Liquidation sales may not be a good deal

December 2, 2008 6:55:29 PM PST
Mervyns, Shoe Pavilion, and some Circuit City stores are already liquidating and experts predict many more retailers will go out of business next year. That will mean more close out sales.

But are liquidations really a good deal for consumers?

The signs are pretty tempting.

"Store closing!"

"Everything must go!"

"Entire store 40 percent off!"

But experts say the deals are not always as sweet as they sound.

"The bottom line is you may not be getting the kind of deal you think you're getting," Consumer's Union spokesperson Anthony Giorgianni said.

Mervyns is the fourth week of its liquidation and consumers there were not thrilled by the deals they found.

"I was looking for a jacket; seemed like the jacket should've been 80 bucks but it was about 115," shopper Kevin Scott said.

It is not just Mervyns; every liquidator's job is to sell, Golden Gate University business professor Michal Strahilevitz said.

"There's absolutely no question they want to give you the sense this is the best price in the world so maybe they're going to say, '70 percent off,'" she said. "But to begin with maybe it was 10 percent higher than another retailer is charging."

Shoppers can find a good deal at a closeout sale, but they will give something up in return. Rock bottom prices come with a no return policy if something goes wrong.

Stores sometimes buy at a steep discount because they will take care of warranty issues, not the manufacturer. So at any closeout sale, ask not only what is in the warranty, but who will honor it.

Some additional advice?

Check items before leaving the store.

"Probably the best way to conserve money is not buy stuff you don't really need or want," Strahilevitz said.

The Mervyns liquidator, Great American of Chicago said closeout prices are based on the lowest prices at Mervyns in the weeks right before the liquidation. But it acknowledges sometimes retailer specials like two-for-one deals can be as good as or better than liquidation prices, especially now with all the deep discounts going on.


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