Many people see the retail industry slumping this year because of the continuing credit crisis, meaning Americans can’t borrow as much to continue our spendy ways, and increased prices across the board, meaning Americans can’t buy as much with the money they still have. Either way, there are only a few ways that a retailer bankruptcy actually affects you. First, let’s take a look at what actually happens when a retailer goes bankrupt. Then, we’ll talk about how this affects you.

Retailers Going Bankrupt

When a retailer goes bankrupt, it’s almost irrelevant to the consumer what type of bankruptcy protection they file for because the effects are the same. Chapter 11 means they want to soldier on, restructure their debts, and try to get back on its feet. Chapter 7 means the business is kaput, everything is going to be liquidated, and there’s no hope for the company.

How This Affects You

Gift Cards: Either way, a retailer in bankruptcy protection will see all of its gift cards frozen and made worthless. This is the greatest impact on the consumer and one reason why I argue that you shouldn’t hold onto gift cards. When Linens ‘n Things and Sharper Image filed bankruptcy earlier this year, both froze gift cards. There are exceptions and those often occur in the case of Chapter 11 bankruptcies, where the retailer will still honor gift cards, because they want to keep good will. If they freeze gift cards but still keep stores open, it’s less likely that consumers will shop there after they’ve been “screwed.”

Another scenario is when those gift cards are made worthless by the bankrupt retailer, other retailers may swoop in and offer discounts to those holding the worthless gift cards. It’s akin to airlines offering fare discounts to those holding bankrupt airline tickets.

Liquidation Sales: Just because the retailer is going under doesn’t mean you’ll find any good deals. CompUSA’s liquidation sales were awful, Shaper Image liquidation sales were awful, and Bombay liquidation sales were awful. When the items were overpriced in the first place, it’s hard to justify paying “normal” price for something you can never return. However, there are always deals to be found if you’re diligent but don’t expect a fire sale just because the retailer is bankrupt.

Returns: You’re probably out of luck on returns with a bankrupt retailer. Any purchases you make after they’ve declared are definitely not returnable, in fact they will probably put up huge signs in the store indicating “all sales are final” and “no returns.” As for purchases before they went bankrupt, you might be able to return it but I doubt it. If the retailer is really going away, there’s no reason to accept the return. If the retailer is restructuring, you might be able to return it but I wouldn’t bet on it.

A retailer going bankrupt is never a good thing, even if you’re a bargain-hunter swooping in, because a lot of people will have lost gift card value (in the case of Linens ‘n Things, ~400,000 lost around $42M in gift card value!), the sales will probably suck, and you lose another sales-tax, income-tax paying shop in your neighborhood.

(Photo by paul keleher)

There’s an interesting Scientific American article out regarding Why Things Cost $19.95 and it delves deeper into a concept most people understand and generally regard as true. I always had thought that the purpose of pricing something at $19.95 or $19.99 rather than $20.00 was because it seemed psychologically “much cheaper” despite an actual difference of a few cents. While that may still be true, the article in Scientific American seems to paint a picture in which the impact is more subtle. If the original price is in round numbers and we try to guess the wholesale cost, our guess will be far lower than if the item were originally priced a few cents off. The $20.00 price puts our “increments” in whole dollars whereas a $19.95 price puts our “increments” in cents. The mental anchor, whether it’s a round or not-round number, really set the stage for how we guess.

To be honest, I never bought the concept that $19.95 seemed psychologically cheaper than $20.00 but this explanation seems far more plausible. If your eyes see a $20.00 item and your brain unconsciously guesses it’s worth $18.00, you’re less likely to buy it (because you want a good deal). You’re more likely to buy it if your eyes first see $19.95 and then your brain is tricked into thinking it’s worth $19.45, you are paying less of a premium (despite you actually not knowing how much of a premium you’re paying). The trick is far more subtle!

To extend this further, and this is now based on my experience (or perhaps I read this somewhere a long time ago) and not the article, I find that the Wal-Mart pricing structure is intended to give shoppers a sense that they are getting a deal. Now that people are tuned into $19.99 being actually $20 (or more, given sales tax), they gone to weird pricing like $19.43 and $19.57, because I think people see odd numbers and think discount! $19.99 is regular price, but if it’s $18.76, it probably means it’s cheaper because another retailer would probably price it at $19.95. I don’t know if this is actually what happens but I bet that’s what they’re banking on.

