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Seven Ways to Score Big When Stores Go Bankrupt

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How to find the real deals -- and not get taken for a ride.

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"Thank you and farewell," read the somber subject line in my email. The sender was Smith & Hawken, purveyor of pricey garden tools.

I guess I lost that game of chicken. I'd been waiting for a mid-summer sale to replace my cheesy plastic garden chairs with some of that fancy teak "outdoor furniture" they sell… or used to sell.

Smith & Hawken, a subsidiary of Scotts Miracle-Gro (SMG), just bit the dust -- so to speak.

The company joins a long list of familiar names that won't make it through the recession, including Circuit City, Linens 'n' Things, Virgin Megastore, the family-owned Ritz Camera chain, the same family's Boater's World stores, and the venerable western department store chain Gottschalks.

And this is just the beginning. The International Council of Shopping Centers expects 148,000 retail stores to close by the end of 2009, according to Bankrate.com (RATE).

Meanwhile, the Smith & Hawken web site is closed, and final sales at its 56 stores in 22 states are under way.

A shopping opportunity, you think? Maybe not. The "final liquidation sale" isn't as enticing as it sounds. Especially right now, but more on that later.

When big names in retail die, the final sales are usually run by any of a half-dozen liquidation experts. They're not in the business to lose money.

Here are some facts to know before you go:

1. What a liquidator calls "original price" is the manufacturer's suggested retail price. Their discount price could well be more than the store ever charged, and more than you'd pay for the same item at a surviving competitor.

2. This really is a final sale. No returns, no exchanges, no complaint department, and probably no chance to closely examine what you're buying.

3. Liquidators have been known to salt sales with inferior merchandise, counting on customers assuming that the goods reflect the store's past reputation.

4. Worse, the above holds true for clearance sales of big-time dead retailers. Consumer Reports warns that liquidation sales of electronics, jewelry and Oriental rugs are often flat-out scams.
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