As Loehmann’s Liquidates, Bargains Get Bigger as Shelves Get Emptier

The Bronx-based department store Loehmann’s may be in the process of a fire sale, but when, oh when, will the deep discounts begin?

Loehmann’s, which filed for bankruptcy last year, began liquidating its collection of discount clothes and other merchandise earlier this month. But some customers expecting a going-out-of-business fire sale may have been dismayed to see markdowns that averaged just 30 percent.

“It all has to do with how customers react to a sale,” said Michael McGrail, the chief operating officer of Tiger Capital, one of the liquidation firms handling Loehmann’s 39 stores, five of which have already closed. “At the end of the day, the customer dictates the value.”

Discounts get steeper the longer the liquidation process goes on, and the liquidators monitor sales daily. When clothes don’t fly off the hangers fast enough, the discounts go up.

Firms like Tiger Capital will take the merchandise’s condition and freshness into account. They’ll run comparisons with comparable stores, and look at what kinds of discounts the retailer typically offered before it went into bankruptcy. Ten percent off, for example, might entice customers to gobble up rarely discounted luxury items like Chanel, for example, but stores that offer discounts more often need bigger incentives.

The liquidation process typically lasts about eight weeks, according to Mr. McGrail, who said that Loehmann’s merchandise is currently marked down 30 percent to 70 percent or 40 to 80 percent, depending on the location. Eventually, merchandise could be marked down as much as 80 to 90 percent - or higher. Loehmann’s liquidation will end March 31, at the latest, but more stores will be closed before then, according to Melissa Krantz, a spokeswoman for the retailer.

“Everything is sold in the stores,” said Mr. McGrail of the increasing discounts. “That’s why it has to go up.”

Hence the shopper’s perennial dilemma: Buy a coveted item now or wait for it to become cheaper â€" and it likely will, if no one else covets it enough to buy it.

“You have to go in daily and look at the merchandise,” Mr. McGrail said. “If you go in and find something you really like, I can tell you, it’s not going to be there.”

This post has been revised to reflect the following correction:

Correction: January 27, 2014

In a previous version of this article, the name of the department store that has been liquidating its merchandise was misspelled in the headline. It is Loehmann’s, not Loemann’s.