Sears is set to close hundreds of stores as a potential liquidation looms - but prices might increase instead of plummet
- Sears is closing hundreds of stores - and will close hundreds more Sears and Kmart stores if the company liquidates.
- Store closures can often lead to price increases instead of the blowout deals shoppers may expect.
- Outside liquidators are hired to set prices in closing stores, which can result in price hikes, especially in sales' early days.
Sears is closing hundreds of stores. But, that doesn't mean shoppers should expect blowout sales.
On Tuesday, Reuters reported that Sears will ask a bankruptcy judge to liquidate, which would result in the closure of all Sears and Kmart stores.
The company has closed hundreds of stores in recent years as it has struggled to keep Sears and Kmart alive. In the most recent announcement, Sears revealed plans to close 80 more locations by March 2019. If Sears liquidates, all of the 687 Kmart and Sears stores that remained open when the company filed for bankruptcy in mid-October will close.
Customers may assume that the liquidation sales would result in massive deals. However, checking the prices, they are likely to notice something entirely different.
When a retailer liquidates, an outside liquidator is hired to get rid of inventory in stores. Often, the liquidator earns a percentage of profit from the liquidation sales.
"Typically, liquidators raise prices of remaining inventory to the manufacturer's suggested retail price, then offer a discount off that price," Business Insider's Hayley Peterson reported in 2018.
"Sometimes, these deals aren't as low as what the store was previously advertising when it was trying to get rid of unsold inventory without the help of a liquidator."
One trick to make the most of liquidation sales if a Sears or Kmart near you is closing is to bide your time. Discounts are the lowest as the sales kick off, and then get steeper as the date of the store's closure grows closer.