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The Deep Dark Secrets of Retailers Revealed

Anything that might not belong on the other message boards!
400lbsonacubseatspring
10+ Years
10+ Years

The Deep Dark Secrets of Retailers Revealed

Postby 400lbsonacubseatspring » Wed Apr 12, 2006 11:18 pm

Well kids,

I have put a lot of thought into exactly what went wrong with the thread here:
http://www.farmallcub.com/phpBB2/viewtopic.php?t=12735
regarding RudyO and Tom at TM.

I think I've made an assumption, perhaps, that most people have spent some time with a retail business of their own, when that is very likely not the case. Most of you have had honest jobs throughout your lives, and have made certain assumptions about retailers which may or may not be true.

Having spent the majority of my life with a retail business of one kind or another in operation, let me tell you a few things about how it works.

Retailers work by the following rules:

1) a product should be bought for as little as possible, and sold for as much as the market will bear. Anything contrary to this leads to bankruptcy.

2) quality is important up to a certain point, but it is never more important than rule #1 -- this is to say that it only makes sense to buy a higher quality item, if, by doing so, the market will bear a higher price. Acting contrary to this is foolishness.

3) retailers genuinely like most of their customers, but absolutely loathe some of them. In reality, the way in which they treat them is oddly the same. Only selling, or being very nice to people you like will put you out of business quickly. Therefore, it is never safe to assume that a retailer is your friend in a business situation.

4) some retailers are in the enviable position of selling things they care about or enjoy selling. Some merely sell what is profitable. It is virtually impossible to distinguish between these two types of retailers, as, one tends to attain expertise in an area, solely out of desire for profit, even though one doesn't particularly care about what one is selling. Do not assume that just because a retailer seems to care about his product, that he actually does. He may just care about the money it makes him. For example, there was a time when I sold antique glassware -- crystal and depression glass. I didn't care one bit about it, other than I thought it was pretty. To my customers, it appeared as if I worshipped the stuff, however, and I could hold lengthy conversations with collectors on many topics related to these items. It is still true to this day in that I sell some items which are of little interest to me, such as $1 cosmetics. Yet I can discuss them with women (and the occaisional man) and point out their particular qualities.

5) most retailers have an "open" return policy, meaning that they will exchange or refund anything that you bought there. This does not mean that they like it, as in most cases, they end up eating the product you are returning. The days when a retailer could return an item to a distributor for credit are going if not gone. Why do you think there are places who sell refurbished or as-is items on ebay?? They buy them from stores who would otherwise throw them away. The truth is, that most people do not return things. In my case it is less than 1/2 of 1% of all that I sell. This makes it negligable. However, there are some days, when someone returns something that was obviously abused, which lead to its breaking, that I feel like screaming at the customer. You will not endear yourself to any retailer by returning an item...especially one of low dollar value.

6) most small retailers (those that do not worry about commission) will be honest with you, in that they will not seek to sell you anything that you don't truly need. This is out of a sense of compassion and honesty to one's fellow creature, and nothing else. When dealing with a professional salesperson, whose salary is linked to comissions, however, be advised that he will try and sell you whatever he can, because it is to his distinct advantage. As many auto parts places convert to this type of employee, you should be more and more cautious. Extended warranties are a prime example. Most commissioned employees receive massive commisions from these. They are seldom a good deal, unless you are a person who values peace of mind at any price.

7) Customers have shown retailers accross the country time and time again that they prefer low prices to good service consistently. This is why small retailers are failing, and wal-mart is succeeding. Because of this, service-based retailers view all customers as potential traitors. There is no way around this mindset. You've got to prove YOUR loyalty, in order to deserve their service. The service-based retailer has nothing to prove to you. If you buy an item at wal-mart, and go into the small retailer to ask him how it works, or possibly seek to ease your conscience by looking to buy a few cheap accessories for the item you bought at walmart, don't bother, he will know immediately what you did, and will resent you for it.

8) retailers hear everything, but pretend to be deaf. Walking around a store, making comments, criticisms, what have you about a retailers products, prices, what have you, no matter how quiet you think you are, will only serve to insult the retailer. The ultimate sin is to say to a companion, in a low voice "these are only $3 at walmart". Don't expect a lot of pleasant attitude from the retailer at the counter.

