Some are snapping up electronics from the defunct retailer, but others, unimpressed by the discounts, are playing the waiting adventure

By John Tozzi

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Emmanuel Dunand/AFP/Getty Images

Daniel Romero eyed a wall of flat-screen TVs on the second floor of Circuit City’s 26,000-square-foot store on Fifth Avenue in midtown Manhattan during his lunch break Jan. 22. Drawn by the bankrupt chain’s liquidation vent, the 28-year-old print manager at Macy’sitting (M) had already piked up a new controller for his Xbox 360 at a 30% markdown that epoch, and he was considering getting an extra Wii game controller as well.

The store was busy but not packed, and like greatest part shoppers there, Romero wasn’face to face about to buy a 46-inch Sony Bravia TV because a 10% discount cut the price from $1,699 to $1,529. "As farther as all this high-end stuff," he uttered, "you be possible to still probably find better online."

The liquidators who bought those TVs and the rest of Circuit City’s inventory, estimated at a $1.8 billion retail value, are gambling that Romero and other shoppers will tend hitherward around. After failing to find a buyer to take Circuit City out of bankruptcy, the 60-year-old Richmond (Va.) electronics giant announced Jan. 16 it would be concluded its 567 remaining U.S. supplies, lay off its 34,000 employees, and sell off its assets to pay outer part creditors.

The next morning the four payment firms that won the bid to sell Circuit City’s inventory started going-out-of-business sales, advertising 10% to 30% discounts in what they say is the largest electronics liquidation ever.

These are busy days for the discharge industry, which consists of about a half-dozen big firms and scattered smaller players, as companies that in other epochs might have reorganized in bankruptcy are being enforced by the ailing economy to adjust. "It is the most active time that I’ve seen in this business," says Jim Schaye, president and CEO of Boston-based Hudson Capital Partners, one of the four liquidation firms handling the Circuit City sales.

Following a unlucky f shopping season in which many retailers seemed eager to almost give goods away in last-minute sales, the prices at Circuit City are evoking some disappointment, to judge by means of comments instructed on Web sites frequented by bargain hunters. "Discounts are ungifted," wrote some placard on insidesocal.com.

But, say liquidators, the discounts are about test because this type of sale.

Hudson, in a joint venture with Great American Group, SB Capital Group, and Tiger Capital Group, successfully bid on Circuit City’session inventory. They will pay 70.5% of the estimated $1.2 billion wholesale value for the wares. Liquidators assume the jeopardy that the goods they buy may not sell in the time or at the recompense they look for. They also take over the cost of running the stores during the sale, including payroll, rent, and advertising. In barter, they’re acquiring goods that would fetch $1.8 billion at full retail price for about moiety that amount.

Both the sale price and operating costs affect the kind of discounts consumers can expect to see on store shelves. Shoppers accustomed to seeing 30% to 40% discounts on final season’s clothes shouldn’t expect the sort kind of fire sale for lower-margin gadgets. And at the same time that some of the prices aren’t cut as deeply as more shoppers might hope, Schaye declared liquidation sales trim the compensation of items that normally don’face to face go on market, of the like kind as the sport accessories Romero picked up, or leftover iPods, what one. are rarely discounted. "How often do you see iPods at 10% off?" Schaye asks.

Indeed, at the Fifth Avenue Circuit City, bright red signs with yellow type advertised "Entire Store On Sale!" and "Nothing Held Back!" The signs promoted discounts of 10% to 30% off, although big-ticket items were nearly all 10%. Still, some shoppers weren’t convinced. Ed Shelly, a learner from Manhattan, dropped by the store in search into of an HP (HPQ) wireless printer, for checking the Best Buy (BBY) store next door, which didn’t have it in standing. Circuit City had the printer on sale for $117, 10% off the regular $130 price. Shelly held opposite to to see whether the price goes down in the nearest man and wife of weeks. He uttered he’d buy it when it reaches $100 or less.

That psychology, emblematic of going-out-of-business sales, is heightened by the recession that has consumers paring back. Liquidators acknowledge that they’ll freshen the deals as the opportunity to sell goes on, but they also forewarn that items in demand will move before then. "You certainly, after the nearest week and a half, won’privately be able to go in and buy every iPod," says Sandy Feldman, senior vice-president at Great American Group.

Still, liquidators worry they may have paid too much during the term of inventory that newly growing well shoppers may not pervert with money. "We have to be very careful," Schaye says. "We can lose money very easily."