LFS shoot themselves in the foot

[StirCrazy]

Originally Posted by DanG

A lot of the cheap goods you are talking about could be loss leaders. Salt for $40, while it may cost them $40 to buy from their supplier, they try to upsell on the rest. How frequently do you go into the lfs to buy just salt and end up buying just salt?

I think he sells it for 45.00 to be exact, so he is making money as J&L is for 39.95. so is he losing no, but he is not making a lot off the salt. as for going in and buying just salt, all the time. I am not a impulse buyer, so I only get what I am goinging for 99% of the time.

Steve

[BCOrchidGuy]

When buying from a manufacturer a store that moves a lot of inventory get what's called a booking price. This price is a per unit price that is discounted based on what they promise to buy during the year. IE if Big Deals on Fish promises said lighting manufacturer that they will purchase $100,000 worth of inventory over the year they will get a discount based on that amount. If the store doesn't purchase that amount they will either pay the difference or be penalized in another way. So, if Big Deals says they are going to purchase that $100,000 they may get a 30% discount off the normal price they would pay, this means they can mark it up 35% and end up selling it for about 5% more than a mom and pop store beside them that can only move perhaps $1000 worth of said manufacturers inventory. The discount will vary, and in this industry I have no idea what they would be, I was in the sporting wear industry and that's what the numbers I mentioned refer to.
One other thing to remember as well is a store that is known for moving a lot of inventory may get special prefference when it comes to clearance or discontinued items. If a light system is no longer available, or a line of powerheads is discontinued a single store may purchase the whole lot of items at a huge discount so the manufacturer or distributor can make room for new items that will probably sell quicker or at a higher price. Prices in Victoria are the way they are because no one will start discounting stuff, if one store started to do that then the others would either have to follow or rely on their service record and their customers loyalty to carry them through, and lets face it if you went to your favorite store to buy a bucket of salt for $99 and it could be had down the street or even on the other side of town for $49, you would probably complain about the price and ask for either a match or a discount, maybe not but I would.

Doug