What do you all think?

Since many states are having their first tax-free period (for hurricane preparedness) this weekend, I thought it would be helpful if someone did a recap of all the tax sales across the nation (I’m unaware of a similar list for 2008 existing anywhere), so I did searches of all the states and collected the information on any sales tax holidays they are having. Many states have scaled back the tax-free program because of projected tax revenue shortfalls (Florida canceled its spring tax sale for hurricane preparedness supplies and shortened its typically ten day school supply tax-free period to seven days) but many still have some sort of program in place.

What started as a tax holiday on clothing and shoes has now spread to multiple tax sales for some states. Some have a spring-time hurricane preparedness tax-free period, some have added an energy efficiency related tax-free period for the fall, and some have all three. Below is as comprehensive a list as I could manage and I hope you find it useful. If a state doesn’t appear, I believe it doesn’t have a sales tax holiday or it’s Alaska, Delaware, Montana, New Hampshire or Oregon and they don’t have a sales tax.

The state names link to the state’s Department of Revenue or some other resource that will fully explain every last painful detail of the tax holiday in that state, such as exceptions to the tax holiday.

• Alabama - August 1st - 3rd, covers clothing <$100 per item, computers/software/computer supplies <$750, school supplies <$50 per item, books <$30 per item.
• Connecticut - August 17th - 23rd, clothing and footwear <$300.
• Florida - August 2nd - 8th, clothing, shoes and backpacks <$50 each, school supplies <$10 each. The spring-time hurricane preparedness tax-free period was canceled for 2008 and the usual 10 day tax-free period for school supplies was scaled back to only 7 days.
• Georgia - July 31st - August 3rd, clothing <$100, computer/equipment < $1500, school supplies <$20, energy efficient appliances <$1500; there is also debate over an energy efficient related tax sale in early October.
• Iowa - August 1st - 2nd, clothing/footwear <$100 per item.
• Louisiana - May 24th - 25th, hurricane preparedness sale exempting purchases up to $1,500 for emergency items.
• Massachusetts - Has not yet established the dates of the sales tax holiday but is usually the second weekend in August, covers anything with a sale price <$2,500 with some exceptions.
• Missouri - August 1st - 2nd, clothing <$100 each, school supplies <$50 each, computer/equipment <$3500
• New Mexico - No announcement but usually first weekend in August, clothing/footwear <$100 each, school supplies <$15 each, computers <$1000 and computer equipment <$500.
• North Carolina - August 1st - 3rd, covers clothing <$100 per item, school instructional materials <$300 per item, sports & rec equipment <$50 per item, computers/software/computer supplies <$250 per item.
• Oklahoma - No announcement yet but usually a weekend in August, covers clothing/footwear <$100 each.
• Tennessee - April 25th - 27th - Clothing <$100 per item, School and Art Supplies <$100 per item, and Computers <$1500 per bundled package
• Texas - August 15th - 17th, clothing/footwear <$100, backpacks <$100; May 24 – 26 - Energy Star tax holiday, eligible items listed on website (thanks Sarah!).
• Virginia - There are three holidays for 2008 in May, August, and October. May 25th - 31st, designated hurricane preparedness equiment priced <$60 per item and portable generators priced <$1,000 per item. August 1st - 3rd, back-to-school sales tax holiday on school supplies <$20 per item and clothing & footwear <$100 per item. Finally, October 10th - 13th, energy savings sales tax holiday on Energy Star Qualified products including appliances purchased for noncommercial home or personal use <$2,500 each.
• Washington D.C. - No official announcement but it’s usually a week in August and a week in November, clothing/accessories/shoes <$100 and school supplies <$100.

If I missed a state, please let me know and I’ll add them. I thought it was funny that Maryland’s first sales tax holiday wouldn’t be until 2010… I’m not buying any clothes or shoes until then!

