I like that model. If they have the shopper traffic to move stock, I'd guess the 20%-40% discount off highest online price is better than they could net by selectively diverting that item to online.
They will also magic-marker over the original retailers labels, but you can usually see where the product came from. For about a year they had inventory from the Texas sporting goods chain Academy, including apparel from various regional schools in Texas. Mostly Houston and San Antonio. My guess was all that inventory came from stores that were partially flooded by a hurricane.