Retail Markup

[Triskeliongirl]

Does anyone know what the typical retail mark up is? Now, I am not complaining, I know these folks have to run a business, warehouse and ship goods, pay employees, etc. But that Terry 50% sale got me thinking, why did they do it??? It seems like a big price cut to take on stuff people would have paid full price for. I need 24" front tires, I don't have a lot of choice in supplier and they never go on sale, so why 50% off on popular and even back ordered stock???? Didn't they just lose my future full price sale? I wouldn't have bought the clothes I bought, but I might have bought others when they went on sale, which would have been the ones that they couldn't get rid of, not their popular ones. Was it to make their sales revenues looks good for the month to some investor types? Was it to get us all into a shopping frenzy (but if so, if just made me stop shopping since I am all set for a while)? Was it to get us used to ordering from terry again (I admit I order from TE unless its an item that terry carries and TE doesn't, service is so much better at TE, and of course I want to support Susan when I can to thank her for creating this community.......but dang 50% off, hard to not do some damage). Just curious your thoughts, especially if any of you are in retail.

[Blueberry]

I have a family member who sells retail, and the general rule is to double wholesale prices. HOWEVER, since Terry is the manufacturer, they won't actually have to pay wholesale (except for the items like Gore that are made by others). So, their actual cost would be much less than 1/2. Probably 20-30% of retail on most items.

[Triskeliongirl]

SO, then what was the point of putting all the Gore stuff on sale? They probably lost money on it with free shipping (and I hope they manage to group the multiple orders for shipping that their webiste problems generated).

What I am really looking for is the marketing strategy behind the sale, and wheter you guys think it helped or hurt them? Maybe it would help in the long term if it gets people to try their house brand, and if they like it become loyal customers in future, esepcially for chamois, etc.?

[snapdragen]

Helps them clear out last year's stock so they can bring in current stuff. I would think the longer they have to store old stock, the more costly it is to them. So, cut the price and clear it out!

[Triskeliongirl]

Of course I get that part, but then why not restrict the sale to last seasons/years items, like the regular closeout and sale section of TE. They put on sale non-seasonal items like tires, and even permitted you to order backordered new stock like the new team terry LS jerseys that aren't even due in until Jan. But, maybe getting their computer to decide correctly what items are and are not on sale would have been too hard.... I know its not really an important question, it just made me curious though.

[Kalidurga]

I've worked in retail for longer than I care to admit Where I currently work, our markup ranges from double to triple depending on the cost of the goods to us and "perceived value" on the part of the consumer. (And, shhhhhh, don't tell my boss I told you that!! ) If a manufacturer is able to give us a low cost on something that is well-made and looks expensive, then we can set the retail higher. I have no idea whether to think cycling apparel vendors would have similar markup guidelines or not, but it's possible that they might use a sliding scale like that as well.

Once a year, we have a sale in which we mark goods down as far as 75%, which means we make a negative gross margin on those items. As snapdragen mentioned, though, it's a great way to clear out aged merchandise and free up our open-to-buy to get fresh, new goods into the store. If there were a way to check the season of the Terry goods put on sale, that might give you your answer.

[RoadRaven]

Yeah, like Snap says... to recover costs really...

Sometimes they still make a little money but other times, particularly with less popular stuff they hope like heck they can recover the costs... remember, as a rule these places have to front up with the money before we consumers ever come on the scene... its a huge gamble for retailers and wholesalers.

And remember that out of that mark up comes all their costs - wages/salary (which is often the biggest cost), rent and other shop costs like electricity and hopefully at the end of it they make a profit for themselves...

[Zen]

There's also a chance that someone buying from the sale will also buy something that's not on sale.