The term “overstock inventory” typically refers to brand new, excess inventory that is simply above and beyond what a retailer was able to sell during the period of time they offered the particular SKU’s. This is not going to include returns and typically will not include shelf pulls.
Companies like Macy’s tend to be a good source of overstock inventory due to the seasonality of the fashion business. For example, they load up on swimwear prior to summer and then shortly before summer ends, they must clear out the unsold swimwear so they can display back to school or fall fashion merchandise. This leaves them with whatever inventory didn’t move as overstock that must be liquidated.
In addition to seasonal effects, the fashion business also tends to be effected by styles and consumer taste. While short skirts may be hot this year, chances are that next year, longer ones will be in style. When tastes or styles change you have the same effect. Unsold goods that are either about to go out of style or have already passed their prime must be liquidated.