With consumers recently underwhelmed by the discounts at Circuit City’s liquidation sale, scores of reports are now popping up about why buyers need to proceed cautiously at these events. The price reductions at a liquidation sale aren’t necessarily the best offers in town, even though they may present themselves as such.
“One might argue that having the big signs, touting 'Going Out of Business' [or] 'Final Days' creates a presumption that this [sale] is a big deal,” says Anthony Giorgianni, associate finance editor for Consumer Reports Money Advisor. “I think the liquidators are counting on people getting excited and not comparison shopping.”
The long lines at Circuit City stores across the country over the past week make clear that many shoppers are buying into the liquidation hype.
Is it a scam?
Not really. Giorgianni says it’s ultimately the consumer’s responsibility to do his or her homework and price compare.
“I don’t think it’s up to the liquidator to post a sign that says, ‘By the way, our discounts aren’t that good,’” he says.
If a store is going out of business, shouldn’t it be willing to sell its leftover items for pennies on the dollar? Nope. It turns out that in most cases, the retailer isn’t actually doing the selling. Companies like Circuit City partner with liquidation companies that purchase the store’s inventory up front, and then are responsible for selling it.