Liquidation sales can pay off for careful consumers

Liquidation sales can pay off for careful consumers

CHAMPAIGN — Bright signs at Bergner's and Toys R Us say everything in the store is 50 to 70 percent off, including the shelves.

At Toys R Us, much of the store is empty and even the garbage can outside is for sale.

While there may be good deals for consumers at these liquidation sales, experts caution that customers should use their smartphones to check prices while shopping.

"We have so much power in our phones now," said Paula Rosenblum, co-founder of Retail Systems Research. "It's silly not to do a price check."

Toys R Us began its liquidation sale in March and Bergner's in April after the companies failed to find buyers during bankruptcy.

Bergner's parent-company, Bon-Ton, was eventually auctioned off to liquidators Great American Group and Tiger Capital Group, which are also helping to run the Toys R Us going-out-of-business sales.

They did not return messages seeking comment.

"They have formulas. They know what they're doing," Rosenblum said. "They do lose money sometimes, but generally, they make money. Otherwise, they wouldn't be in business."

Liquidators make money by starting with small discounts, which bring people in the stores, especially for popular items that usually never go on sale.

"For the first several weeks, they are not a good deal," Rosenblum said.

While liquidators are accused of raising prices before the sales start, Rosenblum said they are limited by laws against deceptive advertising and pricing.

"There's certain things that aren't legal, so I don't know that they jack up the price. They may go back to the original MSRP (manufacturer's suggested retail price), as opposed to the street price," she said. "Then they push the price down from there. Ten percent off from MSRP isn't a deal."

Over time, the discounts increase, but the selection likely won't be as good.

"People get caught up in the frenzy," Rosenblum said. If you wait three weeks, you may get a better deal, "but what you want might not be there."

As stores start to lose inventory, the liquidators may choose to close lower-performing stores and move inventory to higher-performing stores.

Right now, the Toys R Us in Champaign has a sign saying that it is "Emptying our Warehouses! Restocking Daily With New Merchandise!"

"There becomes fewer and fewer stores with deeper and deeper discounts," Rosenblum said. "The object of the game is to get rid of overhead."

Toys R Us is expected to end its liquidation sales by the end of June, according to Regina Conway, a consumer expert with Slickdeals, a website that tracks discounts.

"Some Slickdeals users reported from the early sales that prices had been marked up prior to liquidation sale so the initial 'sale' price was really not a deal," Conway said.

"Now that we're getting to the end of the cycle, however, there may be products with deeper discounts, and ones that could be of value are brands like Lego that discount less frequently."

And Bergner's is expected to end its sales by the end of June or early July, Conway said.

"But some stores will be open longer and some shorter, dictated by the sales and inventory levels," she said.

She also encouraged consumers to price check, especially since purchases at liquidation sales typically can't be returned.

"Online deals and coupons can be as good as liquidation sale deals, with the added guarantee of being able to return your product if something is defective," Conway said.

And she advises customers to use credit cards whenever possible.

"Most credit cards offer price protection so if there is an issue with your purchase, your credit card will handle it," Conway said.

Quick tips

1. Compare prices: Use a smartphone while shopping to check other stores' prices and see whether the discount is actually a good deal.

2. Check for defects: Since all purchases are final, check for stains, tears and other issues before buying.

3. Use a credit card: Some credit cards offer price protection, which could save you from a bad deal.

Source: Regina Conway, Slickdeals

Sections (2):News, Business
Topics (2):Economy, Retail