A going out of business sale can be a tremendously profitable undertaking for a jeweler (or any retailer for that matter). These types of sales can also be run as moving sales or inventory clearance sales.
In the jewelry industry, there are consultants who specialize in promoting and running Going Out of Business Sales (GOB Sales). For these sales the consulting companies bring in large amounts of inventory such as distress and close-out merchandise from jewelers or domestic manufacturers and low quality merchandise, often mass manufactured overseas. The new inventory is then added to the jeweler’s existing inventory and marked up to an artificially high level to begin the process of the extreme markdowns.(See Marking up to Mark Down).
Signs that an outside consulting firm is involved in a GOB sale include the addition of new personnel and new jewelry styles before the sale is announced and the continued presence of new inventory, even weeks into a sale. The business never actually seems to run out of jewelry. Be aware of quality, warranties and lack thereof and of rules of the sale before buying.
The jeweler will inevitably state that all sales are final - items are non-returnable for any reason. This allows the jeweler to make any statement regarding the sale or misrepresent the quality or condition with no fear of reprisal. Customers are frequently and falsely told that all necessary alterations, such as ring sizing, can be performed by anyone (often these rings are of a design or quality that prohibits resizing).
These are some examples of our experience in the aftermath of a local Going Out of Business Sale. In all of these cases, the clients were left with the jewelry and no recourse.
A woman purchased a watch that was marked "Paolo designed by Paolo Gucci" (which was the name of a legitimate watch designer – unrelated to Gucci). She was told at the sale that the watch retailed for $800.00 and purchased the watch for $400.00. Two months later, she brought the watch in to us to replace the battery. The crystal was damaged during the process, and when attempting to find a new crystal for the watch, we discovered that the watch appeared to be quite used, not new.
We then contacted "Paolo designed by Paolo Gucci" and were told that their watches contained specific serial numbers which the watch brought to us did not have and that this customer’s watch was almost certainly counterfeit. Being counterfeit, no parts are legitimately available. "Paolo designed by Paolo Gucci" had not manufactured this style of watch for some time, but when last sold, it retailed for no more than $150.00. We then proceeded to research the watch on the internet and located several similar (assumed counterfeit as well) styles on Overstock.com for the selling price of $29.99.
One ring sold during the early stages of the sale was presented by a husband to his wife at Christmas. The ring did not fit her and several diamonds were loose, but not to worry, he was told that anyone could size a ring. The ring was a wide invisibly set style with some chipped and some loose diamonds that needed to be sized significantly and could not be done without great risk to completely damaging the band. Even though the GOB sale was still in effect at this time, the customer was told that she could not return the ring and that a new one in better condition and a correct size could not be obtained in its place.
One ring brought to us to clean and check after the sale was represented to the purchaser as a new ring. The ring appeared to have been used – diamonds were loose and the prongs showed signs of obvious wear.
Buyers often flock to going out of business sales believing they are the sharks taking advantage of a business in distress. More often than not, the sharks are behind of the counter. A traveling sales representative for a jewelry manufacturer who recently closed a third generation family jewelry store (in a different state) confessed that he made more money in a month during his GOB Sale than during the entire year preceding the sale.
With all this said, there are legitimate Going Out of Business Sales, but these sales definitely require the buyer to beware.