9) Mentioning wal-mart at all is a cardinal sin. Retailers don't want to hear what wal-mart has, how much it costs at wal-mart, if their stuff is better or worse than wal-marts. To any small retailer, it is the unspeakable. Don't be that guy!!!!

Some of these rules are here to explain the mindset of small retailers in general, and some help to explain my original posts.

Now, with these rules of functionality in mind, I do have a lot of admiration for Tom at TM, as I have mentioned before. My receipt pile here says that I have purchased more than $600 in parts from him over the last year. It should be obvious to all of you who worship him as some sort of god, that I have no disdain for the man, and support his business very much.

Having said that, retailers are only people who buy something in quantity, and sell it, one piece at a time. There is no craftsmanship involved.

Since I think that actually making something with your own hands (something that I am particularly lousy at, I will admit), is one of the highest aspirations of man, I do not feel the need to stand in awe of anyone who buys and sells. In short, it's such an easy thing to do, that even a fool like me can manage it.

The original post, to RudyO, was meant to be in admiration of his, and the others like him here on this board's skills at making their gadgets, and selling them to the technically challenged, like myself. The fact that they do so less expensively than a retailer is no great surprise to me, being one myself for so many years.

Now, I hope this exhausts the need for me to explain my offenses to you all. My motivation in the original post was pure enough, but, of course, you were all standing in line to point out my errors. I thank you all for that, as it helps me to reshape my thinking from time to time.

If you still find this to be of offense, well, all I can say is I've tried to share with you some insights. I've ruminated on the matter, and turned it over and over in my mind. Everything that I have written here is true, to the best of my knowledge, experience, and reasoning, as always.

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ljw
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Postby ljw » Thu Apr 13, 2006 7:37 am

Tom, An interesting, and, as always, well written post. I saw myself in a couple of those rules. I've always thought that when I griped about an overpriced item the salesperson would not take it personal after considering the source. :roll: But after thinking about it, if they are motivated in what they're doing, maybe they will take it personal. I'll think about that next time.
I guess another retailer's concern is what return on their investment, or their gross profit margin, are they achieving? What are they paying themselves to work?
Tom, I never take offense at what you write. Different points of view interest me. I may not always agree with you, but peaple look at things from different perspectives. The matter of being right or wrong depends on the individual.
I will say that I appreciate the people that make this site possible and I give them my business whenever possible.

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John *.?-!.* cub owner
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Postby John *.?-!.* cub owner » Thu Apr 13, 2006 9:08 am

Tom, I've been there, and agree with you whole heartedly. I was lucky, in that the last 15 or so years befire I retired I provided a service I was proud of to customers I really liked. Made the job much easier to go to each morning.
If you are not part of the solution,
you are part of the problem!!!

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Postby Dennis » Thu Apr 13, 2006 12:49 pm

Interesting post and perspective Tom. I appreciate your insight.

I think, however, that Costco is redefining the retail business in the big box arena, in your rule 1 & 2, and possibly #3.

http://en.wikipedia.org/wiki/Costco

Dennis
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400lbsonacubseatspring
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Postby 400lbsonacubseatspring » Thu Apr 13, 2006 1:01 pm

Dennis (47 Cub) wrote:Interesting post and perspective Tom. I appreciate your insight.

I think, however, that Costco is redefining the retail business in the big box arena, in your rule 1 & 2, and possibly #3.

http://en.wikipedia.org/wiki/Costco

Dennis


Dennis,

Since we don't have a Costco locally here, I've actually never heard of them before. They are, however, not exactly a retailer, however, but something of a retail/wholesale hybrid. I can see where their philosophy would lead to better sales than Sam's Club, however.

I think there is always room to reinvent the wheel, and wal-mart will not be the ultimate evolution of American marketing. Their profits are slipping, now that they are at the top of the food chain (pardon the pun). And eventually, something else will evolve that will take their place. It will just take time until someone thinks of it. Perhaps the Costco model is it.

-Tom


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