1. And... we're back. You'll notice that all of your images are back as well, as are our beloved emoticons, including the infamous :foo: We have also worked with our server folks and developers to fix the issues that were slowing down the site.

    There is still work to be done - the images in existing sigs are not yet linked, for example, and we are working on a way to get the images to load faster - which will improve the performance of the site, especially on the pages with a ton of images, and we will continue to work diligently on that and keep you updated.

    Cheers,

    Fok on behalf of the entire Styleforum team
    Dismiss Notice

What happens to unsold items at a store?

Discussion in 'Classic Menswear' started by MilanoStyle, Dec 22, 2004.

  1. johnnynorman3

    johnnynorman3 Senior member

    Messages:
    2,686
    Joined:
    Mar 3, 2004
    Congratulations, Jon. You just discovered why so many apparrel groups go bankrupt -- because they don't know math. I posed this exact same hypothetical to my grandfather, who was adamant that the 50% markup math is correct. [​IMG]
     
  2. topcatny

    topcatny Senior member

    Messages:
    1,054
    Joined:
    Dec 14, 2004
    Location:
    NYC and Long Island, NY
    In retail speak, 100% markup is impossible, unless the goods were actually free.

    The term markup in retail speak actually refers to the percentage of the selling price that is profit.  So something that cost $1 and retails for $4 has a 75% markup.

    The formula is... Retail Price / (Retail price - Wholesale price)
     
  3. nightowl6261a

    nightowl6261a Senior member

    Messages:
    1,457
    Joined:
    Sep 15, 2004
    Location:
    Atlanta
    Most retailers/wholesalers will sell to a jobber, we buy from some, like the Grensons...they came via a jobber handed down the exclusive rights from the company, and we happen to be a large client.
     
  4. imageWIS

    imageWIS Senior member

    Messages:
    20,008
    Joined:
    Apr 19, 2004
    Location:
    New York City / Buenos Aires
    Wait, are you saying that I don't know math? And if so, what was wrong with it? Jon.
     
  5. von Rothbart

    von Rothbart Senior member

    Messages:
    2,461
    Joined:
    Oct 29, 2004
    So if Saks buys the suits directly from Corneliani under Saks' private label, will it cost Saks the same $250 as it costs Polo? In that case, Saks is selling the suit at 4 times its cost?
     
  6. imageWIS

    imageWIS Senior member

    Messages:
    20,008
    Joined:
    Apr 19, 2004
    Location:
    New York City / Buenos Aires
    Ah, but apparently traditional math does not apply to retail...so the question is: what exactly is the correct calculation?

    Jon.
     
  7. discostu004

    discostu004 Senior member Affiliate Vendor

    Messages:
    1,805
    Joined:
    Apr 5, 2004
    Location:
    7,908 Feet, Colorado
    my understanding is:
    retail store sells a suit for 1,000, the bought it around 400, so even at 50 off they are squeaking by, but presumably have sold some at 1,000
    when they job it out, they sell it for whatever they can get (20% was discussed), so they take a 200 loss per 1,000 suit but in my discussions with a big store i won't name, but people here would definitely know it, they said that the loss they take in jobbing out is part of their business plan. they know some things won't sell and plan accordingly
     
  8. topcatny

    topcatny Senior member

    Messages:
    1,054
    Joined:
    Dec 14, 2004
    Location:
    NYC and Long Island, NY
    As quoted by von Rothbart "So if Saks buys the suits directly from Corneliani under Saks' private label, will it cost Saks the same $250 as it costs Polo?  In that case, Saks is selling the suit at 4 times its cost?"  (I still haven't figured out how to quote a previous post)

    Maybe and maybe not.  Saks may not be able to put together a large enough purchase to get the same price as Polo.  Polo is buying suits for its retail accounts and its own retail stores.  Saks would be only buying for its own 60 - 70 stores so that may not be a big enough order to get the same price.

