http://clarkhoward.com/liveweb/shownotes/2009/01/20/14950/


Jan 20, 2009 -- Beware of going out of business sales
Are you tempted to try to steal a deal at Circuit City now that the chain is going out of business? Be careful -- you may actually wind up paying more than you expect!

Liquidation sales can be good during their final days, but Clark has a warning about the kinds of prices you'll see in the early and middle stages.

Here's the deal: Failing business like Circuit City put their assets up for bid and a third-party liquidation firm comes in to handle the going out of business sale. These liquidators are experts at creating the illusion of a deal. Normally, they bring in "fake" merchandise that was never in the store before and jack up the prices just to mark them down.

So even as they supposedly discount, they still make huge margins by pretending the merchandise was worth much more upfront. You think you're getting a deal, but you're really getting rooked.

On a human note, 34,000 former Circuit City employees are now being added to the unemployment rolls. Clark believes Circuit City's real downfall came when they decided to cut costs by firing knowledgeable staff in 2007. You know the end is near anytime a company sees its people as an expense instead of a money-making asset.

Finally, there's a related warning that Clark wants to sound regarding the high/low pricing model beloved by electronics retailers and others. The idea here is to lure you in on a sale item and then sell you other things on a markup.

For example, HDTVs are very price competitive at most retailers. HDMI cables, however, can be purchased for as little as $2 or more than $100 depending on the retailer. The difference? $98 -- the cable is exactly the same! So beware of jacked up prices on some goods that offset retailer losses on other merchandise.