THE TOUGH CUSTOMER- Short Circuit: How low does this e-tailer go?
November 27, 2008 Huge signs reading "Going Out of Business," "Liquidation Sale" and "Everything Must Go" are intended to mean one thing to people.
There'll be some big bargains.
The logic is simple. A business, forced to close its doors and sell its inventory– the business term is "fire sale"– will take whatever it can get.
By the looks of the bare shelves at electronics retailer Circuit City in Albemarle Square, which has been conducting just such a sale, the pitch has worked.
Circuit City is in Chapter 11 bankruptcy, meaning it is not going out of business, but is trying to reorganize itself into a profitable company. Its plan calls for the closing of 155 stores nationwide, including the one in Charlottesville. Liquidation sales of inventory in stores designated for closure in retailers' Chapter 11 cases are common as the struggling business seeks to raise cash.
It is less clear, however, whether these sales are such a great deal for consumers.
An unscientific sampling of a variety of items in the Circuit City store over the last week suggested bottom-fishers hoping to pick up that long-coveted HDTV or stereo receiver for some ridiculously low price might want to try a new fishing hole.
In fact, one item I priced, a 40-inch Sony HDTV, actually cost less that day on Circuit City's website ($1899.99) thanks to the manufacturer's one-day price cut than it did in the liquidation sale ($1919.99). And I was able to find the same television for sale from online sellers for as low as $1499.99.
Most other items I priced at the store matched the advertised 20% off of Circuit City's online prices, but they were squarely within the range of other prices I was able to find online. An Onkyo stereo receiver priced at $240 at Circuit City's sale, for example, could be had online for between $230 and $300.
Because of Circuit City's depleted stock and the wide variation of available television models, apples-to-apples comparison with prices in other local stores was difficult. At least one comparison, however, suggested Circuit Prices were pretty good: a 50-inch plasma television was $900 less at Circuit City than at Crutchfield, where it cost $2,500, although the day I shopped, the Crutchfield set did come with a free Blu-Ray disc player worth about $350.
Bill Crutchfield, founder and CEO of the eponymous retailer, says his company doesn't worry about matching a liquidation price (but was more concerned with online store prices). He notes that he has not even visited the Circuit City liquidation sale here.
Crutchfield, however, says he has seen media reports of companies that hype liquidation prices, and indeed, there are a number of web postings easily found online complaining that Circuit City's liquidation prices are not, in fact, sufficiently low.
A Circuit City spokesman wouldn't comment on the pricing, saying all aspects of the sale were being handled by a third-party liquidator. Circuit City's local store manager also said he could not comment.
A representative from that Northbrook, Illinois-located liquidator, Hilco Merchant Resources, was unavailable to comment.
Beyond the issue of prices, Crutchfield points out, is the fact that dealing with a liquidating retailer "has some hassles associated with it."
While a manufacturer's warranty will apply to any item purchased in the sale, Crutchfield explains, there will be no store at which a return can be made.
While that problem may be "not insurmountable," Crutchfield says– for example, returning a defective MP3 player might be a simple matter– "with a big TV, getting it back to the manufacturer can be more complicated."
Of course, on non-electronic items, like printer supplies and blank discs, the markdowns at Circuit City were fairly straightforward and less risky. For example, while researching this story I was able to pick up an ink cartridge at 20 percent off, saving myself $3.65.
That money went right into a new fund I'm starting to save up to get that 50-inch plasma.