Sears is closing hundreds of stores and keeping the rest open through the holiday season — but shoppers won't get the blowout deals they might be expecting (SHLD)
- Sears filed for bankruptcy and announced plans to close 142 stores before the end of the year.
- While customers may expect blowout deals, Sears' precarious financial position likely means that it will be unable to slash prices this holiday shopping season.
- Liquidation sales can actually lead to price increases, instead of the deals customers anticipate.
Sears' bankruptcy will likely not create the sales bonanza that many shoppers are seeking this holiday season.
Early Monday morning, Sears filed for bankruptcy and announced plans to close 142 stores before the end of the year. The retailer has closed hundreds of stores in 2018 in an effort to keep more than 500 locations up and running at least a few months longer.
However, just because Sears is preparing for liquidation sales across the United States does not mean that customers can expect blowout sales this holiday season.
"Sears will be keen to trade well over the holidays but is not in a financial position to be extravagant with giveaways or massive deals," Neil Saunders, the managing director of GlobalData Retail, told Business Insider via email on Monday.
"As such, there will be some promotional activity, but it will not be huge, and it will not be out of step with what the company has offered over the past few years," Saunders continued.
The 142 stores that are closing may need to liquidate stock and get rid of all products. However, Saunders says, Sears' ability to reallocate products to other stores means that customers shouldn't expect a "fire sale" with dirt-cheap prices.
Further, liquidation does not always mean slashing prices. Outside liquidators that are hired to get rid of closing stores' remaining items often raise prices to manufacturer's suggested retail price, then offer discounts from that figure. As a result, stores sometimes end up raising prices during liquidation sales, even when trying to clear out all inventory.
"In many ways, Chapter 11 and continued trading is good news for other retailers," Saunders said. "It means that Sears is not in a position to discount deeply over the important holiday period."
According to Saunders, customers might also be wary when it comes to purchasing more expensive items such as appliances at Sears, due to concerns that guarantees and service contracts may not be honored. This could further boost holiday sales for companies including Home Depot, Lowe's, and even potentially Walmart and JC Penney.
Read more about Sears' downfall:
- Trump slams Sears leadership after bankruptcy filing, saying the company was 'obviously improperly run for many years'
- Sears is shuttering 142 stores with liquidation sales starting immediately — here's the complete list of closing stores
- Sears, once the largest retailer in the world, has filed for bankruptcy and is closing 142 stores. Here's how it got there.
- Sears' top spokesman jumps ship as reports emerge of a potential bankruptcy filing
- 'I've decided to step down as CEO': Eddie Lampert sends email to Sears employees after the company files for bankruptcy