Let Merchants Be Merchants
March 31, 2006-- Home Textiles Today,
More and more in recent months, the conversations around the marketplace have focused on the growing trend toward arbitrary retail price points for specific merchandise categories in home textiles.
The scenario goes something like this: Retailer tells supplier (formerly known as manufacturer) that he loves the product, but he needs a particular markup, and it must hit a specific retail price point.
What it all means is that merchandising, the basic tenet of what retailing is supposed to be all about, has now been reduced to the ultimate formula. Fill in the blanks with the product, at the preordained price and markup (as well as all the other goodies), and you get the order.
Now, looking at the retail marketplace as it is today, the folks that are making these demands are mostly sitting in front of a computer screen, crunching reams of numbers day after day. Whether titled buyer or planner, the modus operandi for these folks is essentially the same — what the numbers say, rules.
What this essentially means, is that all spontaneity has been drained from big-time retailing. It now has stooped to a point where it is merely a spreadsheet. The retailer determines that Sally Jones will only buy this product at a certain price, not a dollar more — but obviously she will buy it in greater quantity if the price were a buck or two below the predetermined retail.
The big fallacy with this operating philosophy is that nobody has asked Sally Jones if she would pay a bit more for the product — or even if she wanted the product as is, or perhaps upgraded a bit.
As we all have seen, there is no bottom to the price war, and even the most practiced of the low-pricers can be undercut by someone on a single day or week-long effort.
It's time that this challenged business takes a new look at how buyers go about selecting product and offering it for sale. The responsibility is not with the buyers or planners — but with the senior executives who have extensive experience in the business.
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