Going-Out-of-Business Sales Not Always Such a Bargain

Despite what the public might think, Baker said liquidators rarely sell merchandise at a loss, even near the end of the sale. He said there are other ways to sell it off, like to overseas markets hungry for merchandise. So rather than trying to empty a store to the bare walls, Baker explained that going-out-of-business sales are more of a play upon human psychology.

"Retail is all about excitement, to get people into a store and get them into a mood to spend money," he said.

Outside Goods

Liquidators often try to take advantage of that excitement by bringing in extra outside goods that were never sold at the store that is closing.

We spotted one example at a Linens 'n Things in Fairfax, Va. Hundreds of handmade Oriental rugs were brought in as the rest of the store was emptying out. A salesman told a member of our undercover team, "They ship it after going out of business."

Problem is, even though the rugs were never sold at Linens 'n Things, they still came with tags that said what the price supposedly "was" and what "you will pay."

"If I can sell it, they send some more," the salesman told us. He even offered to bargain over prices and make us a deal. So we found two things never before seen at Linens 'n Things: hand-knotted Oriental rugs — and haggling.

Store Closing Sales

We also visited a Circuit City store that is closing. It's a different situation there. Only 21 percent of Circuit City stores are going under, while the rest of the chain tries to stay afloat. In that case, Circuit City has hired two liquidation companies, Hilco and Gordon Brothers, to run its going-out-of-business sales.

At Circuit City you could see where the old price tags had been cut out of the product displays with a pair of scissors. Once again, just asking as regular shoppers, we spoke to a clerk and asked why they had gotten rid of the old prices.

"We don't go by the Circuit City price anymore," she told us. "It's the liquidators' prices now."

By now the description sounded familiar. She said the liquidator had raised many rates up to the regular price before the sale began, "and then deducted the, like, 30 [percent] to 20 [percent] or 10 percent," she told us.

So how do the liquidation prices compare overall? Because only part of the Circuit City chain is going out of business, it was a rare opportunity to compare prices at regular stores run by the company with those at closing stores run by the liquidators. The two are not connected.

One example: We saw a Samsung HDTV that was only available as an open box item at the liquidation store and cost $1,799 with all sales final. But at Circuit City's regular stores it was available for $1,599 brand new — $200 less, plus we could return it.

The clerk in the liquidation sale TV department gave us some advice.

"To be honest, I would go to a normal Circuit City for bigger TVs," she said. "But you didn't hear it from me."

Of the 60 electronics products we compared, a third were the same price or less at regular Circuit City stores. And the majority of those that were cheaper at the liquidation sale were only 5 percent to 15 percent less.

When we told consumers outside of a going-out-of-business sale about our findings they were amazed, but not surprised.

"What does going out of business mean if you are jacking up the price rather than lowering the price?" said one woman.

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