Allied Advantage Inc., 6419 S. State, a 50-year-old company that has one of the most recognizable business locations in the Salt Lake Valley, is selling its entire inventory, according to Mark R. McGillis, president and chief executive officer.
The main reason: The business that began in war surplus sales is now selling hardware, housewares and other goods that put the it in head-to-head competition with chain-owned retailers that can operate on a much smaller profit margin than Allied can.McGillis said the price of everything in the store will be reduced an additional 10 percent every Sunday until everything is sold. He has taken out advertisements in the Deseret News and Salt Lake Tribune telling of the 60-day inventory reduction sale that takes place Monday through Saturday from 10 a.m. to 7 p.m.
After the inventory is sold, McGillis will open his 42,000-square-foot building in March as the Market Place at Allied. He is renting space to vendors, manufacturers and distributors who sell paint, wallpaper, sundries, appliances, automotive items, clothing, footwear, sporting goods and fishing and camping items-things Allied has sold for many years.
McGillis said this is a new concept, but one forced because he can't compete with large chains selling the same type of merchandise. He said companies like Eagle Hardware, Home Depot, Ernst and The Home Base can survive on 1 percent profit because of their size, but he can't survive on such a low profit margin.
He said the retail market in housewares, clothing, footwear and sporting goods has exceeded the demand and the profit margin is reduced to sell items and it's not profitable to sell those lines anymore. He believes that by 2000, major retailers will be closing stores because they aren't profitable.
The inventory reduction sale won't affect the company's annual Christmas tree lot sales, Allied Property Maintenance, a landscape property maintenance company, or Gregory's Toys and Adventures, which he also owns.
McGillis said several vendors already have rented space in his building and he is looking for others. He believes Allied's reputation and the nearness to the Fashion Place Mall will make his venture a success.
At its peak, Allied had stores in Tooele, West Valley City and Sandy in addition to the Murray location with 300 employees, but in recent months all except the flagship operation have been closed and the employees have gone elsewhere. McGillis said he will retain a staff of about 40 employees for Market Place at Allied.
Allied was opened in 1946 in downtown Salt Lake City by Leslie Davis, C.H. McFarland and Nate Larson and originally sold war surplus items that were in large supply because of the end of World War II. The store moved to the Murray location a month later.
In subsequent years, Roland Davis, Theron Jolley and Tom Cowley owned Allied and expanded its several times. A surplus training airplane was located at the store and became one of the valley's more familiar landmarks.
McGillis was a creditor of Allied and purchased the bankrupt company in 1991 from the three men. Rather than liquidate the company, he paid off the creditors. Business was good until the proliferation of the large chains that carried the same type of merchandise as Allied.