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Thread: It's on SALE !! SALE !! SALE !!!!

  1. #1
    Join Date
    Jul 2008
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    Alexandria VA
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    Default It's on SALE !! SALE !! SALE !!!!

    When both Hancock and Moore as well as Bradington-Young rolled out their most recent price increases, they proudly announced that the were increasing the Suggested Retail by a higher percentage thereby allowing the dealers to proclaim even deeper discounts off list price. Now instead of 40% off list, a store can say its 50% off list and the customer will be more likely to buy!

    News like this I greet with the enthusiasm of a mildewed dish towel. I ask "Have you changed the wholesale cost so its less money to the dealer?" "Do you think customers are really that naive that they can't figure it out?" "Why does this industry persist in printing up a book of 'fairy tale prices' that have no more basis in fact than that diamond ring in the jeweler's case that is always 50% off?"

    I am always greeted with the same answer. "Because the other dealers want it."

    You know what I do with my retail price books? Most the time I throw them away, or deep file them in the cabinets. Why would I insult a customer by telling them "That sofa lists for $ 9,000 but if you buy it today during the 65 % Off List Sale it will be $ 3,150 but only if you act by close of business of the sale period."

    Know what? That sofa will be $ 3,150 every day of the year at my store, and never have a red SALE tag attached to it. I like to think my customers are smart enough to not need that, and have done their homework ahead of time. Its a pretty good pricing model, it works for Costco and they seem to have prospered.

    The funny thing is Bradington Young never has a sale. They charge the dealers one price all year long except for market specials that require the dealer to floor the piece. Hancock and Moore likewise, but they do offer an additional 5% off in August and February every year to dealers in good standing on non Town and Country items. Guess most people just can't get excited about saving 5%....but thats the reality of it all.

    I only keep wholesale dealer price books at my desk. Makes it easy to look up prices, I add a fixed percentage to the dealer cost for a selling margin, and that becomes the selling price. No silly games, no red tags, and no hanging on everything ending in a "9" . You may get a sofa quote for $ 1,302.00 because that's how the numbers shake out, and I won't make it $ 2,999.99 to make it appear sweeter (really, does anyone buy off on that?).

    I do have a very small percentage of customers who can't buy something thats "On Sale". They have to see the tag. I usually send them down the road to Colony House in Arlington VA or over to Belfort Furniture in Chantilly, VA where they have LOTS of red sale tags on everything. After they make that trip, they come back and say "you really do have better prices than their sale prices, how do you do that?"

    Duane Collie
    Straight answers from thirty-six years in the business.
    My Private Messages are Disabled - Please ask questions here in the forum.

  2. #2
    Join Date
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    Default Re: It's on SALE !! SALE !! SALE !!!!

    Its poor form to reply to your own posts, but why start another thread? I had two phone calls over the past couple of days that amused me to no end. One was a customer shopping a Bradington Young sectional and when I told her the price I thought she might have hung up on me. Wouldn't be the first time....lol. She asked "are you sure your numbers are correct?" I ran them again....yes they were. Then she told me that her local dealer quoted $ 12,000 for the sectional, and asked "How could I possibly sell it for $ 4,000?" How do you reply to that? I'm not going to suggest to anyone why a dealer charges what they do - not any of my business or for me to speculate. Another gentleman called me today with much the same number situation on a Leathercraft sectional. Dealer in NYC told him it was $ 17,000, but he could buy it for $ 12,000. My price? $ 6,800. One again the same question "How can I do that?"

    Every dealer has to find a price point that works for their business model. Or at least what they perceive as their business model. For some its high gross, low volume. For others its low gross, high volume. I fall into the latter, but used to be in the former! When the Recession came on strong, my business faltered like everyone else's. Some stores chose to hang onto the way they always did things and many of them perished. I saw the abrupt fall off in business and decided to go deep discount to generate cash flow, under the assumption if you have the best prices in town people will come to you - and they do. However, one cannot sell on price alone, you MUST have that service level that accompanies the pricing. Customers will tell you they're shopping price and will buy from the lowest bid, but what they really want is the best price AND the best service. And its not the service before the sale that is particularly hard....its the service after the sale that can eat up hours and hours of time. I set my prices at the best possible discount I can while maintaining my service level.

