Insider's Guide to Furniture & the Home Furnishings Industry

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Are Going Out of Business Sales a Good Time to Buy Furniture?

Why do there seem to be so many Going Out of Business and Liquidation Sales in the furniture industry?

Going Out of Business Sign

Liquidation and GOB (Going Out of Business) sales are a highly profitable business. They are almost never conducted by the original store owner.

GOB and Liquidation sales are not just for unprofitable stores forced to go out of business. Any change of ownership will almost inevitably lead to a GOB or Liquidation Sale.

Liquidation sales are highly competitive. Several liquidation specialists will bid against each other for the right to conduct a GOB sale.

The winning bidder does not expect to make large profits from the sale of the left over merchandise .

The liquidation firm's primary goal is purchasing the right to bring in and sell new merchandise during the term of the GOB Sale.

The remaining inventory is purchased by the liquidator for a fixed percentage of the original cost paid by the retailer.

That percentage may be surprisingly high. Making a profit on the left over furniture is not the main point of the GOB sale. It is not where they make their huge profits.

There seems to be something irresistible to the general public about GOB and liquidation sales.

It creates an overwhelming expectation that there will be genuine deep discounts available.

The old inventory is merely a nuisance to the liquidators. They clear that out while bringing in their own product assortment.

Liquidation firms quickly dispose of remaining merchandise at a slight profit. Then the real sale begins.

The liquidation firm brings in their own inventories of inexpensive new furniture. This inventory is purchased from manufacturers in huge quantities at highly competitive prices.

This furniture is sold with pre-set “comparative" pricing. This allows the liquidators to show high percentage discounts while still selling at full markup.

The liquidators make massive profits by selling huge amounts of the new merchandise.

They use sophisticated advertising campaigns that have been perfected over many decades. Limited time sales are backed by enormous advertising budgets.

The goal is to create a sense of urgency for the public. Large numbers of customers crowded into a store increase that sense of urgency.

The liquidation firms take full advantage of the public's expectations. They recruit teams of expert salespeople. Some are hired on a temporary basis. Others work full time, traveling from city to city.

These sales people are highly trained and experienced. Liquidation companies recruit top salespeople, the “best of the best.” They know how to close sales quickly and then move on to the next customer.

The result is astonishingly high sales over the time allotted for the sale. Afterwards, the company moves on to the next liquidation sale in another town.

Once upon a time Going Out of Business Sales could keep going and going for years. That is no longer the case.

State and local governments have cracked down on phony “Liquidation” and “GOB” sales.

Most states and many cities or towns have laws and regulations governing the time limits. The time allowed for these sales varies from location to location.

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