October 30, 2008
Consumers who shop "Going Out of Business" sales are being urged to do
their homework before they buy and that includes comparing prices.
Many large, nationwide businesses have filed for bankruptcy protection in the past year, with several large chain stores, including Linens 'n Things and Mervyn's, closing their doors and are advertising merchandise at seemingly huge discount prices during what they call Going-Out-of-Business sales.
Such sales are intended to sell as much of a store's inventory as quickly as possible, to maximize value for its owners and creditors. Customers are drawn to GOB sales with the idea that they are buying at bargain prices. However, this idea can be abused.
Sellers may increase prices before advertising mark-downs, or bring in new inventory purchased elsewhere at rock-bottom bulk prices, which they then try to sell at closer to normal retail. In New Mexico, the Distress Sales Act forbids this sort of consumer manipulation and exploitation.
However, it does not apply to sales conducted under the supervision of a bankruptcy court. For example, a bankruptcy court in Delaware, supervising the liquidation of a 600-store retail chain, may not be aware that an unscrupulous GOB specialist is trying to increase sales proceeds in another state by changing list prices or bringing in cheaply acquired merchandise.
Consumers should take time to compare the quality and prices at GOB sales to those at other stores before they buy. Don't assume that a half-price sale is a great deal.
There are other concerns. GOB sales are usually final and buyer's remorse in not an option. Once you're past the cash register, you can't return the purchase if you find a better price elsewhere. Keep in mind that the store is soon going to be out of business, and there won't be any place to return defective items.
Know what you're looking for before you go to a GOB sale. Know its normal price range. Decide if you're getting a bargain on the basis of your own knowledge, not what the sign says. Be sure that the advertised bargain is really a bargain.
There can be bargains at GOB sales, but consumers should be alert to the possibility that what a store sign says is a slashed price might not be a better deal than they can get at another store down the street.