(photo by pulpolux)

I think that the key to finding a good cable company is identifying which ones have the best local technicians. The call centers will always be spotty, I’m sure those folks are overstaffed and overwhelmed (especially if they’re located internationally, if you’ve ever seen the documentaries), so their performance is always going to vary depending on when in their shift you call. Get lucky and get someone just beginning their shift, you’ll probably get 100% accuracy. Find someone who just ended a horrible 30 minute call with a customer bitching at them… probably not the best time to get them. So the discriminator should be the local technicians (since services will vary little, unless it’s Comcast downsampling HD!) and I wanted to give a ringing endorsement to the local technicians in the Howard County area (I have no idea how their areas are segregated). I’ve had two calls (installation and one repair) and each went very well.

My most recent one began the other day when my wireless connection to the Verizon-provided cable modem and router went down. I turned on my XBox 360 to see if the connection is still good because it’s connected via ethernet cable (I could’ve brought my computer down and connected it but I figured if all was well, I could squeeze in a couple games of Call of Duty 4 for my trouble :)) but that connection was down as well. So, I called up Verizon and we went through the process of resetting the router, resetting the box outside (not sure what it’s called), and then checking the settings on my computer (traceroutes, pings, resets, the works). All fail. No biggie, electronics fail all the time.

That’s when the Verizon tech said that the problem was probably the coaxial connector on the cable modem/router. The explanation seemed a bit off, since I could ping the IP of the box outside (meaning the signal went through that connector), but the end result was that they’d mail me a new cable modem/router which was a good thing. The modem was supposed to arrive on Monday but when I called that night, the CSR on the phone let it slip that perhaps the last CSR didn’t complete the shipment order. What’s funny is that when I asked him directly whether the package was shipped, he would give me evasive answers (I didn’t ask more than once, I just thought it was funny he’d respond like taht). Anyway, the end result was that a local technician would be out the next day.

So a lackluster performance by the call center but once again the local technicians came through. The woman arrived first thing in the morning and got to work. We tested out everything, swapped out the cable router, and still no wireless or wired connection. She reset the box outside, still no good. She played with the settings on my computer, which I had jacked up trying to get the XBox to use my computer as a wireless modem - I couldn’t figure it out. Still nothing. Eventually we tried the XBox again and then finally the computer connected without a problem. Apparently we just didn’t wait long enough for the box to fully cycle when we tried to connect the first time. Either way, she said that she’d stick around until everything was up and running.

Now, I don’t consider that above and beyond service, but given all the complaints people have about technicians (like sleeping on the job), I figured a story about how a technician that showed up on time, was courteous and did a thorough job, would be a nice change of pace.

Thumbs up Verizon, please keep it up.

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not your enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” - From translation of Sun Tzu’s Art of War

In this article, I’m going to try to identify a salesperson’s tools, why they work, and hopefully what you can do to defend against them whenever you’re going to make a purchase. These aren’t tricks or scams, these are just solid sales techniques that have been proven to work. I won’t go over things that are outright scams, like baiting and switching or “the one you want is out of stock, how about this one” or “whoops I added this up wrong and it’s way too high, lemme see how you react,” just the ones that are generally honest and just good tactics.

Throughout reading all this, remember one truism: Salespeople need to eat. They will try their hardest to sell you something and they will persist if you give them any reason to believe a sale can be made. Being polite is one thing, but being honest and forthright is better because it allows a salesperson to work on a customer willing to buy. If you’ve made a decision not to buy, make it very very clear and the salesperson should understand. If they don’t, they won’t be in sales for long! If they do, they’ll be thankful to be able to get a good excuse and move onto someone who will turn into a commission check.

Becoming Your Friend

All salespeople worth their suit will try to build up a rapport, try to get into the comfort zone with you, and ultimately try to become your friend. I’ve seen it in a car dealership, I’ve seen it with real estate agents, and I’ve seen it in Chinese restaurants. The key to business has always been about building relationships and building networks. Business owners build relationships with customers, customers come back for more and are more trusting, right? Would you buy from a random store or one in which the owner has shown an interest in your well being? Certainly the latter. This practice extends to salespeople, by building a relationship, you might not buy right now, but you when you do buy, you’re more likely to return.