    So what defines a service issue? Well, let me give you an example of one that occurred this week.

    A customer in Texas ordered a pair of Bradington -Young recliners, and he was able to get a quote for less then my selling price, so I agreed to match it. It was a very low profit deal for me. Tuesday afternoon about 3 p.m Eastern, I get a phone call from Caldwell Freight Lines, a common carrier. Their driver is sitting in front of the street of the customer's home in Texas with the chairs and no one is home. Its 1 p.m. in Texas, and the driver isn't going to wait. Now this one throws me for a loop because I don't ship on Caldwell Freight and I don't ship common carrier to most customers. Why does Caldwell have it in the first place? Why didn't they call ahead? Dispatch tells me the chairs will come back to North Carolina if we can't find the customer in the next 15 minutes. I only have the one phone number for my customer and it goes to voice mail (always give all your contact phone numbers on an order for this very reason). Furiously, I dash off an email in case my customer might have a Blackberry and get it at once. But the minutes tick by and no contact. The driver leaves. I spend the next two hours on the phones talking to Caldwell, Bradington Young and trying to locate a moving storage facility in Texas where the chairs can be dropped so the don't have to go back to North Carolina and routed to the proper shipper I specified, West Express. The situation is aggravated by the late hour of the day and everyone but one customer service rep at BY has gone home. Apparently B-Y shipping made a mistake and shipped it on the wrong line. I find a moving / storage place in Houston near the trucker but Caldwell won't release the freight to them without B-Y's authorization since they were the shipper - and everyone at BY has gone home for the day. Great! By that evening, my customer has the phone message and email after work and is not real pleased that the furniture was right there - but could not be delivered (and I would be too, if I were in his shoes). The next morning is another flurry of phone calls and emails to the dispatcher at Caldwell and my customer. We find that the truck was next headed to Brownsville TX and has to come right by my customers house on the way back, so its arranged to deliver at 7 a.m this morning (Friday) and so it was. Successful and the driver even helped carry the chairs up to the house (remember in common carrier loads, they do not do that normally). So it all ended well.

    My point is that even though I did a price match on a low margin sale, I am hard-wired to give the same service level, and that took up several hours of time to straighten out that whole shipping mess and get it happening sooner rather than later. There are stores where the service level would have been "So sorry to hear that, they'll sort it out when the chairs get back to North Carolina and re-deliver in two more weeks." And that would have been it. I don't operate like that. And that also means I might decline to match an quote you as a customer might get from a country discounter who operates a few dollars over cost. If that heavy discounter is only making $ 50 on a $ 1,000 recliner, how hard is he going to work for you when a problem arises? You decide for yourself....
    Duane Collie
    Straight answers from thirty-six years in the business.
    My Private Messages are Disabled - Please ask questions here in the forum.

  3. #3
    Join Date
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    Default Re: It's on SALE !! SALE !! SALE !!!!

    I have guy who will sell me this for $50, delivery included. Will you match?

    In simple terms, in business you can compete on three fronts - price, service and quality. The only type of business that can consistently offer the best in the field for all three is a monopoly. You can bet that the guy who was underselling you on price is not going to match your customer service. I wonder if he would even have known how to salvage the situation had he been confronted with a similar delivery issue.

  4. #4
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    Default Re: It's on SALE !! SALE !! SALE !!!!

    Very true. You can have two of the three elements, but not all three. 1) Price 2) Service 3) Quality. Customer get to pick which two of the three they want!
    Duane Collie
    Straight answers from thirty-six years in the business.
    My Private Messages are Disabled - Please ask questions here in the forum.

  5. #5
    dkzzzz Guest

    Default Re: It's on SALE !! SALE !! SALE !!!!

