Every day I keep hearing the question “how did we get here?”. The only answer I can come up with is; “because we don’t want to pay for anything”. How did we manage to ship all our jobs overseas?….because we didn’t want to pay for anything. “How did we get into this healthcare mess?” ….because we didn’t want to pay for it (and then some of us ended paying too much for it)…. How is it you can’t go into a store anymore to see TV screens and only a few manufacturers still make them?…Because no one wanted to pay for them…so you can only choose from 3 adaquate manufacturers. Don’t get me wrong we WANT all these things….even though most people can’t distinguish the difference between good and bad quality….we just don’t want to pay a lot for anything. We want the big DISCOUNT of life….no matter what. That’s what drives the American consumer and it’s no secret that everyone takes advantage of that fact to give us what we want…one big DISCOUNT…because somehow we feel entilted to it!
Please read this article I ran across the other day.
The new dynamic: Off-price is not for the faint of heart
May 1, 2012 By Karen Alberg Grossman
“What’s an off-price store anyway?” asks David Lapidos, EVP of the OffPrice Show, alluding to the extent of discounting and promotional activity in conventional stores. “Off-price stores come here to do the bulk of their buying; regular stores come to improve their margins.”
According to Lapidos, the show’s exhibitor base these days is half manufacturers and importers, half jobbers. “Jobbers can no longer exist on just clearance merchandise since few manufacturers are overcutting or taking risks. Consequently, several have developed their own lines for department stores that they also show here; others have goods made specifically for this show.”
Tom Joyce of Building 19 is a retail expert in off-price. His stores, based inMassachusetts, are famous for value product and wonderfully quirky advertising. As he explains, “It takes expertise and finesse to get good brands at good prices, especially in a tight market. There are no longer large quantities available domestically, so jobbers are going overseas. What’s more, it’s a gentleman’s business: if a jobber’s stuck with something, you help him out and then next time around, he’ll help you. With the right relationships, you can lock up exclusives, especially from department store shelf pulls. So I can sell a gorgeous designer name sweater at $9.99—maybe it’s Pantone 423 vs. 422, but who cares? Having last year’s goods is less of a factor in men’s.”
According to Joyce, great offerings are finite. “There are only limited amounts of most off-price product; when it’s gone; it’s gone. And the biggest change over the last few years is that as stores and manufacturers reduce inventories to accelerate turn, availability of the most desirable goods has diminished.”
Another issue, he explains, are the growing middle classes inChina,Indiaand other Asian countries. “Many opportunities of the past are staying in local markets overseas. If factories can sell goods in their own country, they don’t have to use quota or pay duty.”
Joyce cites another issue: chains (Bealls, National Stores, etc.) using larger quantities so that one call from a vendor could be 12,000 units—the end of that style if the chain buys it. “Several of my key vendors sold out of half their offerings by the end of the second day of the show,” he explains.
As regular-price department and specialty stores look to increase margins, off-price buys are an increasingly important part of their strategy. Concludes Joyce, “If they buy a $40 MSRP item for $5 (which means out the door at $17.99 to $19.99), they can special sale these goods at $14.99 and still triple their money. So while it’s hard to forecast and there are many frustrating variables, off-price remains a dynamic and viable business.”
Well there you have it….a whole industry built on the idea that it really doesn’t matter what it is, if it’s cheap and you can take advantage of the cheap consumer it’s on the shelves of your local stores and internet sights…..Be careful what you wish for, you’ll destroy the value of what you already have. (I sound like a fortune cookie)