The disappointing start to Target’s liquidation sale is normal for stores trying to make some money before closing their doors, a retail expert says.
Bargain hunters crowded the chain’s 133 Canadian stores when the sale began Thursday, but many were disappointed to discover that many prices had only been shaved ten to 20 per cent. Electronics, such as iPads, were only five per cent off. The biggest discounts were in cosmetics and women’s fashion, where prices were up to 30 per cent off.
But the modest discounts are not unusual for the first day of a liquidation sale, according to retail analyst Ed Strapagiel.
"What Target will likely do is cash in as much as possible," Strapagiel told CTV’s Canada AM on Friday. "The way you do this is something called a 'Dutch auction,' where you start off on the high side and as time goes on the discounts will increase."
Target owes some $5 billion to creditors, and is trying to make at least some of that money through its liquidation sales. While the company may not make the full amount, Strapagiel believes, by pricing strategically over the coming weeks, they may come close by the end of the sale period.
Items that were ten per cent off Thursday, could be cut to 20 per cent in a week, Strapagiel said, so that Target can sell as many items as possible, at the highest prices.
The longer consumers wait, the more likely they are to get deeper discounts, but the less likely they are to find the items they want.
"The name of the game isn’t to get out as fast as possible, but to get as much money as possible," Strapagiel said, noting that the sale could last up to two months.
Target announced on January 15 that it planned to close all of its Canadian locations following an unsuccessful bid to crack into the market.
Since arriving in 2013, the retailer consistently struggled to appeal to Canadian buyers. Shoppers were disappointed that Canadian prices didn’t match those in the U.S., and embarrassing inventory problems left many shelves empty.
But Strapagiel said he doesn’t think the latest let-down will permanently scare away bargain-hunters.
"Once the discounts get up to 50 per cent, I think you’ll find people will find it in their hearts to come to Target," he said.
