Beware the GOOBS

You heard me.

Circuit City announced last week that they’re finally throwing in the towel. Kaput. Finished. They’re closing all remaining stores and liquifying all of their inventory. Most consumers will automatically assume that sales of “up to 50% off” are a good bargain. Unfortunately, they aren’t; that Blu-Ray DVD player that you saw for “20% off” at Circuit City may actually cost more than the exact same model at Best Buy.

Years ago we used to have some laws on the books to protect consumers from this sort of thing, but I think they vanished at some point during our, uh, “corporate-friendly” mentality of the past decade.

Basically, what happens is simple. As a hypothetical example, let’s say that there’s an LG 52″ 1080p LCD TV at Best Buy for $1200. And let’s say Circuit City was selling the exact same model a week ago for $1250. MSRP on this particular model is $2000. Now that Circuit City has transferred control of their retail stores to liquidation companies, said companies will immediately adjust pricing on just about everything in the store. What this means is that they will take that $2000 MSRP TV, “mark it down” by 20%, and sell it for $1600. Consumers will walk in, see the eye-gouging “OMG 20% OFF” signage throughout the store, and immediately buy, thinking they’re getting a great deal. In reality, they just lost $400.

Another common tactic is creative interpretation of words like “was” and “previously”. Wal Mart is notorious for this, and they’re not even going out of business.

When a store shows an item on sale and lists a “was” price, it only means that someone, somewhere, at one point in history, listed that exact same item for sale at the “was” price. For example, I bought my mom a 42″ HDTV at Wal Mart for $848 (not on sale) back in September. Just a few days ago, I saw that exact model in-store “on sale” for $858. “Rollback,” the sign said. “Was $958”. Again, a less-educated customer only sees that it’s been “marked down” $100, and instantly assumes they’re getting a good deal. Good for Wal Mart shareholders, bad for you.

Bulk items are another favorite of liquidators. Quick: If a 30-pack of blank DVD-Rs is $8.99 and the 250-pack is $79.99, which is the best deal? Since you’re reading this, you’ve probably already guessed that the 30-pack is cheapest at $.29 / disc (compared with the 250-pack at $.31 / disc). Most consumers, however, always assume that buying in bulk is cheapest. Be wary; always divide the price by the number of units (be it DVDs, ounces, or something else entirely).

A lot of this seems like common knowledge, but … well, to be blunt, most consumers are fairly easy to manipulate. Liquidation companies thrive on that; they have made a very profitable business out of knowing that consumers will buy a more expensive item as long as it says “OMG SALE” on it somewhere.

So before you head out to Circuit City searching for great deals, do yourself a favor and check prices online at Best Buy, Wal-Mart, Target, & Costco / Sam’s. Especially on big-ticket items, you may wind up saving yourself a major bundle of cash.

One final word of advice: When Hilco Trading commenced liquidation of the Circuit City stores that closed last November, they immediately implemented a “no refund under any circumstances” policy. Curiously, they also implemented a strict policy of refusing to allow customers to inspect merchandise prior to purchase. If Circuit City is doing this again with their current liquidator, stay far, far away. If you buy an item that has been damaged in some way, you’re SOL. The manufacturer won’t cover damage under the warranty, and Circuit City won’t take it back.

You know, come to think of it, maybe you should just shop at Newegg instead.