5 Reasons to Avoid Liquidation Sales

[Blu-ray Neo]

I thought this was an interesting read given the Circuit City fiasco....


5 Reasons to Avoid Liquidation Sales
ByJeffrey Strain, Special to TheStreet.com
Wednesday January 21, 2009, 10:29 am EST


Circuit City recently announced it had hired liquidators to sell off its inventory. While you might think this is a great time to find deals, the truth is that liquidation sales offer few bargains. Keep these facts in mind before spending your hard-earned money.

You don't need it: If you heard about a liquidation sale where a company is selling some type of gadget and now you find yourself wanting one, you did exactly what the liquidator wanted you to do. If you really wanted the gadget, it would have been on your list, after all.

The first rule of smart shopping is that, if you don't need it, it's not a bargain no matter what the price. Liquidation sales are a good way to convince yourself that a want is within reach, and therefore a need.

The prices aren't that good: When people hear the words "liquidation sale," they assume the main purpose is to get rid of merchandise quickly, meaning cheaply. While moving the inventory is one goal, it's not the primary goal. The main point is to make money.

Since "liquidation sales" usually last several months -- Circuit City's will last till the end of March -- there is no incentive to slash prices from the outset. In fact, most liquidators will actually raise prices to full retail or a token 10% off because they know the store will be packed with people. That means prices at liquidation sales are often higher than you could have gotten at the store before it went into bankruptcy. Those "75% off or more" discounts that you are imagining won't arrive until the final week of the liquidation sale -- a time when anything you would really want will already be long gone.

If you still feel you must go to the liquidation sale because you are sure prices will be good, do your homework. Know the prices at area rivals and online. This way, you'll know what a good deal is.

There are limited forms of payment: The way you can pay for merchandise at a liquidation sale can be limited. Checks, coupons and gift cards probably won't be accepted. You probably can't use credit cards in the final weeks, when large discounts come into play.

All sales are final: Since the store is going out of business, sales are usually final. If you have trouble with that big-screen TV or gadget, the store isn't going to help you. Especially for expensive items, it may not be worth the risk if you are only saving a few dollars.

If you do decide to buy at a liquidation sale, see that the item is in good working condition. Plug it in to make sure it works and open the box to be certain all the pieces are there. You need to take extra care since you won't be able to return it. Fully understand the return policies and any terms of the sale before you buy. If you can, use a credit card to get protections.

There's no knowledgeable help: The goal of liquidators is to sell, not to help you decide which of several similar gadgets would best suit your needs. All staff will likely be working the cash registers, and any floor help may have little to no knowledge with technical questions. Basically, there will be no service of any kind, so unless you know exactly what you want, liquidation sales are not the place to try and find something.

Good deals can usually be found at the end of a liquidation sale, but only on items that aren't in high demand. Don't be fooled into thinking that, just because a business is being sold through liquidation, it guarantees a good price. Liquidation sales carry a lot of disadvantages. Or better yet, skip the liquidation sales altogether and spend your money on things that are on your need list.

http://finance.yahoo.com/news/5-Reas...-14114850.html


http://finance.yahoo.com/family-home/article/106466/Where-You-Won't-Shop-in-2009

[phlydude]

My local ABC affiliate ran a "consumer watch" segment specific to the CC liquidation. They looked at 25 items and found that 10 of them were a better buy @ BB without being on sale.

One guy surveyed was happy he got a "deal" on a Blu-ray player...it was $37 cheaper at Best Buy (insert Price is Right loss music here).

All items that they looked at could be acquired cheaper online, including one TV that they actually said the web site (one of those Brooklyn storefront upsell like crazy merchants) for $450 cheaper.

Here is the link if anyone is interested (with the story video)
http://abclocal.go.com/wpvi/story?se...mer&id=6620505

But they did clarify to say that the idea of Liquidation was to get as much money as possible for the store that is going out of business so that they can pay their creditors.

Quote:
" But Circuit City is a classic example of the real deal behind liquidation sales.

When the chain filed for Chapter 11, bankruptcy court ordered four separate liquidation companies to take over operations and get as much money out of the store closings as possible.

To do that, liquidators are allowed to raise the marked price and bring in outside merchandise.

So that is why a Sony laptop computer was $799.99 on January 12th, before Circuit City's liquidation, and now, during the liquidation, the laptop is being sold for $37 more.

Remember, the price tag used to say $799.99, now it says the sale price is $836.99 marked down from $929.99!

The liquidators say they are not raising prices already in the Circuit City system, but you still need to price-check items before you head to the store. "