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Time To Permanently Lower Prices

May 14, 2009 Let’s see - - - in the past two or three months I have been offered “never before sale pricing” (which I will refer to as NBSP from here on) from several vendors. They include, in no particular order, Brown Jordan, Pride, Gloster, Summer Classics, and Ebel. There have been other “deals” such as Cast Classics reverting back to their 2008 price list and Suncoast reducing prices on a few entry level frames in very specific color ways.

Had just one of these vendors held a sale event, I wouldn’t be talking about it. But when six or seven do it, I think it will have an interesting effect on our upcoming markets. And that is: IMHO I don’t think vendors are going to be able to raise their prices back to presale levels for 2010. They are going to meet a lot of resistance from retailers at market and consumers in our stores next year.

While I think business in 2010 is going to be better than 2009, I think consumers are still going to be price conscious. Many pundits are saying consumers’ shopping habits will permanently change because of the recession. There will be less buying of “things” especially on credit. Instead, shoppers will be buying necessities and fully paying their credit cards every month. Essentially the end of “unbridled consumerism.” At least, for a few years!

I recently had this same conversation with a rep whose opinion I respect. He has been emphasizing to his manufacturer that their 2010 price list has to be as low as possible; preferably lower than their 2009 price list and at least as low as their NBSP. I don’t think he is the only rep who will be telling that to manufacturers.

In a prior blog, I talked about how price lowering can harm a brand. If consumers see the price going down on a brand that is considered high end, they may question the quality of the brand. In a growing economy, I think this has legs. But in a recession, I don’t think there is a consumer among us who would think worse of a company because they are lowering prices.

I also understand the price of raw goods and fuel have dropped substantially since last year. Surely, that is reason enough fo 2010 prices lists to be at NBSP.

There is another reason why I advocate for lower prices. One time and limited time sales can work. However, when multiple manufacturers are running these sales at the same time, they lose their impact with the consumer. It is also more expensive for the retailer because the sales have to be advertised. Most vendors aren’t allowing us to advertise other products and sales in the same spot. That means I have to have different spots for Brown Jordan, Summer Classics, Pride, Ebel, etc. I can’t afford to do that.

I hope my friend, the rep, has some juice with his manufacturer. Or, if they are reading this blog, maybe it will influence them. If neither do any good, I think there will be lots of retailers at market this year clamoring for lower prices. Care to join the cause?

On another completely unrelated note, I would be remiss if I didn’t say a public goodbye to Dean Ingelage who has announced his departure from Woodard. Dean worked hard for Woodard, his reps, his customers, and our industry. Somehow, I don’t think this will be the last we see of him. But, if it is, he will be missed and much appreciated.

Yours in confused retailing, Bruce

Posted by Bruce Aronson on May 14, 2009 | Comments (4)