Nov 3, 2008 6:07 pm US/Pacific
Closeout Sales Don't Always Mean Big Deals
Consumerwatch Asks A Retail Expert When Sales will Hit 50% and Over
SAN FRANCISCO (CBS 5) ―
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Mervyn's is one of the Bay Area chains offering deals.
AP
Bargain Shopper Whitney Stone got lucky. She found double markdowns while swimming through the sea of sales signs at Shoe Pavilion. It's just one of many retailers drowning in the economic downturn.
Linens & Things is also bankrupt and liquidating with 30% off deals. Circuit City announced it will cut prices and clear shelves at 9 Bay Area locations in a nationwide effort to stay afloat. Mervyns is closing shop and blanketing stores with 25-50% off signs. Vilen Gabrielyan saved about $16 on shorts, socks and tshirts.
"Everything I bought was 25% off the regular price," Gabrielyan said. "I was a little surprised there weren't deeper discounts because there was a lot of inventory. They will end up spending more money moving it than just cutting prices to 70% off."
Retail veteran and industry insider Paul Stoner said consumers see closeouts and assume businesses are desperate. But when it comes to liquidating, he says you won't see the best prices early on.
"They will start at low discount 20%, then 30% and see what they can recoup," said Stoner. "Then they'll take the bulk of what's left and sell it to Ross, Marshalls or TJ Maxx. So, you may see it (70% discounts) in January if the stores still have their doors open but it'll be picked over."
Stoner now manages San Francisco's Cherish, a boutique card and gift shop. In this economy, he said customers already expect and ask for markdowns on holiday items. But, they are also willing to buy early if they know the items are unique and priced overall below the competition. He prices items at about 10-15% less than large competitors and offers services like free gift wrapping and advice on scrapbooking.
The bottom line, even though in retail it's a "Buyers' Market," businesses can't afford to cut costs at any expense. That's especially true of the businesses that are survivors.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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