Everything Must Go!

I was reading a notice on the Consumerist website the other day about the Borders Books chain closing down a bunch of their locations and having “liquidation sales” to get rid of the remaining inventory – and fixtures, and anything else – at those locations. As you might expect from the source, the post was full of complaints about liquidation sales and the shady practices associated with them, and I found myself reflecting back over years to the first few times I had encountered such sales, and bumped into such practices. Looking at the whole issue now, with the perspective of a middle-aged business scholar, I’m not sure what I find more upsetting: the fact that nothing seems to have changed, or the closely related fact that people still fall for these tactics…

First of all, consider the nature of the transactions going on in such sales. If the company is actually going out of business they have no motivation to care what their customers think about them; they’re not going to be here next week. If the company itself is still around they may have hired a liquidation company to sell off everything in the locations being closed, and glean whatever revenue they can in the process. Liquidators also don’t care what the consumer thinks about them, because they aren’t going to be around next week (by then they will have packed up their lurid yellow-and-black banner signs and moved on to their next client). In either case, there is no motivation to provide customer service, be polite to the customer, or even worry about the condition of the products being sold; just slap a sticker that says “No Returns/All Sales Final/Sold As-Is” on everything and let the buyer beware…

Then there’s the pricing issue. Many companies choose to jack up their prices before taking the huge discounts proclaimed by the banners out front, so that even with the “80% Off! Everything Must Go!” sales being offered, you’re still being charged more for the orphaned merchandise without guarantee or warranty. I recall one such sale at a store near our house where some products I had been looking at for around $200 were “On Sale” for $289 dollars during the “Going Out of Business” sale – and were later marked up to $329. The motivation here is obvious – every penny you can squeeze out of the customers will either placate your creditors or increase the amount you will salvage from the bankruptcy and walk away with, and there’s no reason to worry about what your customers will think, since they won’t be your customers next week anyway. Some companies will actually bring in additional merchandise (including things the store never carried when it was in business) to sell on these terms, just so they can stretch out a little more revenue…

Why anyone still falls for these tactics remains an open question. Certainly anyone with a web-enabled phone should be able to check prices on the spot and determine what is actually a bargain and what is a scam. Similarly, most people should be able to grasp that paying thousands of dollars for something without a warranty or any way to return it (in some cases, without even being allowed to look inside the package before you buy it!) isn’t functionally any different from buying something off the back of a truck – except that you can’t be charged for receiving stolen property OR turn in the sellers to the police if the thing you bought turns out to be a brick in an otherwise empty box. In fact, if you sign an invoice that gives away all of your legal recourse, there isn’t anything you’re going to be able to do about it; that’s what “no recourse” means!

It has often been said that it isn’t possible to cheat an honest man. I have not found this to be true; just because someone is honest that doesn’t mean that they aren’t also naïve, credulous, or stupid. However, it has frequently been my observation that it generally isn’t necessary to cheat an honest man, since any community will be filled with a sufficient number of greedy, larcenous, unethical fools to accomplish almost any practical purpose. It’s entirely possible to find a good bargain during the liquidation of a company, just as it is entirely possible to win at cards; I’ve done both on occasion, and probably will again. But it’s also true that the world is full of predators, and the only way to avoid becoming prey is to stop acting like prey…