Liquidation! Going out of business! Everything must go! Deals, deals, deals!
The slipping economy — already steamrolling to one of the worst in decades — is putting the consumer in charge as more retailers falter even in the midst of the usually busy holiday shopping season.
In their wake has come a litany of liquidation sales previously unseen in number or scope: jewelers slashing prices to 80 percent off; electronics stores practically pushing items out the door; toy discounters nearly giving it all away to meet creditors’ demands.
Bankrupt stores pressing to grab up scant available holiday dollars — Linens ‘N Things, Circuit City stores and The Sharper Image among them — were joined earlier this month by KB Toys, which filed for bankruptcy protection and began its own going-out-of-business sales immediately. The chain has one store at the Colorado Mills mall and an outlet in Castle Rock.
All of it just in time for the holidays.
“With the economy right now, it’s ConsumerLand USA,” said Tom Wacker, a manager at Preferred Sales Associates, a furniture liquidator based in Lancaster, Pa. “The merchants are getting slaughtered. Cash is king and if you’ve got the money, you’ve got the deal.”
In some cases, firms like Preferred Sales Associates are hired to manage the liquidation sale. They take over the store’s inventory and work to clear everything out. Other retailers will handle the effort on their own.
Experts say the tight-fisted shopper can reap the rewards as long as they’re careful to do their homework.
That’s because not every liquidation is the same.
“Liquidations play on greed, that their misfortune is your good fortune and they’ll promote the highest discount in the range,” said Edgar Dworsky, a consumer advocate who runs .
“Liquidation is different from going out of business which is different from bankruptcy reorganization. And, in the end, not all the deals are the best ones.”
Know your prices
It’s critical to know what’s a good deal and there are a few giveaways, such as multiple stickers on an item. Liquidator practices vary, so while one will push prices to their original retail cost and start cutting from there, others will begin discounting from the last price before they stepped in.
At Linens ‘N Things, for example, shoppers at the first day of liquidation — perhaps believing great deals were in place — found that items previously offered on the clearance rack were back to regular price with a scant 10 or 20 percent discount.
“My husband and I went to Linens ‘N Things for their liquidation sale and ultimately purchased things at Bed Bath & Beyond with a 20 percent coupon,” said Kristin Miller of Colorado Springs. “The prices weren’t marked down enough to warrant an unnecessary purchase. Ultimately I think people feel like prices are inflated then marked down to make it seem like we are getting a deal.”
In another case, consumer bloggers tracking prices at Circuit City — in November it announced it was closing 155 locations but was keeping others open — found the closeout offerings on high-end HD televisions were actually more expensive at the store than on its online shop.
“You really should treat the liquidation no differently than any regular sale,” Dworsky said. “The consumer has to check and compare prices just as they would any other time. A guy with a sign in the street with ‘x’ percent off doesn’t mean your item is favorably priced.”
Professional liquidators have one job: Make as much money as possible for the retailer. Many liquidation companies base their earnings on how well they accomplish that task. Liquidators are a roving group, moving across the country from one disposition to the next, racking up expenses along the way.
“When we come into town our housing is typically 90 days,” said Wacker, the furniture liquidator who usually heads a team of about 20 associates for each sale and makes his home in Denver.
Finding a great price is really a matter of education, he said.
“It really depends who is running the sale since not every liquidator is on the up and up,” Wacker said. “You can pretty much deal on every item on the floor and the best thing in your back pocket, other than knowledge, is cash.”
Bargains? Not necessarily
Price cuts of 10 or 20 percent off regular price aren’t enough to sway many shoppers — some retailers regularly offer coupons for that amount of savings — and deep discounts sometimes mean the best stuff is already gone.
“You can’t flatly say that just because a store is in liquidation that the bargains are numerous,” Dworsky said.
Mark Allen at Sonny’s Jewelry in Cherry Creek North agreed.
“I’ve got some items up to 70 percent off, but I can’t pay people to take it,” he said, referring to how deep a discount he’d make. The store is closing after 17 years at its Fillmore Street location and is handling its own closeout.
“Some items are 10 percent off,” he said of the liquidation that began a month ago. “We pretty much cut the prices and they are what they are.”
But are you getting a deal? Allen said one customer recently priced a diamond, went to other stores to shop and came back to buy.
“It really depends on what it is,” he said.
Some tips for savvy liquidation shopping
Liquidation sales play on people’s desires for a great deal and can give the impression that prices are low.
• Price it before you go in. Know what an item costs at the competition and use that to deal. Be prepared to walk out empty-handed.
• Before you buy it, try it. Unpack the box, take the item out and survey it for damage, then plug it in. Most closeouts have a no-return policy.
• Buying a floor model? Figure how much it will cost to replace the missing extras such as remote, manuals, power cords. Chances are the item was running at full power, too, so factor that in life expectancy.
• Avoid gift cards and extended warranties.
• Don’t let anxiety rule you. Resist the urge to buy because you’re concerned it might not be there tomorrow.
David Migoya: 303-954-1506 or dmigoya@denverpost.com
