Why Sports Authority's Going Out of Business Sale Isn't That Great -- Yet

"Everything Must Go!" If you've ever shopped at a going-out-of-business sale, you've probably seen these words. And you've perhaps assumed that these words mean the store is desperate to get rid of every last bit of merchandise, and will resort to super-cheap pricing to get shoppers to bite.

So when you see headlines like the one in USA Today pumping up Sports Authority's nationwide "giant going-out-of-business sale," you might understandably think that all of company's 400+ stores around the country would be a bargain-hunter's dream. But recent history tells us this isn't the case, at least not yet.

First and foremost, the purpose of comprehensive liquidation sales like the one Sports Authority is undergoing is to take in as much money as possible. Yes, the goal is also to empty out the stores of all merchandise, but they're in no rush, and they want to maximize the return on sales.

So Sports Authority will follow the pattern set by retailers such as Borders, Blockbuster, and Ultimate Electronics when they went out of business in recent years. The discount will be marginal in the beginning—say, 20% or 30% off—and the true bargains will only appear in the final weeks before stores close and the goods have been thoroughly picked over.

Liquidation sales kick off this week at Sports Authority locations around the country, and stores won't be shuttered until August 31. The Consumerist estimates that it'll be "maybe sometime in July" before widespread deals worthy of the "going-out-of-business sale" name pop up.

Shoppers should have a good idea of how things will proceed at the new round of Sports Authority closures based on what's been happening over the past few months, during a period when the company announced that "only" 140 stores would close. The going-out-of-business sale prices at these stores have been nothing special, for the most part. Sure, some winter-season goods have been offered for 60% or more off, but that's how a lot of sporting goods stores price merchandise at this time of year. The discounts on in-season items such as bikes, camping gear, and baseball apparel have been underwhelming.

The Portland (OR) TV station KGW did some price-comparison shopping at one Sports Authority in the middle of a going-out-of-business sale, and found that there were a few terrific bargains, some items were priced higher than competing outlets like Target and Toys R Us that most certainly were not going out of business.

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"I think going-out-of-business sales are often a good deal for the business going out of business," Tom Gillpatrick, a retail expert from the Portland State University’s School of Business Administration, told the station. “It's a bit of a game. They may mark a few things down deeply to draw you in. The initial discounts aren't that big.”

So, as always: Buyer beware. And when you're shopping at any going-out-of-business sale, view every last "deal" and "bargain" with a higher degree of skepticism than usual. Besides the worry that the price may not be all that great, remember that odds are, you won't be able to return or exchange it in the future. In addition to that "Everything Must Go!" sign at sales like these, there's usually another one: "All Sales Are Final!"