NextGen currently tracks the pricing on over 5,000 women’s brands in order to keep its suggested resale prices in tune with the retail prices in women’s fashion. This involves the timely identification and valuation of brands—new, old, rising, fading, fallen; and distinguishing the many labels introduced by designers to appeal to different markets. It’s a demanding task in normal times, and especially now as the rate of brand/price change is as high as we’ve seen.
The significant change we’re seeing in women’s fashion pricing, specifically the growth in the designer brands at the top, and discount brands at the bottom, reflects the broader shift in income distribution. To quote Schwartz in his recent New York Times article (2/2/14) entitled The Middle Class Is Steadily Eroding. Just Ask the Business World.
“As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.
The top 5 percent of earners accounted for almost 40 percent of personal consumption expenditures in 2012, up from 27 percent in 1992. Largely driven by this increase, consumption among the top 20 percent grew to more than 60 percent over the same period.”
John Graubard’s graphic observation in the same article sums it up “In a few years the consumer choice will be Neiman Marcus or WalMart.”
The prices charged by stores using NextGen’s pricing system vary significantly. Prices for the same brand and category of apparel, accessory or footwear at some stores can be as much as 2.5 times that of others. The primary reasons: 1) demographics or more specifically client disposable income, and 2) competition. Shops serving well-heeled customers with limited competition from large discounters and resale shops are able to charge higher prices than those located in lesser income markets with nearby competition.
The challenge is finding the right level. While pegging prices to a store’s historic sale prices by brand and category makes for consistency, there is no way of knowing whether these prices could and should be higher or lower, i.e. how much is being left on the table.
Herein lies the NextGen advantage. NextGen’s prices are informed by the pricing/sales experience of stores in high to low demographic and high to low competitive markets across North America. In the case of new stores with no sales history of their own, NextGen sets prices based on the new store’s market demographics and competition. In the case of stores with a pricing/sales history, NextGen analyzes their pricing/sales history relative to the histories of stores in like markets in order to identify pricing potentials. Owners generally opt to move to these prices immediately though sometimes gradually so as not to concern longstanding customers.
In retail businesses, it’s safe to say that prices are invariably set by owners be they individuals or corporate, or by managers using pricing conventions provided by the ownership. This only makes sense as pricing is the revenue side of the bottom line.
When NextGen started working with resale stores, we expected to find the same. Much to our surprise, pricing in a number of children’s and women’s resale establishments is left largely to employees.
Prices set by employees are rarely optimum when compared to prices obtained by stores in comparable markets; they are most always on the low side. But as damaging as the profit loss commonly associated with employee under-pricing, is the price inconsistency that comes when employees are left to price largely on their own. The result is a loss of customer trust. With inconsistent pricing comes customer uncertainty that the tag price reflects value, and the consequent declination to pay the asking price ( i.e., buy) for items with unfamiliar labels. Translation > lost sales.
Owners need to own their pricing. While some employees who’ve been pricing welcome a company pricing system and the reduced anxiety that comes with it, others resist giving up this control. Indeed, NextGen has had a number of owners decide against the pricing system for fear of losing valued employees vested in the existing pricing—their pricing. Even with employee support, if customers are accustomed to employee under-prices, prices cannot be bumped abruptly. Prices must be adjusted incrementally in order not to sour longstanding customers. Fortunately, the mixed price/value association characteristic of most employee pricing practices, can effectively mask modest price changes.
The time is always right to take control of your pricing, … to take control of your business.
“A Resale POS system without auto-pricing waddles like a duck on land,
with auto-pricing it streams like a duck in water” NextGen Knowledge Base
POS Auto-Pricing is a must-have tool for resale businesses today. It instantly suggests the right resale price of an item based on brand, condition, currency, features, composition, … . It dramatically cuts the time required to price. It assures that prices are correct and consistent. It adds considerably to a store’s bottom line. It frees owners and significant others to tend to sales, customer service and other areas important to the success of the business.
The challenges facing the buyer of resale merchandise, whether buying outright or on consignment, are far greater than those facing buyers of new. To arrive at an item’s selling price, the resale buyer must assess the currency, quality and condition of hundreds of types of merchandise (apparel, footwear, accessories, toys, equipment, each carrying one of thousands of possible brands / labels– numbers of a magnitude dwarfing those faced by even the largest retail buyers. What’s more the resale buyer must examine these items and determine the selling price one by one, each in a matter of seconds.
Little surprise that owners quickly find themselves and others in their employ spending an inordinate amount of time buying. It’s the black hole of many if not most resale operations.
It is no surprise that the POS system of virtually every resale franchise or chain has auto-pricing built-in. What is a surprise is that ResaleWorld’s Liberty 4 is the only POS system today with built-in auto-pricing available to independent Resale owners of women’s, juniors and Children’s Resale shops.
In the Retail industry, the gain in productivity realized with the move from cash registers to POS systems has been significant. In the Resale industry, the gain in productivity realized with the move to POS systems w/auto-pricing is proving no less significant.