Here’s what you need to do - become their friend but don’t drop your guard. The goal of any business person, even if they are becoming your friend, is to close on a sale and earn another dollar. You can take advantage of this by asking for discounts today in return for promises of future business and using word of mouth. “If you help me out and knock off a few bucks, I’ll be sure to tell all my friends to shop here.”

Yes leads to more Yes

Psychology studies have shown that people who are in a “yes” frame of mine are more agreeable. I know it sounds ridiculous and I can’t find the study (maybe it was in Tipping Point or something) but it’s true. What this means is that a salesperson will ask you a bunch of yes questions in the hopes that it primes you to agree to a sale. Sometimes the questions are ridiculously obvious, “do you want something that lasts? something with a brand name?” and sometimes they’re not so obvious. Don’t confuse these primer questions with legitimate questions about your needs, but still keep on your guard.

What you should do it answer everything truthfully because some of those questions are information seeking, but just remember in the back of your mind there’s some salesperson psychology work going on here.

Making You Wait

This always happens at a car dealership. You test drive a car, you start talking numbers with the salesperson, then they have to get their manager to review the numbers. He or she leaves for what seems like a while, comes back and says the manager is on the phone, hold on a minute. Then they start up a, usually, unrelated conversation about weather, what you like to do, their kids, etc. Then the manager might show up or they disappear for a while. Sometimes the manager is honestly busy, sometimes they’re trying to tire you out by making you wait. People make mistakes when they’re tired, they’re hoping your guard lowers a little more with every passing minute. (Note that this doesn’t happen when you first show up, only when you start talking numbers!) This is also another opportunity for the relationship building to continue, maybe you learn about his kid who needs braces or is starting up school, maybe you find our she has a son that broke his arm, who knows.

If they make you wait more than five minutes for a manager, get up and leave. If you feel tired and drained, get up and tell them you want to sleep on it because you are tired. If they say hold on, don’t hold on. Firmly shake their hand, ask for their business card, thank them, and walk away. You should never make a large capital purchase, such as a car, without reviewing the paperwork with at least two people you trust and certainly never do it if you’re not 100% clearheaded.

Special Offer, Today Only, Building Urgency! Now!

I talked about this when I got a quote on windows (and again when I got a quote on carpet), but it’s “special offer” price that’s good only for the next four hours. Or the next day. Or a week. Whatever the case, they cut a few percentage points off the price in order to get you to sign up right now. It’s creating a sense of urgency where none exists. If you had a hole in your roof, they wouldn’t need to drop the price to entice you - you already have that sense of urgency.

The deal is not a special offer and will be valid for at least a week if you ask. The fact of the matter is that once they recognize you aren’t going to bite on a “deal that expires in 10 seconds,” they aren’t going to insult your intellect by insisting on it. Just ask them if they’ll extend it a week and if they won’t, walk away because it won’t be the best offer out there. I think it’s unreasonable to ask for a month because prices of raw materials fluctuate but it can’t hurt to ask!

The Sample Close

I forgot about this great tactic until SavingFreak reminded me (thanks!) in the comments below, but this is where they something along the lines of “if we were able to do this, this and this, would we have a deal?” A close cousin of this would be if the salesperson said “what would I have to win your business today?” or something similar. With the first version, they try to guess what roadblocks you may have and overcome them right off the bat. If they guessed wrong, they’re hoping you reveal what it is preventing you from signing and try to address that if they can. The second one gets right to the point and asks you.

When they ask, tell them what you want and tell them everything you want. If it sounds unreasonable, that’s okay, tell them anyway because that’s what it would take! Don’t ever give up something without them asking for it first. For example, if you need $500 knocked off the price, 12 months of 0% same as cash financing, and for it to be leather and not cloth - demand it. You never know until you ask and you don’t want to just say $250 off and then feel compelled to sign when they make it happen.

The Hand Off

Some people are good at buttering people up, some people are good at explaining technical details, and some people are good at closing deals. The Hand Off occurs when it appears that you, the prospect, aren’t going to buy. This is a last ditch effort where they bring in the big guns, a VP or a sales manager or something similarly titled, to come in and “solve your problems.”