    Interesting posts. I agree with all that have been said, except this: "The only type of business that can consistently offer the best in the field for all three is a monopoly." There is no insentive for any monopoly to offer anything "best" that is why they are building monopoly in a first place.
    The examples of it are abound: US Cellular services, Federal reserve bank, Cable TV services, Long distance Bus copanies, USPS, US food industry, etc etc etc.

  6. #6
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    Default Re: It's on SALE !! SALE !! SALE !!!!

    Your examples of monopolies, other than the federal reserve and the USPS's first class mail monopolies, aren't actually monopolies. Most are oligopolies.

    The fact that monopolies, by definition, have little incentive to compete doesn't make what I said any less a fact. If a competitor enters the market without beating the monopoly on at least one of the three, it will fail. If a competitor enters the market with better price, quality and/or service, the monopoly has to respond or it will fail.

  7. #7
    dkzzzz Guest

    Default Re: It's on SALE !! SALE !! SALE !!!!

    I think that monopoly, once established, would never let anyone enter their market. Thus there is no real fear of them failing nor any danger of them providing anything 'the best'.

  8. #8
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    Default Re: It's on SALE !! SALE !! SALE !!!!

    Do you believe that Alcoa is the only manufacturer of aluminum, AT&T monopolizes the telephone industry, International Shoe dominates the domestic shoe market....

  9. #9
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    Default Re: It's on SALE !! SALE !! SALE !!!!

    i don't know of many monopolies that prevail in today's era. Perhaps some in the drug industry, where a company spends millions of dollars to develop a narrow-market drug that other companies don't deem worthy in competing for market share due to the poor ROI if they have to develop the drug as well. The drug used for my kind of Cancer is made by Novartis for example...and is called Sandostatin (generic name Ocreotide). You want the drug, you get it from Novartis or do without it, they are the only maker and one 28-day injection is $ 7,000 per dose. Guess how many people without health insurance get that one? And its the only thing on the market that stops late stage IV tumor growth in Carcinoid cancer. Now THAT is a monopoly! But as someone who has been on that drug, I can tell you that I'd rather deal with their monopoly of it then not have it.
    Duane Collie
    Straight answers from thirty-six years in the business.
    My Private Messages are Disabled - Please ask questions here in the forum.

  10. #10
    Join Date
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    Lakewood Ranch, Florida
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    Default Re: It's on SALE !! SALE !! SALE !!!!

    Quote Originally Posted by drcollie View Post
    i don't know of many monopolies that prevail in today's era. Perhaps some in the drug industry, where a company spends millions of dollars to develop a narrow-market drug that other companies don't deem worthy in competing for market share due to the poor ROI if they have to develop the drug as well. The drug used for my kind of Cancer is made by Novartis for example...and is called Sandostatin (generic name Ocreotide). You want the drug, you get it from Novartis or do without it, they are the only maker and one 28-day injection is $ 7,000 per dose. Guess how many people without health insurance get that one? And its the only thing on the market that stops late stage IV tumor growth in Carcinoid cancer. Now THAT is a monopoly! But as someone who has been on that drug, I can tell you that I'd rather deal with their monopoly of it then not have it.
    Having spent 36 years in the pharmaceutical industry I would disagree about your characterization of monopolies. Certainly there are orphan drugs that may have little competition. That is usually due to a very limited market, extremely high costs to develop ( as much as $800 million and 10 years), and difficult technology (translates to costs) to manufacture. The industry as a whole however is very fragmented with many companies (100's) and the largest Pfizer still having less than 10% of the sales. I would offer one other point, that is, drugs are a relative bargain in the overall cost of health care. They represent about 7 cents of every dollar spent. The monthly cost of this life saving drug is less than a typical day's cost in a hospital. Our society has to a great extent demonized the companies like Novartis because of the suggestive comments like "one 28-day injection is $7000 a dose. Guess how many people without health insurance get that one?"
    I would counter that many patients without the ability to pay for medicines such as this are often given free supplies under drug company programs. Let's be thankful that medicines like Sandostatin exist so lives can be extended. And if this individual medicine is a monopoly, I for one am glad it exists.

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