Liquidation Sales Could Offer Great Discounts for Savvy Shoppers

Several retail chains over the past few months have had to start shutting down some of their less-profitable stores and liquidating their merchandise. One of the more notable examples, Toys R Us, was in the news recently about having to close down all of its over 700 locations. Many economists blame the surge in store closures on the success of online retailers like Amazon. When a shopper can get the same product for the same price (or cheaper) without ever having to leave the house, why would they ever shop at a brick-and-mortar store? Compounded with the decreased number of customers is the fact that traditional retailers have inherently higher costs (rent, electricity, more employees, etc).

Well, according to an article by the Associated Press of the L.A. Times, if they play their cards right, a retailer's loss could be the savvy shopper's gain. A shopper has to be careful, though; liquidation sales aren't always a good deal. You have to compare prices and check online deals if you want to make sure you're not being tricked by the "CLOSING" sign in big letters. Liquidators are aiming to make as much money as possible from the merchandise before they completely go out of business. Therefore, it makes sense that the liquidation prices would be at some equilibrium: high enough that the store can make money, but low enough that they can entice shoppers to buy the merchandise.

One of the tricks that retailers use to make the deal seem better is to focus on the percentage discount, rather than the final price of the product. Often, they will raise the prices, then mark a discount on it, so that it seems like it's significantly cheaper than usual when, in fact, the amount of money saved is pretty minor. The way to avoid such tricks is to compare the final discounted price with the price of the product at other stores or online. It's only a good deal if the overall price is low, not necessarily if there's a large percentage discount.

Additionally, shoppers should be aware that there's a happy medium in getting the best deal on the greatest selection of products in a liquidation sale. The sales tend to start at a 20% discount and prices go down over time until all of the merchandise is gone. If a shopper waits long enough, they can save the most money. On the other hand, if they shop earlier, they have a greater selection of products to choose from. There's a sweet spot in the middle where the discounts are relatively high AND the selection is relatively expansive. Shoppers looking to find the best deals (especially on clothes and toys, because those tend to be more discounted than electronics) should try to find that sweet spot.

If you have a gift card for a store that's closing down, use it immediately! Even if you know the chain is being bought out by another retailer, use the gift card, because the store credit may not be honored by the new owners. Once in a while, gift card holders can get a settlement after the retailer's bankruptcy, but that requires filing claims, something that many customers forget to do until after the deadline. Finally, even though liquidation sales can have great deals, shoppers should be careful that the items they're buying are of good quality and not defective. Often, sales during a liquidation are final, and the stores don't allow returns, so be careful when shopping and only make purchases when the merchandise seems to be in good condition.

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