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Klarinet Archive - Posting 001536.txt from 1998/04

From: "Kevin Fay" <kevinfay@-----.com>
Subj: Retail v. Warehouse
Date: Mon, 27 Apr 1998 15:10:40 -0400

I do not believe that your friend is lying--I do know, however, that he
is somewhat misinformed.

While many manufacturers do offer special models for large retailers,
thus being able to offer a lower price on them, branded items MUST have
the same price to all competitors at the same level of distribution.

A concrete example--Dennis Bamber sells a line of "Woodwind" saxophones.
They're the same, I think, as the "Antigua" line sold through stores
here in Seattle. He might get a price break on them because of the
special branding--but then again, he may not. He will NOT, NOT, NOT get
a price break on Buffet R-13s, however, or kickbacks or whatever. No
way--state and federal attornies general would be at Boosey & Hawkes'
door and right quick about it, too.

Now you may think (a) that all major corporations are evil and
circumvent the law or (b) that the music market is too small to garner
governmental attention. All I can say--from professional experience--is
that bigger cases have been brought in small markets, particularly so
when the goods are imported.

The real advantage to the large retailer is the basic economics of
retail--simply size. Bill's view of the economics is correct. The
larger retailer can afford to have smaller margins, principally because
of better inventory turn. The average grocery store, for example, marks
up its inventory about 2-3%, but still has a healthy profit at the end
of the year.

kjf

----Original Message Follows----
Date: Tue, 21 Apr 1998 21:19:28
From: Lee Hickling <hickling@-----.Net>
Subject: Re: Mouthpiece Information--Retail v. Warehouse

Bill Hausman wrote that "warehouse" music stores can afford lower
margins
because they sell more. He said:

> ...... Assume for the sake of
>argument that the cost of merchandise is the same for either store. If
the
>only item you sell costs you $100 and you only sell 10 a day, you HAVE
to
>charge $200 each for them or go under. If you sell 100 per day, you
only
>have to charge $110 to break even. While it is nice to think that
lowering
>price will increase sales, within the limited market area a local store
>operates in it is unlikely to make much difference, although on the
>national level it may make some. Nobody is gouging anybody, but you
have
>to cover the cost of doing business, which is higher for the local
store
>PER ITEM SOLD.

Bill is absolutely right, but I have to question the assumption that the
cost of merchandise is the same for either store. The owner of the store
where I teach says he knows for certain, from salesmen, that the big
stores, and the operators of chains of stores, get not only volume
discounts when they buy new instruments hundreds at a time, but
under-the-table price breaks and other goodies -- like special
instruments
that are not in the catalogs and can be touted as
above-the-top-of-the-line
and sold at a premium. He's an honest man, he's been in the business for
nearly 30 years, and I believe him.

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