Shrewd Shoppers Find
Bargains for the Home

The economy may be slowing, but in Yorktown Heights, N.Y., Bill Rubin is already cleaning up. He bought a $70 GameBoy for just $18, a $600 digital camera at more than a 30% discount, and a year's worth of aspirin for $20. He even got a deal on one of those robotic dogs.

"I may be bottom-feeding," says Mr. Rubin, 46 years old. "But at least I'm not paying a lot."

Don't blink, but this spring there's an unexpected window of opportunity for bargain hunters. Caught off guard by the speed of the slowdown, retailers stuck with lots of extra inventory are marking down merchandise far more than usual. Since the beginning of the year, sales of everything from furniture to electronics have slowed as much as 12%. The result? Haggling is back, liquidators have more goods than they can handle, and big deals are returning to the Web.

The most significant inventory logjams are among big-ticket and seasonal items, where consumers have cut back sharply. In the market for a desktop? With more than a week's worth of extra inventory on hand, companies like Compaq Computer and Hewlett-Packard have started slicing up to $300 off some of their newest models. How about an SUV? With car inventories as much as 10 days above normal, a basic Chevrolet Blazer is going for just $17,000 -- $2,000 less than a few months ago. At Banana Republic, executives say they're discounting significantly more this year -- analysts estimate as much as 30% over last spring's sales.

"Retailers are being kept awake at night trying to figure out how to get rid of this stuff," says Wendy Liebmann, a New York retail consultant. "They have to have sales."

Companies from Zale jewelers to General Motors admit they're saddled with excess inventory right now, on top of the usual pressure to discount in slow times. Indeed, nationwide, sales-to-inventory ratios are among the highest they've been in three years, according to the Department of Commerce. That's why furniture and housewares retailers are discounting everything from ovens to sofas up to 40%. It's also why manufacturers like Ford and Chrysler had to cut production during the first quarter. "Many companies were caught with their pants down," says Mark Zandi, an economist with economy.com.

Six months ago, most stores couldn't keep any version of a Palm digital assistant -- from the $149 model to the $349 model -- in stock. But now Palm Inc. says it expects its inventory will double by June, not only because of slowing demand but also because of recent problems securing certain parts. The result: On Wednesday, the company announced that it is lowering prices on most models up to $50 and plans more promotional sales through the fall. "This isn't what we expected or hoped for," says a spokeswoman for the Santa Clara, Calif.-based company.

No wonder fast-on-their-feet shoppers like Jennifer Adams are buying now. Figuring that the bargains wouldn't last forever, Ms. Adams saved hundreds of dollars this year simply by moving her annual shopping spree up a couple of weeks. Among her finds: a home entertainment center, a top of the line DVD player and a big chunk of her spring wardrobe -- all at about half off. "I couldn't believe it. This wasn't picked over stuff," says the Washington, D.C., marketing executive.

Paying the Price

While slowdowns inevitably trigger discounts, the current landscape is unique because of how fast the slump hit. Last September, the Nasdaq was above 4,000 and consumer confidence was high. All the false starts made matters worse: Market watchers have predicted slowdowns so often and so loudly since the late '90s, many manufacturers ignored some red flags that surfaced last fall. Instead of adjusting plans, they placed heavy orders for spring and are paying the price.

Finds Online

No longer just an investor's nightmare, the Internet is emerging as a good place for consumers to take advantage of the strong U.S. dollar (hint: buy from Canadian sites), a dumping ground for excess inventory and a place to scavenge for deals on dying sites. Below, a handful of Web destinations for everything from art to garden tools.

*Manufacturer's suggested retail price.

Even consumers seem surprised by how the fast-changing economy is working in their favor. In New York, book editor Leah Edmunds saved $600 on a laptop from Gateway because the San Diego company lost her original order. By the time it resurfaced a month later, the price had dropped to $2,000. "It turned out to be a fantastic deal," Ms. Edmunds says.

In Plaistow, N.H., Patrick Ginty and his wife, Jen, not only got a new washer, dryer, refrigerator and stove for $750 less than they expected, Sears, Roebuck & Co. refunded their $65 delivery charge. "We definitely didn't have sticker shock," says Mr. Ginty.

The biggest surprise is that many family-owned retailers are permitting their sales staff to haggle with customers -- a tactic that was all but taboo a year ago.

Although most large department stores have yet to embrace haggling, "smaller stores are beginning to crack," says Ann Caruso, a retail strategist with the Doneger Group in New York. Medici, a three-store shoe chain in New York, is not only letting its customers haggle more than usual, it's encouraging sales staff to initiate the bargaining process. "It's better to lose $5 or $10 instead of a whole sale," says manager Khalida Iqbal. In Washington, D.C., Ted Cooper, director of the Adams Davidson Galleries, says he will take off as much as 10% more on art than he would have just a few months ago.

Indeed when Tiffany Goddard went stereo shopping a few weeks ago, she found haggling was a breeze. Walking into P.C. Richard & Son in Manhattan, Ms. Goddard, a marketing manager, wangled a $650 model for just $450. How? She left the store three times, threatening to shop elsewhere.

Another reason there are so many bargains now is the Internet. Five or six years ago, the Web was barely a blip in most people's minds. Now it's morphed from shopping phenomenon to investment debacle. The 'Net's latest incarnation? A dumping ground for companies that need to get rid of inventory fast. On Web-outlet-malls like smartbargains.com and half.com, shoppers can find deals on everything from "gently used" CDs to overstocked dishwashers. They can snap up stuff that didn't sell in stores, from the Web sites of bricks-and-mortar retailers and order from Canadian sites, taking advantage of the strong dollar.

Internet Wreckage

With the growth of Web shopping down 200% since last March, according to market researcher Bizrate.com, Internet wreckage is where bargain-conscious consumers like Scott D. Hansen go to shop. When the Milwaukee model-rocket collector saw that eToys.com was going out of business in February, he logged on and bought $300 of rocket kits, saving almost $100. The downside? The toys took four weeks to arrive, and were damaged, too. "That annoyed me," the 38-year-old computer consultant complains.

In some cases, of course, acting fast won't save a consumer anything. The big book chains, having squashed most of their competition, have started eliminating discounts and raising prices. According to analysts, beauty products, higher-end women's apparel and accessories also are holding their own, because female consumers are willing to pay for certain luxuries, even in a down economy. And because sales of smaller-ticket items tend not to slow as much in such times, it's unlikely shoppers will find a lot of discounted CDs and paperback novels.

How long will the bonanza last? Not long at all. Many firms, with improved inventory systems in place, have already begun correcting the problems. The computer industry has reduced excess inventory by half during the last few months. The furniture industry, hit hard by slow housing sales, will have whittled away its extra chairs, sofas and beds by June. Auto inventory is expected to be back to normal by late April. "If this is as bad as it gets, most of the inventory could be gone by summer," says Todd Slater, a retail analyst at Lazard Freres & Co.

Still, real-estate developer Jim Sullivan wishes he had been a bit more patient waiting for the deals. The 42-year-old Massachusetts father spent $2,000 on a new computer for his kids last Christmas. Today, the same model is selling for about $250 less. "They probably would have been just as happy with something else," he says.

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