Forman Mills founder’s new venture aims to turn online shoppers’ unwanted returns into big profits

From a warehouse in Pennsauken, Rick Forman built the Forman Mills discount retail chain into a 36-store network, then sold it to private equity investors in 2016.

Now he’s back with Turn7, which he says is a different kind of discount store, taking advantage of a surge in retail inventory and returns that piled up during the pandemic and shutdowns that have cost the U.S. 25,000 stores since 2018. Up to 50,000 more stores could close by 2027, according to one Wall Street estimate.

Forman started Turn7 with locations in Moorestown and Northeast Philadelphia, then in the spring, took back a former Forman Mills at 48th and Market Streets in West Philly. Turn7 is designed to appeal to both the average shopper looking for a good deal and to folks who hope to resell low-priced items to make a profit.

The store name is based on Forman’s goal to turn around all merchandise within seven days.

The “secondary market” for clothes and other items returned to U.S. stores and shippers, plus unsold items taken off store or warehouse shelves by managers or manufacturers in favor of new products, surged to an estimated $1 trillion last year, from about $400 billion in 2017, according to Tony Sciarrotta, who runs the Reverse Logistics Association, an Atlanta-based industry group, citing data collected by Zac Rogers of Colorado State University.

Returns alone have grown to more than $750 billion, from $300 billion, in the same period, as stores closed and shoppers moved online, he added, citing National Retail Federation data. Post-pandemic returns should slow for a time, but the long-term trend is clear: Online shopping returns account for one-quarter to one-third of sales, vs. about one in 12 for brick-and-mortar stores.

And under pressure to reduce landfill and incineration waste, companies need resellers such as Turn7 more than ever, Sciarrotta said.

Jabari K. Jones, who heads the business advocacy group West Philadelphia Corridor Collaborative, welcomed Forman back to the neighborhood, noting that the area’s small retailers were especially glad.

“There’s always guys selling at 52nd and Lancaster, 47th and Wyalusing, and right outside his door here on Chestnut Street,” said Jones, pointing over his shoulder to music, hat and handbag vendors along the sidewalk. “Convenience drives people to shop in the neighborhood.”

Forman took questions from The Inquirer recently about his latest venture. His answers were edited for clarity and brevity.

I was going to do a retail store, but then I was down South. I saw they have these chain liquidators, Gimme a Five, Crazy Cazboys. There’s one in New England, Ocean State Job Lot.

These liquidators, down in Alabama, even on a lousy day, got hundreds of shoppers. Flea market guys cherry-pick from these stores. It’s easy with the apps now: They go in there knowing the prices on big items at Target and Walmart and Amazon. So they look for those goods, and if they can buy at a much cheaper price from the liquidator, they can go online and beat the big guys.

They know what’s selling for $120 on Amazon. If they can get it here from $30 and sell it for $100, they’ll pay us $3,000 for a thousand of the item.

And I thought, why not at home? Ollie’s Bargain Outlet started out as a liquidator, also Big Lots, but they got big, and they’re more like regular stores now.

» READ MORE: Forman Mills’ former owner is opening a new deep-discount store

We opened a kind of pop-up, proof-of-concept store at Cottman and the Roosevelt Boulevard [for pre Christmas shoppers] in fall 2021. Then, in December, we signed a two-year lease for the old Lord & Taylor’s at Moorestown Mall. Our big store and warehouse, we put up at Philadelphia Mills in Northeast Philly. And now in West Philly. I still owned this location; Forman Mills wanted to stay here, but I didn’t renew their lease.

I’m hiring 400 employees between the three locations.

Since the pandemic, with all the shopping from home, there are all these returns and all the logistics problems in international trade. Remember all those ships off Los Angeles that couldn’t get into the port to unload? So all that stuff is finally coming in now, and where are the stores going to put it? Not in landfills!

So we buy, not necessarily from Stitch Fix and Amazon and Costco, but they do business with all the big warehouses, and a lot of those warehouses now need to get rid of their excess.

We come with cash; we wire the money. Not like the big department stores, with their 90-day billing. We take goods immediately — by tractor-trailer. ... Carburetors to Cuisinarts. New or returns. . Kitchen sinks, literally. Bikes — the price we are buying these, you can sometimes resell at 60% to 70% off the lowest Target or Amazon price.

And we have no idea what it will be tomorrow. Some people will come back just to find out. And they’ll take it. That’s the excitement. Retail-tainment.

They don’t have credit, and they are very local, maybe working out of an apartment. After COVID, people don’t want to go back to making $12 or $15 an hour. They want their own business.

They have the space now. We can take 120,000 square feet from these mall operators and pay just $5 a square foot sometimes, compared to $10 or $12 for warehouses or offices.

» READ MORE: The fading Moorestown Mall gets new life as a residential and wellness center

They love us, and they hate us. They’d rather have Nordstrom’s. But the old Madison Avenue stores have been going out of business. The masses are coming to us. I had lunch not long ago with Joe Coradino [CEO of PREIT, which owns area malls that have lost longtime anchor department stores]. I kidded him that he wasn’t at our grand opening at PREIT’s Moorestown Mall, but we were mentioned in their quarterly report to investors.

Everyone. Moorestown has some of the highest incomes in South Jersey. There are people who drive up in Jaguars. Everyone now wants bargain retail.