Everything Must Go!

Ever wonder why it is that when you go into a store with "Going Out Of Business!" signs in the window, everything you find for sale is really expensive? Despite the "Up To 50% Off!" signs? Actually, the signs probably have the "50% OFF!" part in really huge letters, so that people in passing cars can see them, and the "up to" part in 6-point type. Unless 4-point or 2-point was available, but that's really not the point. Even if we allow for the "up to" part, shouldn't the prices still be lower than when the store was part of a going concern?

An article in MSN Money News points out that in many cases, when a company has entered the "Final Clearance" stage of its life cycle, the owners will bring in truckloads of merchandise, either from their own warehouse or from some deep discounted source, put prices on it, and then mark it as 50% off. Since it's merchandise that was never sold in this store in the first place, there is no way for the consumer to tell if it's really 50% off, or full price, or even marked up from what it might have been before. The sad fact is, people are gullible, and greedy, and will rarely even ask. And if they do, so what? What does bad will mean to a business that will not be there next week? If they can trick the foolish and unwary into spending a lot of money on cheap, defective crap it just lowers the amount they will owe to their creditors -- or raises the amount of meat that will be left on the bones when they carve up the company.

In fact, if the company can acquire some marginal merchandise at pennies on the dollar, they can even use this tactic without resort to fraud. If the product originally retailed for $10 and the company was able to purchase it on close-out for $2, they can put it into their own "Going Out Of Business Sale" at $5, sell it to the customer at a genuine 50% off of the original retail price, and still make $3 (or 250% profits) on each sale. Of course, if the item was never worth even $2 (let alone $10), it's still a rip-off; and if the company goes out of business the following week and the item breaks two days after that, there is no way for the customer to get his or her money back. But at least the company isn't actually committing fraud.

This is not to suggest that all Final Clearance sales are fraudulent, or that it isn't possible for a knowledgeable consumer to make some good purchases during one. When the old Federated Electronics Group went under (almost 20 years ago now) I was able to find an really nice set of bookcase speakers on the $10 table that not only worked beautifully and sounded great, but were still working just fine a few weeks ago when I gave them to charity because we're moving across country and we don't really need them anymore. If you know what a good price for a given product is, and can find an example that isn't damaged or used (or really a cheap knock-off copy of what you wanted to buy) then you can come away from some of these sales with a bargain. And if you don't know what you want and what you should expect to pay for it, why are you making any major purchase in the first place?

Of course you still have the problem of not being able to return things to a retailer that does not exist anymore, which means you should probably look for manufacturer's warranties and/or third-party service contracts when making these purchases. If no such warranty is available, then you probably shouldn't purchase anything you can't afford to lose. And remember that if you have or purchase a gift card from a company that goes out of business, there is no way to get your money back...

But that's a post for another day...