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Thread: Manufacturer's Minimum

  1. #1
    hallmart Guest

    Default Manufacturer's Minimum

    A somewhat local store advertises that they sell their furniture at the Manufacturers Minimum Allowed Price. These are specific discounts off of MSRP. For example, 40% for Hancock & Moore.

    Is this authentic? Or just another teaser to get me to the store?

    We found some furniture we like in town but the prices are a bit higher than posted here for H & M T & C ($2,700 for City sofa PLUS a delivery fee). And I'd like to check out a few more models. Trying to figure out where to go to get a better price around here, if possible, as my husband wants to sit before he buys.

    I know, I should just go & check them out. I'm just weary of all the furniture shopping (not to mention dragging 4 kids 10 & under with me).

    http://www.cthomeinteriors.com/sales/


    Thanks
    Kate

  2. #2
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    Default Re: Manufacturer's Minimum

    H&M does not specify to any dealer what the minimum selling price will be on any of its products. No maker currently does that I'm aware of. Its VERY hard to enforce, nearly impossible,actually. Also, there is no MSRP for the Town and Country promotion, all the dealers get is a wholesale price list and they work from that to get to their selling retail. If they sell H&M at 40% off the main price book, that puts them about average for most brick and mortar stores in higher rent locations.

    I think honesty is the best policy, and can never understand why some stores want to try to dupe their customers with lies and half-truths. It amazes me the lengths some dealers will go to in order to keep you from price-shopping. Every dealer sets their own price they feel they need to charge in order to stay in business and make a living from their endeavor. Why can't they just say that? I certainly do!
    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
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    Default Re: Manufacturer's Minimum

    Quote Originally Posted by drcollie View Post
    H&M does not specify to any dealer what the minimum selling price will be on any of its products. No maker currently does that I'm aware of. Its VERY hard to enforce, nearly impossible,actually. Also, there is no MSRP for the Town and Country promotion, all the dealers get is a wholesale price list and they work from that to get to their selling retail. If they sell H&M at 40% off the main price book, that puts them about average for most brick and mortar stores in higher rent locations.

    I think honesty is the best policy, and can never understand why some stores want to try to dupe their customers with lies and half-truths. It amazes me the lengths some dealers will go to in order to keep you from price-shopping. Every dealer sets their own price they feel they need to charge in order to stay in business and make a living from their endeavor. Why can't they just say that? I certainly do!
    Duane, I see a lot of sales from certain furniture stores claiming 40-70% off sale prices. I find it funny since I have read a lot of dealers are already pricing the furniture 30-50% off msrp everyday pricing to keep people buying. Though advertising a big sale does get people in the door it seems.

  4. #4
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    Default Re: Manufacturer's Minimum

    True that, I suppose. A retailer can choose a couple of different models to operate under, but the end result is the same. He has to make xxxx amount of profit (as a percentage of the gross) to operate a viable business. Make less that that, and he fails. I can tell you that most furniture stores aim for an 16 to 18% net profit for the year when all is said and done. How they get there, depends on the method the owner of the business will think best work for him.

    I operate under the Costco model. When you go to Costco, you don't see red SALE tags on things. There is one price posted, and that's what the customer pays. If they don't like the price, they move on. Its simple, direct, saves huge amounts of money in not having to advertise 'sales' and fool around with the pricing all the time, but it relies on the customer knowing a value when they see it. Walk into my store and you will never see a red sale tag.

    Other stores operate under the loud and noisy model. Lots of explanation points, gaudy signs on everything, and the hook is "its ON SALE". They're going more for the impulse buyer rather than the educated one. It cost a lot of money to run these constant sale events and it 'trains' their salesforce to be price-driven rather than educating the customer on quality of various pieces.

    Both models work.

    For example, Hancock and Moore is going to offer 5% off its regular line during the month of February. What sounds better? "5% OFF regular price", or "70% OFF MSRP!"
    Guess it depends on the customer and how much homework they've done. Either way, that sofa prices out bottom-line to the same figure.

    The core of my business in years past has always been Benchmade furniture. These small cabinentmakers don't have sales - ever. Its a foreign concept to them as makers. In the hand-crafted cottage industry, there is no benefit to a large volume of orders since the bulk of what they do is one-piece-at-a-time, therefore they don't need a sudden rash of orders, but steady work all year long. A sale would overwhelm them because if a cabinentmaker can produce (3) chippendale chests in a month, why would he want orders for (40?) He can't just go find someone off the street to come help. So years ago I decided a SALE model was not going to work for my store and I've stuck with it. I think my regular customers appreciate it as well because it takes the pressure off them to buy within a certain time period in most cases.

