Good Question: Are 'Going Out Of Business' Sales That Good?
MINNEAPOLIS (WCCO) -- It is hard to miss the signs. "GOING OUT OF BUSINESS" on the outside of Ultimate Electronics. "EVERYTHING MUST GO" at the Borders Bookstore. But are going out of business sales really a good deal?
"I think they're an OK deal," said one man walking out of a Borders with a couple books he got at 20 percent off.
Steve Manhart said on Twitter, that the liquidation sale at Ultimate electronics wasn't that great: "Their regular sales were better than that!"
"In general it's a good deal, worth coming to see," said Mark Bergen, the chair of the marketing department at Carlson School of Management at the University of Minnesota.
Bergen pointed out that the 20 percent discount on books and 40 percent discount on other items at Borders is probably the best deal you'd ever get in that particular store. Not that that means it's the best deal you could get anywhere.
"Many regular sales are meant to draw you in, they're loss-leaders, where they make their money somewhere else. These prices may not be the best prices you can get anytime at any place," said Bergen.
But the days of going out of business sales just to have another going out of business sale six months later are over.
"All of this has to be above board," said Bergen.
Minnesota passed its law regulating these types of sales in 1985. You can only be going out of business for 120 days. Businesses are not allowed to increase inventory for the sale "by ordering or purchasing an unusual amount of merchandise during the sale or during the 90 days before the sale began," according to the state statute.
Minneapolis is even tougher. You get 90 days for a going out of business sale, and you have to fill out a form to get a going out of business sale license.
Stores typically don't mark up the prices in order to mark them down. According to Bergen, frequently liquidators take over the stores, and then mark the prices down from the regular full retail price.
"You may pay more than you did a couple weeks ago," depending on prior sale prices, he said.
Inside Ultimate Electronics, we found 10 percent off a Canon HD Camcorder, priced at $899. We found the same camcorder at Walmart.com for $748.
A 46" HD Mitsubishi TV was priced at $1,619 at Ultimate and $1,599 on sale at BestBuy.com, so almost the same price.
But as the going out of business sale goes on in time, those prices keep dropping. And because consumers understand that when a store goes out of business, it has to liquidate its inventory, they can be very popular.
"These kinds of prices are ones that as a shopper it makes sense. It could be 20, 40, 60 percent off," he said, and it makes sense to at least take a look.
