Suzanne O’Connor’s Bargains LA

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Tuesday, March 07, 2017

Fake Retail

By Suzanne O'Connor

Knowing what real retail is, is problematic. The truth is most items are initially priced higher than what they will actually sell for.

Suggested Retail Pricing, especially in apparel is not Market Retail, but a “suggested price”.  Most apparel doesn’t actually sell at the retail price but somewhat less. Items do sell at retail to be sure, but how many actually do at the original asking price?

“Retail” is a marketing price to help the shopper discern a value. That price is based on many factors included cost of manufacturing, distribution, brand awareness, what demographic they are marketing to and what they think they can get for the product… aka the “Price Point”. That retail price can range from 150% markup to 600% markup.

So establishing a base price to discern value is what Retail Pricing is really about. Basically, it’s false advertising.

But then again, actual retail can be the suggested price. For example, unless you have a family member that works at Apple, you will pay what they ask on everything. If you do find any Apple product marked down, it was Apple who did it. Other computer companies are nearly as tight with their pricing, that is until a new model comes out.

Retail pricing can be all over the board. For example, we subscribed to the Smithsonian Magazine last year for $11 a year a rock bottom subscription price. In the magazine, they have a card with a special offers at $53 a year. But the “retail price is $163 a year. Does anyone actually pays that price?

At the same time, since we have a kid who’s an actress, we also subscribe to the Hollywood Reporter at $199 for 44 weeks. Why is one price the real price and not the other?? Both accept advertising. So is it just because each magazine has a different audience? Hard to know.

Discrepancies abound in retail pricing. A luxury scented gift candle may retail at $68 but will actually sell when it’s marked down at $50. Wholesale may have been as low as $15. A pair of J Brand jeans retails at $190 and will actually sell at that price.
A Deep Seating Patio set may retail at $3000.  But will actually sell on sale at $2300. Though wholesale is $1200.  A top designer blouse may retail at $220, but will sell at $160 a couple weeks after it was put on the racks. A Kenmore washer and dryer set is priced at $1879 but will sell at $1299 if bundled. Few people would ever buy a brand new washer without a brand new dryer. So the real retail is $1299.

But that is the nature of retail pricing.  It’s a deceptive, “slight of hand” to help you feel you got your dollars worth when you pay what they knew it would sell for.

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