Deal Hunter: How to shop ‘going out of business’ sales
By Katherine Boyle,
For retailers, the holiday shopping frenzy is often followed by a bleak January, sometimes marked with store closings or bankruptcy filings. With Penn Camera, Pottery Barn, Macy’s and Bloomingdale’s recently announcing area store closures, shoppers might be tempted to run out and pick up supposed bargains from the advertised “Everything must go!” sales. But experts are leery of the gift horse. “It’s hard to find great deals at liquidation sales,“ said Tod Marks, a senior editor of Consumer Reports. “Our research often shows that third-party liquidators mark up the prices of merchandise. You have to know your prices and brands. Just because a store is going out of business doesn’t mean you’re getting a bargain.”
“Shoppers are sometimes lured in because they think the store is desperate,” said Edward Johnson, president of Better Business Bureau of Washington. “The opposite is often true. At liquidation sales, stores seek to maximize profits.”
We asked experts for tips on how to shop store closings. Surprisingly, you need to do more research than usual to get a great deal.
Before You Shop
Spot the gimmicks
Some stores have been liquidating for years, and they’ve never shut their doors. “This isn’t a true liquidation. A true liquidation sale means the store has filed for bankruptcy,” Johnson said. “There are retailers that perpetually fool shoppers,” Marks added. “They have ‘store closing’ signs up all the time. You’re not going to find a bargain there. You have to know whether a store is truly going out of business.” To find out, call the company headquarters. For local businesses, call your local courthouse or Better Business Bureau to find out whether a company has filed for bankruptcy.
Not all liquidation sales are equal
Retailers sometimes run liquidation sales, but third-party companies also administer them. Try to avoid sales run by third-party liquidators. Third-party liquidators buy merchandise to make a profit and have less incentive to sell it. They can mark up the prices on the store’s sale merchandise and even change a store’s shipping or delivery policies to the consumer’s detriment. Marks recommends asking sales clerks for their badges or a business card to find out who is running the liquidation.
While You’re Shopping
Know your prices
Shop around before you go to a liquidation sale. Knowing the brands you trust and the manufacturer’s suggested prices will help you get a good deal. Liquidators try to sell goods for the highest profit, and many competitors will drop their prices to compete with liquidation sales.
Consumer Reports recommends using your smartphone to find prices. Free apps for iPhone and Android scan bar codes and help you compare costs. Amazon Price Check and Google Shopper are among the most popular.
They’re sold out of return policies
If you buy that dress and realize it’s too small, tough luck. You can rarely return anything at a liquidation sale. “When you purchase something for full price, you’re paying for a return policy. It’s cheaper because you can’t return it,” Marks said.
Look for the manufacturer’s warranty
You may not be able to return a product to the retailer, but the manufacturer’s warranty should apply even if a store closes. Before making a purchase, call the manufacturer and check the status of the warranty.
When and How
to Check Out
Go early, late and often
The best stuff always sells first, but you won’t get the best price early. Some liquidation sales can last months, so it’s in your best interest to go many times throughout the sale. “Everything gets cheaper until it goes away,” Marks said. “There’s slimmer pickings, sizes and variety if you wait until the end, but you’ll save more if you shop later in the sale.” Marks recommends waiting a few weeks and keeping tabs on products you really want.
Use your gift card before it’s too late
Johnson offers this tip: Use your gift cards immediately. Once the merchandise is gone, the card is worthless. It’s in your best interest to use them early in the sale.
It pays to use plastic
Never pay cash at a liquidation sale. Credit cards will protect you if a store closes before that custom-designed table or big-screen television is delivered. If the store won’t accept a credit card, be sure that you’ve tested all electronic equipment and that you can walk out with the item in hand.
The Bottom Line: You should shop a liquidation sale the same way you shop a normal sale — with caution. By knowing your brands, comparing prices and verifying warranties, you’ll make savvy purchases. Don’t be fooled by the hype: Even bankrupt companies want to make a buck.