    To an extent stores private label brands can offer a good value.  In my experience department stores do not take all of that markup for themselves.  If they had the same quality suit as Polo they would probably price it a little less than the Polo's retail.  A Sak's brand suit does not have the same perceived value as a brand name suit, to the average customer.  (The member's of this forum are much more aware of garment construction and fabric quality than the average consumer and even many members of the retail trade) So they would bring the retail price down to compensate for that.  

    But, the private label brands typically have the highest gross margin of all of the brands a store carries.  They cut out the middle man and pass on some of the savings to the customer.  Private label brands also allow stores to run Sale ads and offer even greater savings.  This helps them in 2 ways. 1. Most major brands will not financially support a "Sale" ad that advertises their product.  That is not to say retailers never do it, but it is frowned upon by the vendors and the retail stores do not want to damage the partnership they have developed with the vendors. 2. Even though they have their own private label brands 25% or 33% off they are still making a profit similar to what a branded item would sell at regular price.  So they can offer a great perceived value to their customer and still make a healthy profit because their initial markup is higher than normal.
     
  9. Heron

    Heron Well-Known Member

    Messages:
    65
    Joined:
    Nov 30, 2004
    Location:
    Ontario, Canada
     
  10. ernest

    ernest Senior member

    Messages:
    2,564
    Joined:
    Jan 18, 2004
    Location:
    PARIS
    50% makeup means 1$ is sold 1.5$.
    100% means 1$ is sold 2$

    But I am just a guy who studied economics...so my predictions...
     
  11. ernest

    ernest Senior member

    Messages:
    2,564
    Joined:
    Jan 18, 2004
    Location:
    PARIS
     
  12. topcatny

    topcatny Senior member

    Messages:
    1,054
    Joined:
    Dec 14, 2004
    Location:
    NYC and Long Island, NY
    I understand everyone's confusion over markup.  When I first started in the business out of college I had the same problems understanding "Retail Math".  

    But, I am also positive if you ask a retailer what his markup is on an item he bought at $1 and sold at $2 he will tell you it is 50%.

    Most people, and normal math calculations think of markup as the percantage an item is marked up from the purchase price. In retail speak they look at the percentage of the retail price that is markup.

    The formula for this calculation is:     
    Retail Price / (Retail Price - Wholesale Price)
     
  13. ernest

    ernest Senior member

    Messages:
    2,564
    Joined:
    Jan 18, 2004
    Location:
    PARIS
    100% markup seems impossible if markup is for you =

    (selling price- cost price) / selling price
     
  14. topcatny

    topcatny Senior member

    Messages:
    1,054
    Joined:
    Dec 14, 2004
    Location:
    NYC and Long Island, NY
    Ernest 100% markup is in fact impossible in retail math, unless you got the goods for free.
     
  15. ernest

    ernest Senior member

    Messages:
    2,564
    Joined:
    Jan 18, 2004
    Location:
    PARIS
    If you apply your formula you have no 50% =

    2/ (2-1) = 2 = 200%
     
  16. topcatny

    topcatny Senior member

    Messages:
    1,054
    Joined:
    Dec 14, 2004
    Location:
    NYC and Long Island, NY
    You have the formula backwards

    Selling Price / (Selling price - Cost)
     
  17. ernest

    ernest Senior member

    Messages:
    2,564
    Joined:
    Jan 18, 2004
    Location:
    PARIS
    That's what I just said obove to WIS who was asking how much should be the selling price to have a makup of 100%
     
  18. topcatny

    topcatny Senior member

    Messages:
    1,054
    Joined:
    Dec 14, 2004
    Location:
    NYC and Long Island, NY
    Ernest, that is in fact what you said, I thought you were still posing the question rather than answering it.
     
  19. ernest

    ernest Senior member

    Messages:
    2,564
    Joined:
    Jan 18, 2004
    Location:
    PARIS
    what does it change if you change retail by selling?
     
  20. Toggery

    Toggery New Member

    Messages:
    3
    Joined:
    Dec 23, 2004
    topcatney is correct in his explantions of "retail math". Retail math is different than what most of you know as traditional math. topcatney is also on the mark in his explanation of the private label policies of major retailers.
     

Share This Page

Styleforum is proudly sponsored by