By Mr Retail
These days, finding inventory can be a full-time job. And to say it is stressful would be an understatement. Who would have thought 15 months ago that we would be rolling into a pandemic and then see our industry explode with growth? I sure didn’t. But there’s a caution I’ll get to in a minute.
In many industries, we see the ‘supply and demand’ principle in full effect. Increasing prices of building and construction supplies is a prime example. But our industry is different and we need to be sensitive to “price gouging.” Let’s explore some more.
In short, price gouging is when a company inflates their pricing based on demand. From gasoline to chicken wings (yes chicken wings), we see it all around us. So what is the difference between price fluctuations and price gouging? It is pretty simple. If you are paying the same for a product during a shortage and you inflate your pricing because you have it and other retailers don’t, that is gouging. Now, to be clear, most vendors have a suggested retail price and some have a lower minimum advertised price. Either is fine. You may also have items you typically sell on promotion and now you are asking full price. That isn’t gouging in my opinion.
So, why shouldn’t I raise my pricing to whatever the market will bear if I have it and no one else does? It is because of the Internet. Let me explain. CarPlay radios are in short supply, yet all of the major brands are sold online by respected retailers like Crutchfield. Plus, many of our vendors list retail pricing on their sites. So, if a client comes to you and sees an inflated price, you could possibly destroy that great reputation you have spent years building. In my opinion, the risk is NOT worth the reward. And if we are being brutally honest, wouldn’t we get upset if we were on the receiving end of it?
Most of us weren’t willing to pay the $1,000-1,500 pricing on ebay last Christmas for a PS5. We thought it was nuts. But hey, people bought it. But we aren’t ebay sellers. We are respected local retailers. And if we want the consumer population at large to trust us, then this is an instance where looking to the big guys like Best Buy is a good example. Their pricing stayed the same.
Now, let me close with one last thought. What I am NOT saying is you can’t have price increases. If a vendor price goes up for you, your selling price will also go up. I also suggest you re-visit your labor rates and accessory pricing to see if some positive changes need to be made there.
We are all in this together and need to stay the course as our industry can’t take any more black eyes. I believe in you, and our industry. It has been home to me for over 30 years now.
About Mr Retail
Mr Retail will be offering opinions and information on car audio retailing for CEoutlook. He wishes to remain anonymous. He has owned a retail store in this country for over 20 years now. Mr Retail loves what he does and loves the 12 volt industry and is happy to share his hard won expertise.
I don’t see anything wrong if customer gets the product at the fair price they are happy to pay. Raising prices for everything including labor, shipping, parts will put much more stress on you going forward than you realize. Better build some $$$ cushion now while you can. If customer is willing to pay the price you offer, then it will make both of your happier, You will have a sale and customer gets a product today from you, and not from the buddy who bought from you 1 hour ago at MAP.
Our respectful Chinese suppliers do no shy to charge us 25x (!!) on some products.
So if you cannot get new product you should sell what you have at what you always have been selling it for so your customers don’t get upset? What happens when you have no more product to sell at all can you call up your customers to help pay the bills?
You should adjust price based on market conditions also I think..
Supply and demand always happens in a crisis, always has, always will. It’s how you adjust and pivot to get you through the difficult times. Some places thrive, others find it hard to stay afloat, and some can’t handle the swings
Ray makes a good point here. You can also tell your customers the truth. That usually works well.
I agree with everything said in this article. However, our manufactures should not advertise MAP pricing on their sites, especially in times like this! MSRP is what should be posted and then we have the choice to sell at MAP. This has always been a frustration for me and many others with manufactures. More than ever, now is the time for that to stop.
It’s unethical to take advantage of the customers by raising the prices on audio products. We always match prices with Crutchfield and even show the customers that we match the internet prices ( Love Crutchfield by the way). But some companies do stab their dealers by allowing the sale of their products on the internet way less than when we buy it from them directly as dealers. For example, Metra electronics. I sometimes buy their products from ebay or Amazon way cheaper with free shipping and no minimum order to get free freight. So, how embarrassing to see a customer showing me a dash kit sold by Amazon for $25.00 (shipped free) and my cost as a dealer is $38.00 from Metra.
I get your point, and I do it as well, but let’s be clear, YOU are paying $130 annually for that “free” shipping.If it’s not bound and sold by Amazon itself you still may be paying shipping, if it comes from an Amazon Marketplace seller.
Honestly, I’ve been burned plenty of times by Amazon’s Prime 2-day free shipping. Does anyone actually file a claim with them if it takes 3 days?
That $130 annually could also be used for personal items in his home, his wife can use it, includes Prime video, Whole Food discounts, etc. So it’s not exactly fair to say he’s paying $130 for dash kit shipping.
He also mentioned eBay. So, point proven.
Mr. Retail does a good job of explaining price methodology in these “opportunistic” conditions. That said a brick & mortar specialty retailer should be (must be in my opinion) always thinking about his long term profitable relationship with his current and target customers. Consumers are NOT STUPID contrary to the belief of some retailers. They almost always figure out how they have been treated by a retailer, value of the experience/price ratio. If they perceive a high quality experience the price becomes less of a factor in their decision about what they say to OTHER CONSUMERS (your target customer).
FOCUS on the CUSTOMER’s TERRIFIC EXPERIENCE, charge a profitable BUT fair price (that means you gotta know your gross profit margin AND all of your operating costs) and YOUR CUSTOMERS will remain your customers and do the word of mouth evangelizing that is the life blood of the brick & mortar specialty retailer.
Ray Windsor