As store closings spread during this recession, liquidation sales and their urgent declarations - EVERYTHING MUST GO! - are tantalizing shoppers in growing numbers. But they are seldom the bricks-and-mortar equivalent of a guy in hock willing to sell his Rolex for pennies.
Au contraire, dear shopper. A liquidation is a counterintuitive consumer experience.
Liquidations are often sophisticated moneymaking operations, especially when run by professional firms whose primary goal is not to play Santa Claus but to make the most money possible for a distressed company.
Lawmakers and advocates have sought to protect gullible consumers for decades from the frenzy of these high-decibel events. (Pennsylvania's law hit the books in 1937.) But many shoppers still get seduced by the lure of bold-faced banners, blaring TV advertisements, and the prospect of fire-sale prices.
"They think that the store is desperate and is willing to let things go for whatever it can, because it's got to close its doors," said Anthony Giorgianni, associate finance editor at Consumer Reports Money Advisor, a subscription newsletter. "The reverse is really true."
"The going-out-of-business sign, the psychology is so strong that the liquidators know that they're probably going to command a pretty good price for those items."
In the case of a bankrupt retailer, liquidators are hired with a primary mission: to generate cash so that creditors can be paid.
That is what is going on now with local company Oskar Huber Fine Furniture, which declared bankruptcy in September. With federal judicial approval from New Jersey, the Huber family hired Planned Furniture Promotions Inc., or PFP, of Connecticut, to run its going-out-of-business sales.
