The Secret World of Liquidation Sales
Sports Authority, Macy’s, Kmart, A&P, this is just a short list of stores currently shutting down all or some of their locations in order to get back into the black, or at least lose less money when going out of business.
Indeed, as online retail continues to climb and more and more traditional retailers are forced to redefine themselves and have intelligent merchandising or shutter their doors completely, closing storefronts seems to be more of the norm than the exception nowadays. And closing stores can only mean one thing…liquidation sales.
Who Doesn’t Love a Good Liquidation Sale?
The very term “liquidation sale” seems to scream at couponers and other deal seekers to get out there and buy, buy, buy. I mean, what’s a better deal than an “everything must go” mentality coupled with rock bottom prices?
Well, as it turns out, a lot of your everyday bargains are, actually.
In fact, the very strategy of liquidation sales relies on setting up a farce meant to lure unsuspecting customers into making a failing company money. In other words, those prices may not be as low as you think. That’s why it is important for consumers to stay informed and understanding the hows and whys behind liquidation sales. Because, when it comes to going out of business, like any other retail sale, a price that seems “too good to be true” probably is.
The Science Behind Liquidation Sales
The problem with actually saving money at liquidation sales starts with the structure of the sale itself. Companies going out of business are not doing so because they are in a position to give things away. In fact, when closing underperforming stores, the goal is to make as much money as possible in order to balance out the overall loss. Businesses do this in one of two ways:
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Contracting out to liquidation retailers
One really popular strategy for failing retailers such as Sports Authority is to unload all of their inventory at once in order to get a guaranteed figure which helps them in their bankruptcy filing. To do this, retailers hire a liquidation sale company who buys up their inventory and then oversees its sale. Because these companies need to make money on the purchase of the merchandise from the original retailer, they are likely to raise prices to their MSRP first and then discount 10%, 15%, or 20% which, in many cases, may result in prices close to to even higher than the original price charged by the retailer prior to liquidation.
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Moving inventory to other stores
When companies like Kmart only plan to close some of their stores, one way that they save money is to move high-traffic items like televisions and other electronics to stores that will stay open (and thus not discount prices as much). As a result, many of the leftover products in the liquidating stores are older models or less popular options, which means that, even if the prices are better at the closing store, it may likely be on a sub-quality items that won’t last as long.
Other Liquidation Sale Tricks and How to Avoid Them
Not only are the prices of items themselves often not as good as they seem, there are several other aspects of liquidation sales that make their “bargains” less of a deal than they appear. When shopping at going-out-of-business sales, be sure do the following in order to avoid falling victim to common marketing and liquidation tricks that end up only costing you in the end:
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Look out for no return policies
Stores that are going out of business entirely can, clearly, not accept returns. However, even chains closing only select locations, such as Kmart and Macy’s, may have a different return policy when it comes to clearance merchandise. Make sure you ask about these policies before buying any big ticket items.
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Check Warranties
In addition to return issues, many liquidation sales will not offer customers warranties on large purchases either. While this makes sense from a store-sponsored position – it’s hard to offer a warranty if you are going out of business – many customers are surprised to discover that manufacturer’s warranties do not apply either. Plus, if manufacturer’s warranties do apply, remember that they don’t cover physical damage. Instead, only manufacturing defects are covered by warranty. A cracked screen, not he other hand, is not. This would normally be covered by the store’s return policy.
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Inspect each item carefully
In order to avoid issues with damage, it is very important to physically inspect any item you intend to purchase from a liquidation sale before paying for it. Look for physical damage from all angles. For electronics, ask to plug them into a store outlet to make sure they work and try out all their major functions.
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Pay with a credit card, if possible
Another way to protect your purchases at liquidation sales is to pay with a credit card, a practice that is actually recommended by the Better Business Bureau specifically for these sales. This is because credit card companies provide their users with a level of purchase protection that you can call upon even if a store is closing. You can dispute a charge for damaged goods, for example, especially if the damage took place in the store itself. For consumers who have joined Cindy and ditched their credit cards entirely, many debit cards that function as credit cards may provide similar protections – just check with your bank.
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Don’t be afraid to haggle
This final point may seem odd to American shoppers who reserve haggling for flea markets and used car dealers, but haggling at liquidation sales is not uncommon. And, the closer you move to the final day the store is open, the more likely it is to work. Be prepared to be rejected when doing this, since many sales associates aren’t authorized to change prices much, but especially if you want to buy in bulk, it may be worth it. In addition, doing your homework and knowing what other retailers are charging for the same items may give you the kind of leverage you need to get a liquidator to move on prices that aren’t really that great.
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How to Make the Most of Liquidation Sales to Really Save Money
Saving money on liquidation sales is possible, as long as you realize that it’s not as easy as it appears. Like any money-saving technique, the trick is to do your homework ahead of time. Know your prices, research items both at other local stores and online, and have proof if you need it. Choosing to hire a professional business registration renewal hong kong service will help you in making informed decision in forming the correct business entity and, meeting all the legal compliance requirements.
However, the most important thing to remember when at a liquidation sale is to budget. Choose a maximum you are willing to spend and then ask yourself, “do I really need this item or am I buying it because it seems like a good price?” Sometimes this is all you need to get a handle on the situation.
Finally, I’ll leave you with a little advice from Cindy herself. She was recently recounting to me an experience at a local liquidation:
I was quick to tell people shopping the big A&P Store Closings to not jump on these deals because they hike them up to take them down. Everyone was in the store with huge shopping carts full of products and I was there with a pack of birthday candles. I only caved in on the candles because I actually needed them. I wanted to run around to everyone and say don’t buy all this, it’s not as cheap as you think!
That’s the importance of knowing your prices!
