Tuesday, January 27, 2009

Retail store closings do not equal deals for consumers

I think this goes without saying, but many people still fall for the "GOING OUT OF BUSINESS" signs that will be popping up with increased frequency.

Let's take the case of Circuit City as our latest example. Circuit City is having it's liquidation handled by an outside firm that specializes in liquidations. After they announced they were closing, Circuit City closed their doors for a couple of days to prepare for the liquidation. When they reopened a number of people noticed that prices had actually gone up on a number of items.

For example:

Model/ Store Price/10% Off Price/ “True” Current CCWeb Price
Samsung/PN50A550 $1999.99 $1799.99 $1699.99
Samsung/LN46A550 $1699.99 $1529.99 $1449.99
Samsung/LN52A750 $2999.99 $2699.99 $2699.99
Sony/KDL40V4100 $1399.99 $1259.99 $1199.99
Sony/KDL52XBR6 $3499.99 $3149.99 $3299.99

Source: HD Guru

What this shows is that the store price was inflated by 10-20% on many models before they were "discounted" by 10% at the start of the liquidation. In fact, many of the liquidation prices exceeded the regular price on Circuit City's own website.

A similar analysis from the boys and girls at dealnews.com found........

"From cameras to TVs, every item we saw at the store was marked as 10% to 40% off. However, of all the items we looked at, only one (the 32" Sharp LCD) was cheaper at Circuit City than it was online. Even so, we've seen other Sharp TVs with similar specs for less.

After our initial disappointment, we wondered if smaller items, like Blu-ray movies and memory cards, were better priced. Unfortunately, they weren't. Most Blu-ray movies started at $22.99 while a 4GB SanDisk Extreme III CompactFlash Card went for $45 (that same card costs $26.05 + $7 s&h at Buy.com.)

The same applied to gaming. Activision's Guitar Hero III Legends of Rock Bundle with Guitar for Xbox 360 sold for $55.99 at Circuit City. Online we found it for $50 (at Toys "R" Us.) Open box items were similarly overpriced. We found an open box Sony Bravia 120Hz 46" 1080p LCD HDTV, model no. KDL-46XBR6, for $2,519.97. Online we found a new model for $1,899.95 with free shipping (at B&H Photo-Video.) It's worth noting that open box items purchased at Circuit City could not be returned under any circumstances. Dozens of posters throughout the store made this clear.

As expected, Circuit City's liquidation sale was atrocious. Even though the store had a Black Friday vibe, there were no sales to be found. But we were surprised to find that the stores beating Circuit City aren't just online-only stores like Amazon and Buy.com. Even Toys "R" Us and Sears undercut Circuit City. It bears repeating: Liquidation sales aren't synonymous with discounts, and consumers should remember that as more merchants file for bankruptcy."

These "liquidation sales" tend to be very good to the liquidators and very bad for your wallet. If you are thinking about going to Circuit City at least wait until March when they are really getting ready to shutdown.


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