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Is that store's sale really a sale?

Some retailers employ a variety of pricing tricks to make their discounts seem better than they really are. For consumers, the old advice still applies: Shop around.

By Bankrate.com

Sure, the sign reads "sale." But what does that really mean to your wallet?

Not much, according to several retail experts. In fact, a sale is no guarantee of a good buy, so take note of return policies as you shop.

"It's a serious issue," says Bob Robicheaux, the executive director of marketing, management and industrial-distribution studies of the University of Alabama at Birmingham.

"The (Federal Trade Commission) has for many years been looking at questionable practices with regard to some retailers and promotional pricing," he says. "It's not an unusual practice for a retailer to buy an item for $100, and the normal markup is to $200. But they mark it up to $300. They know good and well that most people are not going to buy it at that. The store will then run it at 50% off. And you think you're getting it at cost."

Consumer adviser Clark Howard has made a vocation of getting the best deals on everything from clothing to electronics without relying on those colorful sale signs. His secret: research.

"I want to know a product category upfront," says Howard, a co-author of "Clark's Big Book of Bargains."

Consumers need to take a similar approach to make sure a sale sign means savings:

  • What's the product quality?

  • What do similar items sell for elsewhere?

  • Is it last year's merchandise or this year's?

  • Were the sale items brought in just for the sale, or are these goods that the store has been carrying?

"If you just go by what the advertising says, you'll be totally misled," Howard says.

Even the skimpiest effort at shopping around pays off, experts say. Here's a look at three consumer-goods areas and what it takes in each to make a sale price worth paying.

Deals in electronics

"Consumer electronics are not typically high-margin items," says Andy Pargh, a co-author of "The Gadget Guru's Guide to the Best." Pargh says a good margin for retailers is about 25%.

He recommends consumers do some comparison shopping via computer before setting foot in a store. Learn the base line, or "normal," price for the item you want and investigate which stores and Web retailers are giving the best deals.

So what's a sale in this product category? "Anything over 15%, if it's brand-new technology," Pargh says. "More than six months old, you want to get down to the 25% mark."

Demo models can be a good buy, as long as the store tells you that's what you're getting and gives you a "hefty markdown," Pargh says. Again, look for at least 25% off, he advises.

The best buys? If you can wait, pick up closeouts on last year's models. "You can save 40% to 60%," Pargh says. "And depending on the product, there is nothing wrong with getting last year's model."

Sales in apparel

When it comes to clothing, it definitely pays to know the merchandise, says Vincent Quan, an instructor at the Fashion Institute of Technology in New York.

"Know what you want, first and foremost," says Quan, who has spent decades working for some of the biggest names in the garment industry. "And make sure you've shopped a little here and there -- department stores, specialty retailers, boutiques, mom-and-pop stores, discounters and then the outlets."

Consumers love sales, and clothing retailers know it. "Anything less than 20% doesn't spur that much interest -- 30% will get you to look," Quan says.

The normal markup for retailers, he says, is about 100% to 125% over wholesale. Some items, such as coats, are often marked up more than that to allow for a regular cycle of seasonal sales.

But sometimes, Robicheaux says, retailers will take the price even higher, just to mark it down.

And frequently, if you wait for a sale, you sacrifice selection. "Fringe sizes are normally what you find" after an item has been in the store long enough to receive a deep discount, Quan says.

If you like store brands, called private-label merchandise, it's difficult to comparison-shop. Often, says Quan, "the same manufacturers produce these products quietly on the side." He suggests you look instead at what you're getting for the money. Does it stand up to your quality standards?

Outlets are another weapon in the clothing discount arsenal. But shopping at an outlet store doesn't necessarily mean you're going to get a steal. While outlets offer a discount off retail prices, they don't pay the same markups. "Generally, outlet stores are run by vendors," Quan says.

For instance, say a vendor makes a handbag for $50 and sells it to a regular retail store for $100. The retailer pays that, and the shopper will see a price tag of $225.

But at a vendor-owned outlet, you could see that same $225 handbag on sale for 30% off, or $157.50. Because there is no retail middleman, the vendor is actually making $107.50, a profit of more than 200% above his cost. Though consumers are getting a reduced price, it's not a true 30% discount, Quan says.

Shoppers also need to recognize that with outlets, the merchandise many times is subtly different. Outlets also offer closeouts, discontinued stock and overruns of varying quality.

To get the best deal, study the product and shop price. Quan had been looking for a particular pair of Timberland shoes and knew the usual selling price. So when he saw them in a small local retail store for $40, half the normal price, he knew that was a bargain. "They're sitting in my closet now," he says.

Discounts on home furnishings

When it comes to furniture, sale signs mean little.

"Phony sales are very prevalent at furniture stores nationwide," says Kimberly Causey, the author of "The Insider's Guide to Buying Home Furnishings." "Some companies price retail so high that nobody charges full retail. Everything is at a discount."

Len Lewin, the author of "Shopping for Furniture: A Consumer's Guide," agrees. "If you're simply buying the discount, you're missing the whole point, and you'll make a bad deal," he says.

And ignore the financing deals. "I find that with most consumers, they buy the financing rather than the furniture," Howard says. "People forget the price of the furniture and focus on the payment."

If you want a particular piece, get the manufacturer's name, the collection name and the item number "to make sure you're comparing apples to apples." Then compare prices at three to five stores minimum, Causey says. Don't be afraid to use the phone to save shoe leather.

"I've seen cases where one retail store was offering 75% off and another was offering 40% off, and (the 40%) was less expensive," Causey says.

Reputable outlets offer some great deals, according to several furniture experts. "If you want the absolute best deal, travel to North Carolina and shop at the factory-owned furniture outlets," says Causey. The savings typically run 65% to 80% off retail, she says.

Causey purchased a name-brand armoire that normally sells for $3,600 for $899 plus $100 for shipping. Shipping costs will depend on a consumer's ZIP code, but as a general rule, she expects about 5% of the retail price.

Want to get an even-better deal? Manufacturers display the new designs twice a year, in April and October, at the International Home Furnishings Market in High Point, N.C. Many outlets hold a sale right before or after the event to make room for new stock, says Causey, who estimates these sales can save buyers an extra 5% to 10%.

Don't forget the local discount stores. Howard says some of his best furniture buys have come from Costco, Sam's Club and BJ's Wholesale Club.

In the final furniture analysis, it doesn't matter how little you pay if it's not a quality product -- that's not a deal.

"You just have to know enough about the basics of construction," Lewin says. "Pull the drawers out. Touch it and feel it, and look at the finish to know if you're dealing with a good piece. Your eyes will tell you what's good and what's not so good."

This article was reported and written by Dana Dratch of Bankrate.com.

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