topic Re: I have a retail question? in Community Chat

I have a retail question?

Kimnola — Sun, 01 Sep 2019 16:03:16 GMT

I'm not an educated woman. Can someone generally tell me how retailers determine their shelf price?
Is it a percentage value from distributor? Thanks for you information.

Re: I have a retail question?

LTT1 — Sun, 01 Sep 2019 16:06:06 GMT

@Kimnola

It used to be a 100% markup on clothing. So, if the wholesale price was $50, you would pay $100.

Jewelry was a 500% markup, I had heard. I used to work in clothing retail as a teen.

Re: I have a retail question?

Kimnola — Sun, 01 Sep 2019 16:18:48 GMT

@LTT1

Holy Moly!!!!!! Thanks so much for the information!

Re: I have a retail question?

froggy — Sun, 01 Sep 2019 16:32:15 GMT

I used to work at a fabric store - the mark-up was 100%.

Re: I have a retail question?

millieshops — Sun, 01 Sep 2019 16:34:25 GMT

@KimnolaThe simple answer is that they add up all their expenses and try to figure out how to make a profit after all of them get paid. So for QVC, they have the expense of the merchandise, of their TV productions with all the studios, the salaries on and off cameta, all their buyers, their warehouses, their insurances, their advertising. their corporate salaries and offices, ans there's more!

It's virtually impossible for us as consumers to figure out because we don't have access to all that information and with a company like QVC which sells a huge variety of products, each kind has a different cost overall and each kind also had a diffeent possible return.

I grew up in a retail family, worked retail at various times in my life, and I never try to figure how what a company SHOULD charge me. When I need or want something I do what I can which is comparison shop to find the best value for me at the time I want to buy.

I think comparison shopping was easier years ago when there was no Internet just because the choices were so much more limited, Now sometimes there's just too much choice, too many sites to check sometimes, but for me it's still the only way I feel I can use my money wisely. I don't even try to save the same percentages on everything just as the retailers don't profit the same percentage on everything.

Most of all, though, I've decided my best "tool" is not to want what I really will never be able to afford - and that keeps me sane!

Re: I have a retail question?

Zhills — Sun, 01 Sep 2019 16:52:09 GMT

Their investors are also guaranteed a certain return on the stock. That's also included!

If I really want it and I can afford to buy it and enjoy it; it is a good deal for me!

Re: I have a retail question?

pigletsmom — Sun, 01 Sep 2019 16:58:34 GMT

Many drugstore items are around 20% but greeting cards are usually 100% profit.

Re: I have a retail question?

millieshops — Sun, 01 Sep 2019 17:01:59 GMT

@ZhillsThe investors do expect a return - Is it really guaranteed? I'm thinking one of the reasons for companies going into bankruptcy is that too many investors back out when the profits disappear.

Re: I have a retail question?

Zhills — Sun, 01 Sep 2019 17:08:16 GMT

I believe you are correct. That is why some companies file for bankruptcy with a chance to recover profits.

Re: I have a retail question?

sunshine45 — Sun, 01 Sep 2019 20:09:31 GMT

in general, for clothing and accessories...... in a single store, small local chain, or boutique type stores....

i buy a pallet of sizes of a shirt for $20 per shirt.

i sell them in the store for $40 per shirt.

when i mark it down i am still making money on each item, until i mark it down more than 50%. my goal obviously is to sell as many as i can prior to a 50% markdown.

Re: I have a retail question?

chrystaltree — Sun, 01 Sep 2019 19:50:37 GMT

No one here can answer that question, we can make something up, but we don't have the foggiest idea how all of the thousands upon thousands of retailers determine price. I've never worked in retail but my common sense tells me that if differes....greatly....from retailer to retailer. A store like H&M wouldn't use the same formula or criteria that a store like Tiffany's and Tiffany's would use the same formula and criteria that Lord & Taylor would use. They are all retailers but very different.

Re: I have a retail question?

Marienkaefer2 — Sun, 01 Sep 2019 23:21:59 GMT

I worked in retail for a long time during high school and college. That was in the 1980s and 90s, so things most likely are different now.

I think it really depends on the items being sold, the retailer (chain vs mom and pop) etc.

When I worked in a major dept store, the markup was 100%. I knew this because I used to check new merchandise in (mainly clothing) and the wholesale prices were on the invoice.

HOWEVER, the wholesale prices were extremely low at that time.

A women's sweater that sold for say $20 at that time (remember 30 years ago), had a wholesale price of $10.00, sometimes lower.

On the other hand, my grandparents owned a paint and hardware business and I remember their markup was only a couple of dollars, or even less.

So I wouldn't make a general statement about retail across the board.

Re: I have a retail question?

sidsmom — Sun, 01 Sep 2019 23:32:47 GMT

When I watch Shark Tank, it always takes one aback

when the investors would start asking the presenters....

’how much does it cost to make’,

‘what are your expenses’ &

‘what do you price it at?’

Those numbers can be light-years apart depending on the product.

I always finish watching the show looking at my ‘stuff’ differently.

Re: I have a retail question?

granddi — Mon, 02 Sep 2019 00:02:50 GMT

A friend with an independent furniture store said Triple mark up PLUS freight.

Re: I have a retail question?

Warrior2022 — Mon, 02 Sep 2019 02:38:08 GMT

My father was a optician and own 7 stores. About 25=30 years ago, Eyeglass frames were about a 200% mark up.

Re: I have a retail question?

Desert Lily — Mon, 02 Sep 2019 04:20:26 GMT

This question doesn't have a simple answer. When I was a Buyer, jewelry and holiday goods had a 400% mark-up, and when they were put on sale they still had a 100% mark-up. Necessities (like at the grocery store) have a smaller mark-up because they turn over more rapidly. The term "mark-up" is ambiguous and varying. A smaller retailer gets a smaller discount from a wholesaler, while a larger retailer has "economy of size" and can negotiate a minimum of 25% more off the wholesale price. Home decorative accessories may have had a 100% mark-up from the wholesalers "price list", but the wholesale price is not the same for every retailer.

Every retailer has business expenses and that's somewhat separate from pricing. The business plan may illustrate how much income is required minus expenses to show a profit. But, different suppliers may have different discounts/mark-ups for the same retailer, so there isn't always a standard mark-up. Expenses might be lowered within payroll, capital equipment, benefits, plans to expand, etc.

If a retailer does private labeling and eliminates the middle man, the retailer can achieve a much greater mark-up. No product is exactly the same as the private label product for consumers to compare retail prices. (I loved being a product developer and a Buyer...it was creativity + math) Marketing helps create the perceived value and how the product is a necessity for the consumer. Directly dealing with manufacturers creates lucrative relationships, and direct importing also creates a greater "mark-up."

The current online retailing has issues of shipping, warehousing, partnering with shippers, etc. Some suppliers ship directly to the consumer for the retailer. B&M stores used to keep inventories at a minimum with point-of-sale software having re-order levels. B&M stores paid/pay taxes on their inventory annually in most states.

Retailing continues to evolve and IMO mark-ups can be a complex issue.