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Monday, Jun. 15, 2009

Gottschalks' name all that remains

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Naked mannequins huddle in one corner of the store, Christmas trees are for sale in another, and piles of Oriental rugs are 80 percent off.

This is not the Gottschalks longtime customers know. The going-out-of-business sale is in full swing, and a liquidator, not the bankrupt 105-year-old retailer, is running the show.

The stores aren't the messy madhouse of customers fighting for deep discounts that some might imagine. In fact, some shoppers might not notice much difference.

But it's clearly a liquidation: Nearly everything in the stores is for sale, from the clothing racks to the office chairs, and it's all 50 percent to 80 percent off.

The sales must be finished by July 15, with some stores facing earlier deadlines. The Gottschalks at Century Center in Modesto is expected to wind down earlier than the Vintage Faire store.

Until then, shoppers should not forget who's selling them the merchandise, said Doug Broten, chief executive of the Better Business Bureau of Central California in Fresno.

"In liquidation sales, what people need to keep in mind is they are not buying it from the store they've been doing business with for years. They're buying it from liquidators," he said. "They've been granted the right by the bankruptcy court to use that name. It's not Gottschalks."

The liquidators won that right in a bankruptcy court auction, paying Gottschalks about $100 million. Any earnings above that will be shared between the retailer and the liquidators.

Bringing in outside merchandise -- and selling Gottschalks items elsewhere -- is a common liquidation practice, said Scott Testa, a professor of marketing at St. Joseph's University in Philadelphia.

Signs at many entrances alert customers that tags with a blue dot on them mean the item has been brought in from outside the chain. Tags with blue dots are everywhere in the stores.

Boscov's, an East Coast department store with 39 stores, bought some Gottschalks merchandise and was touting it in advertisements, Testa said.

Unlike Gottschalks, Boscov's survived Chapter 11. The family that founded it recently brought the chain out of bankruptcy protection with the help of government loans.

"There are a number of ways liquidators use -- and retailers in general use -- to get rid of inventory," Testa said. Selling entire lots of merchandise to another buyer may be easier or more profitable than unloading it through a lengthy liquidation sale, he said.

Oriental rug sales are commonly brought in during going-out-of-business sales, Testa said. That's happening at several area Gottschalks and also at Mervyn's liquidations.

Bargain or overpriced?

How good the bargains are depends on whom you ask.

For Criselda Padron of Parlier, saving $30 on Paris Hilton perfume at the River Park Gottschalks was a good deal.

"In general, a lot of the prices are very reasonable," she said.

Others were disappointed. Bonnie Carlson of Fresno said she didn't find many deals when she stopped by the Sierra Vista Gottschalks recently with a friend.

"We think it's overpriced," she said. "No bargains."

Nonetheless, she bought nightgown for $16 and a camisole for $10, both half off their original price.

Some customers had issues with the prices.

Linda Green of North Fork bought a pair of purses before the liquidation for $19.99 each, on sale from $40. Earlier this week, they saw the same purses advertised as 50 percent off the original price, but still selling for $19.99 at the River Park store.

"I don't think it's right to do that, but what are you going to do?" Green said.

Broten of the Better Business Bureau said such situations are common at liquidations.

"It's not atypical for them to raise prices initially and then take 20 percent off an increased price," he said.

Gottschalks liquidators did not return calls. But earlier they said they don't raise prices above the original levels. Scott Carpenter, an executive vice president with Great American Group, one of four liquidators handling Gott- schalks, said in March that items on sale before the liquidation starts go back to their original full price. Discounts are then applied to that price, he said.

Since all sales are final, Broten warns customers, "Make sure you're getting a good deal and you've done a little bit of comparison shopping."

He recommends shoppers buying an appliance such as a coffee maker remember that they will have to go through the manufacturer if there's a problem covered by a warranty or guarantee.

Business is steady

A quiet but steady flow of customers made their way through the stores this week. Last week, foot traffic at Fashion Fair mall was up 8 percent from the year before, which mall senior manager Mo Bagunu attributed to the Gottschalks sale.

Some stores have less merchandise than others; the River Park store is full.

For customers who want to know when the best deals happen, there is no clear answer. The longer the sale goes on, the lower the prices get, but the selection gets smaller too, Broten said.

"It's always a trade-off between selection and price," he said. "They're in the business of maximizing how much they get out of the liquidation."