The problem of false "Going Out of Business Sales"
In this market we experience the negative effects of disreputable oriental rug retailers making a business out of "going out of business". These are not the unfortunate shops liquidating their own inventory but those who, with the help of suppliers, liquidate new stock for big profits. They eat into the consumer base of reputable rug dealers by advertising deep discounts which they rarely deliver.
Educating the consumer is a difficult task because the public typically buys mass-produced products where deep discounts and bargains are easy to recognize, so we can be mislead by the promise of a bargain. Unwittingly, the consumer can be mislead and is vulnerable to the promise of a discounted oriental rug since most people are unaware of how to assess the true worth of an oriental rug and the many, complicated criteria that contribute to determining it's value. Reputable retailers, committed to staying and building their businesses, suffer not only from the lost revenue but also from the terrible reputation that these unscrupulous fly-by-night dealers leave in their wake. Take, for example, a situation in Chicago which I watched develop. A business with two large downtown shops ran a reported half million dollars worth of advertising promising deep discounts in a "Going Out of Business Sale." They advertised in the major newspapers, on radio and on T.V. The advertising expense alone was impossible to match by smaller retailers. Much of that budget came from the pockets of suppliers who sold large volumes of stock on consignment. A lot of money was made by the dealers with no real savings to the buyers. As a result, several "copy cat" "going out of business" sales were supported by the same suppliers. I know of a case where a new Pakistani rug was sold to a customer as a valuable Persian. The anger and embarrassment that this consumer suffered did harm to how he now views all rug dealers. This sort of thing happens all the time. When reputable dealers have taken legal action against these dishonest retailers they have only become even more ingenious at avoiding legal liability.
Many going-out-of-business sales are run by professional liquidators who use shops with short-term leases. Most of their inventory is rewoven, bleached, painted or otherwise substandard rugs - defects that the casual buyer may not recognize. Worn and damaged areas are repainted to look good to the untrained eye; bleaching is done to make newer rugs look antique. Prices are marked up by many hundreds of percent and then 'slashed' by 70%. What can you do? Shop with reputable dealers who guarantee their goods; educate yourself. Take rugs you are uncertain of to a reputable dealer for appraisal. If the seller won't let you take it on approval or give you a written copy of their description of the rug - proceed with caution!
The only way to be sure you're getting good value is to shop and compare. An excellent resource is the Official Price Guide to Oriental Rugs by Joyce C. Ware published by the House of Collectibles which is available in bookstores and libraries.