Are liquidation sales and buying clubs a good deal?
I’ve started to write this blog post twice before and scrapped it both times because I sounded pissy (pardon my French, but I can’t think of a better word. Please let me know if you have a good alternative). So, let me try again.
The silver lining to the recent economic meltdown, assuming there’s still some change jingling in your pocket, is that you are in position to take advantage of the situation. There are tremendous deals in the marketplace should you want to buy anything from a new house/car/furniture to a new set of garden gnomes. My wife could write books on bargain hunting and you can see the excitement in her eyes these days. They’re dancing. It’s that euphoric look she gets when she throws open the doors at Talbot’s during a sale with a gift certificate tucked in her purse, knowing she’s about to triple dip by scooping up a two-for-one sale courtesy of a birthday present. Heaven.
The dark side of all this frenzied liquidation madness is that the unwary public is in danger of being hooked, gutted, and filleted faster than the half starved fish that jump on your toddlers hooks at the local trout farm. With the potential thrill of possibly saving 50% or more surging through their veins, many formerly discerning individuals unconsciously turn off that same common sense switch in their head they willingly flipped at the Florida state line on their first college spring break.
A friend of mine is close to the folks who own a highly regarded design store on the other side of town. They, sadly, have decided to shut their doors and hired a liquidation company to take care of that process. (Here’s where I start to sound pissy) This store that just a few weeks ago was so quiet the owners periodically checked for police tape around the building is now posting daily sales numbers I would be proud to take to the bank in a week! The reality is, for example, an oil painting that was listed for $800 was instantly repriced at $1199 and then marked down to $850 less an additional 10%. Sounds like a whopping 4% off sale to me, but its working. Furthermore, that liquidation company is boosting inventory by bringing in inferior product which shoppers are assuming to be of quality because of the fine reputation built over the years by the owners of that store. By the way, who do you go to when you need some customer service on an item purchased at a wacky blowout sale?
I am imagining those poor trout flopping on the grass, gills heaving.
So why does this trick work so well? It works because you, the intended “mark”, don’t know what the original price should have been in the first place. That “retail” price can be pulled out of thin air. It’s bluffing, just like in a poker game. And just as you don’t play poker with someone wearing sunglasses, you don’t buy jewelry from someone who whispers “psssst” and opens their coat, you don’t bet on golf against a kid with a deep tan and a two iron in his bag, you shouldn’t buy furniture from someone you don’t know or trust just because of the perceived discount.
When Publix has a two for one sale on pasta sauce, it’s a great deal. I trust Publix and I know how much the sauce cost the last time I bought it. I could write a whole post on pasta sauce as it relates to business…maybe I will.
What about the buying clubs? I have to be careful here because if you thought I sounded pissy before, that was nothing. Without going into too much detail, the warning sirens in your mind should be blaring like you got too close to the Mona Lisa. You are told you have to make your decision to join and pay up to five grand for the privilege to do so, on the first visit. You are not allowed to think about it for a couple of days? That’s worse than the old days of buying a car from the guy with white shoes and a gold tooth! These tactics sound like they came from the sticky pages of a Cancun time share sales manual. A rule of thumb to remember, especially when that common sense switch is getting shorted out by the grease oozing from a deal that’s too good to be true, is that your level of skepticism should equal the amount of pressure placed on you to buy.
I would happily take five grand from every person who graces my front door in exchange for not providing much service and allow them to order at “discounted” prices. Guess what, I’d let them think about it for a couple of days, too.