscribe to our newsletter to stay up to speed with the latest trends in the auction industry.