The salesperson will usually tell you that they want to get their manager to speak with you, don’t bother arguing because chances are he or she will get fired if they never employ this tactic. Just say “Ok, but I need to leave in five minutes for [insert something].” At the very least, you can give the salesperson an excuse they can give to their boss if needed.

Conclusion

The few tactics I outlined above are tried and true methods that have sold a lot of things to people. There is much more to sales than those ideas, such as identifying the benefits of products, being persistent, working hard, etc., and you can find a plethora of books about it, but those are the tactics that can turn an otherwise level-headed buyer into a foolish one. I suspect that you’ve encountered one, if not all, of the tactics above, so please share your experience! I’d be interested to see if there were any other ones that I missed.

(Photo by Mr.mt)

What happens when you make a product that promises to “boost your immune system” and ward off colds? You make a ton of money, if it actually boosts your immune system and wards off colds. When you make that promise and don’t actually do that, at least anymore than a sugar pill placebo, then you are called Airborne and you settle for $23.3 million for false advertising. I’ve never taken the stuff, mostly because it looks like a nasty orange mixture and because I didn’t believe it, but a lot of people did and if you are one of those people, you are entitled to a piece of the settlement.

If you did drink the stuff, you probably didn’t do your body any harm; the mixture was just a super-shot of Vitamin C along with some other goodness that was mostly likely expelled out of your body the next time you used the bathroom. In fact, Vitamin C is water soluble and you urinate out anything more than 100% the daily recommended value (so the extra 230948203483209% is pretty much useless). If you do feel a cold coming on, taking Vitamin C is not a bad idea but taking 2309428304923% will not help anymore than 100%. (Some other vitamins such as A, are fat soluble and thus not expelled in urine, and you can certainly overdose on those so be very careful!)

Anyway, if you bought an Airborne product between 01 May 2001 and 29 November 2007, then you qualify to file a claim against the settlement. If you have proofs of purchase (unlikely unless you are a serious receipt filer) then you can get a refund for everything you bought and stuff have a proof of purchase for. Otherwise, you can claim as many as six products in addition to the ones you have proof for. So, if you have a receipt for three boxes then you can make a claim for as many as nine (3 proofs plus 6 undocumented items). The only downside is that everyone and their mother is likely to make a claim since you can claim up to 6 items without proof, whether you bought it or not, so you will only get your piece after the $23.3MM has been divvied up.

The deadline to submit is 15 September 2008. If you opt to mail it in, it must be postmarked by September 15th.

Resources:

• Settlement Website
• Settlement Agreement
• Online Claim Form
• Paper Form

I have an interesting “ethical” question for you all, especially given the fervor over the Costco return policy.

I recently purchased an Epson Home Cinema Projector that came with a $300 rebate and a free bulb rebate (worth nearly as much). One of the quirks about the rebate was that you had to mail it within thirty days, rather than the typical static time limit that was ignorant of when you purchased. As you can imagine, what happened was I got all excited with the projector and forgot to mail the rebate within the 30 day limit. I did exactly what the manufacturer wanted, I purchased the project at the “list price minus the rebate amount” in my mind but I actually paid full price. It’s been a while since I’ve made a $300 mistake like that, one that could be chalked up to carelessness and laziness rather than circumstances that were less within my control.

My solution to this was something that some may find unethical (or at least gray) but I didn’t see a problem with it. I purchased another Epson projector and then submitted that receipt with the other documentation (UPC code, serial number) so that I’d be compliant and the rebate was approved. The only cost to me was shipping the second project back via UPS Insured; it set me back around $60. All in all, the added hassle netted me $240 and a free bulb.

While I feel that was certainly in the gray area (submitting a receipt that didn’t technically match the UPC), I personally found that to be on the good side of the ethical line. I returned the project in exactly the same condition that it was sent to me and Amazon wasn’t out anything (maybe shipping fees) and I received a rebate I was rightfully entitled to (I did buy the projector, I just missed the 30 day window by a few days). And I was certainly on the good side if you consider how quickly rebate fulfillment companies are to screw the consumer at every opportunity!

What do you think?