    I'll admit I do lose a few sales every year to people who simply cannot judge value and insist on that red sale tag. They just have a mental block that they can't buy it unless its "on sale". Its most curious to watch!
    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
    southbayed Guest

    Default Re: Manufacturer's Minimum

    We also operate under a "This Really is Our Best Price" kind of business. Duane is correct in the fact that Hancock & Moore does not implement a minimum price but some factories do. Keep in mind folks, there is a difference between a MSRP (Manufacturers Suggested RETAIL Price) and a MRP (Minimum Retail Price). Meaning, if an MRP is set at $1249.00 then anyone can sell that item for any price as long as it is not lower than $1249.00...most retail store do not cross this line because if they do get caught selling lower than than MRP they may have the line pulled from them.

  6. #6
    Join Date
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    Default Re: Manufacturer's Minimum

    True I notice a lot of these Reg Tag stores are really looking for people to say "a couch is a couch" and really don't seem to think couches could be built differently. A lot of the couches at one store that always is having blowout sales don't even list the manufacturer anywhere a customer could easily find.


    Quote Originally Posted by drcollie View Post
    True that, I suppose. A retailer can choose a couple of different models to operate under, but the end result is the same. He has to make xxxx amount of profit (as a percentage of the gross) to operate a viable business. Make less that that, and he fails. I can tell that most furniture stores aim for an 16 to 18% net profit for the year when all is said and done. How you get there, depends on the method the owner of the business will think best work for him.

    I operate under the Costco model. When you go to Costco, you don't see red SALE tags on things. There is one price posted, and that's what the customer pays. If they don't like the price, they move on. Its simple, direct, saves huge amounts of money in not having to advertise 'sales' and fool around with the pricing all the time, but it relies on the customer knowing a value when they see it. Walk into my store and you will never see a red sale tag.

    Other stores operate under the loud and noisy model. Lots of explanation points, gaudy signs on everything, and the hook is "its ON SALE". They're going more for the impulse buyer rather than the educated one. It cost a lot of money to run these constant sale events and it 'trains' their salesforce to be price-driven rather than educating the customer on quality of various pieces.

    Both models work.

    For example, Hancock and Moore is going to offer 5% off its regular line during the month of February. What sounds better? "5% OFF regular price", or "70% OFF MSRP!"
    Guess it depends on the customer and how much homework they've done. Either way, that sofa prices out bottom-line to the same figure.

    The core of my business in years past has always been Benchmade furniture. These small cabinentmakers don't have sales - ever. Its a foreign concept to them as makers. In the hand-crafted cottage industry, there is no benefit to a large volume of orders since the bulk of what they do is one-piece-at-a-time, therefore they don't need a sudden rash of orders, but steady work all year long. A sale would overwhelm them because if a cabinentmaker can produce (3) chippendale chests in a month, why would he want orders for (40?) He can't just go find someone off the street to come help. So years ago I decided a SALE model was not going to work for my store and I've stuck with it. I think my regular customers appreciate it as well because it takes the pressure off them to buy within a certain time period in most cases.

    I'll admit I do lose a few sales every year to people who simply cannot judge value and insist on that red sale tag. They just have a mental block that they can't buy it unless its "on sale". Its most curious to watch!

  7. #7
    Join Date
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    Default Re: Manufacturer's Minimum

    Quote Originally Posted by southbayed View Post
    We also operate under a "This Really is Our Best Price" kind of business. Duane is correct in the fact that Hancock & Moore does not implement a minimum price but some factories do. Keep in mind folks, there is a difference between a MSRP (Manufacturers Suggested RETAIL Price) and a MRP (Minimum Retail Price). Meaning, if an MRP is set at $1249.00 then anyone can sell that item for any price as long as it is not lower than $1249.00...most retail store do not cross this line because if they do get caught selling lower than than MRP they may have the line pulled from them.
    The Minimum Retail Price system is regulated under State laws and can vary from state to state. I was under the impression that all states had banned them a few years ago, but I could be mistaken.

    Regarding Manufacturer's Suggested Retail Prices -- When I started in the furniture industry many years ago, the standard MSRP was keystone + 10%, in other words double the manufacturer's cost and then add 10%. Later it became keystone + 20%. Lately I have even seen keystone + 40% (check your local department store pricing.). Most furniture is not sold at MSRP.

  8. #8
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    Default Re: Manufacturer's Minimum

    Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007)

    The Supreme Court ruled it legal that a manufacturer can set a minimum selling price among its authorized dealers. Summer 2007 that was ruled upon.
    Duane Collie
    Straight answers from thirty-six years in the business.
    My Private Messages are Disabled - Please ask questions here in the forum.

  9. #9
    southbayed Guest

    Default Re: Manufacturer's Minimum

    Good Knowledge

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