When is a sale really a sale? |
| By Dana Dratch • Bankrate.com |
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Sure, the sign reads "sale." But what
does that really mean to your wallet?
Not much, according to several retail experts. In
fact, a sale is no guarantee of a good buy.
"It's a serious issue,"
says Bob Robicheaux, executive director of marketing,
management and industrial distribution studies of
the University of Alabama at Birmingham.
"The [Federal Trade Commission] has for many
years been looking at questionable practices with regard to some
retailers and promotional pricing," he says.
"It's not an unusual practice for a retailer
to buy an item for $100, and the normal mark-up is to $200,"
says Robicheaux. "But they mark it up to $300. They know good
and well that most people are not going to buy it at that. The store
will then run it at 50 percent off. And you think you're getting
it at cost."
Consumer adviser Clark Howard has made a vocation
of getting the best deals on everything from clothing to electronics
without relying on those colorful sale signs. His secret: research.
"I want to know a product category upfront,"
says Howard, co-author of "Clark's Big Book of Bargains."
Consumers need to take a similar approach to make
sure that sale sign means savings:
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Think twice before you buy: |
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"If you just go by what the advertising says,
you'll be totally misled," says Howard.
Here's a look at three consumer-goods areas and what
it takes in each to make a sale price worth paying.
Deals in electronics
"Consumer electronics are not typically high-margin items,"
says Andy Pargh, co-author of "The Gadget Guru's Guide to the
Best." Pargh says a good margin for retailers is about 25 percent.
He recommends consumers do some comparison shopping
via computer before setting foot in the store. Learn the baseline
or "normal" price for the item you want and investigate
which stores and Web retailers are giving the best deals.
So what's a sale in this product category? "Anything
over 15 percent, if it's brand new technology," says Pargh.
"More than six months old, you want to get down to the 25 percent
mark."
Demo models can be a good buy, as long as the store
tells you that's what you're getting and gives you a "hefty
markdown," he says. Again, look for at least 25 percent off,
he advises.
The best buys? If you can wait, pick up closeouts
on last year's models. "You can save 40 to 60 percent,"
says Pargh. "And, depending on the product, there is nothing
wrong with getting last year's model."
Sales in apparel
When it comes to clothing, it definitely pays to know the merchandise,
says Vincent Quan, instructor at the Fashion Institute of Technology.
"Know what you want, first and foremost,"
says Quan, who has spent decades working for some of the biggest
names in the garment industry. "And make sure you've shopped
a little here and there -- department stores, specialty retailers,
boutiques, mom-and-pop stores, discounters and then the outlets."
Consumers love sales and clothing retailers know it.
"Anything less than 20 percent doesn't spur that much interest,"
Quan says. "Thirty percent will get you to look."
The normal markup for retailers, he says, is about
100 percent to 125 percent over wholesale. Some items, such as coats,
are often marked up more than that to allow for a regular cycle
of seasonal sales.
But sometimes, says Robicheaux, retailers will take
the price even higher, just to mark it down again.
And frequently, if you wait for a sale, you sacrifice
selection. "Fringe sizes are normally what you find" after
an item has been in the store long enough to receive a deep discount,
says Quan.
If you like store brands, called "private label"
merchandise, it's difficult to comparison shop. Often, says Quan,
"the same manufacturers produce these products quietly on the
side." He suggests you look instead at what you're getting
for the money. Does it stand up to your quality standards?
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