The resale and consignment business has always been difficult, but the growing competition online is making it even tougher. In the final analysis, it’s meaning fewer customers and sales.
What’s the answer? While there is no one answer, one sure answer is to lower your operating costs, become more efficient. And one sure way to do that is to reduce the amount of time being spent pricing items for resale. The time spent buying or accepting items on consignment generally accounts for much if not most owner/staff time.
Navigating Google and other online shopping sites, piece by piece, is a voracious time and money eater. NextGen’s Suggested Pricing and quick online [Checkit] features quickly pay for themselves, grow your profits, and may just save your business.
Many consignment shop owners believe that a location with a wealthy clientele will bear higher prices than a less affluent location. The store owners participating in the development and piloting of NextGen’s Women’s Consignment Pricing System, questioned NextGen’s insistence that a pricing system could fit all markets. We expressed some pride in our ability to know what our markets would bear.
NextGen pointed out that resale franchises have for years employed largely brand-driven pricing models, with prices that worked across markets. They explained the obvious—that the retail prices of women’s accessories and apparel for a given item and brand are the same irrespective of the market in which they’re sold.
We took a wait and see attitude, pending the results of their multi-store sales analyses. What we learned was that brand was the most important factor in pricing. We found a couple of surprising patterns. One, that exact same items were selling for more in lesser markets and for less in better markets. And, two, that our pricing practices were not consistent.
Everyone knows the real estate mantra, “Location, Location, Location” when shopping for a home. We are now convinced that in pricing women’s consignment, it’s “ Brand, Brand, Brand.” While the NextGen Women’s Consignment Pricing System certainly allows for location as a factor in pricing, it doesn’t carry nearly the weight as the brand.
The NextGen Women’s Fashion Pricing System takes the guesswork and agony out of pricing. More consistent pricing means more money for store owners and their consignors.
A common feature of the more established point of sale systems geared for the consignment and resale industry are automatic price markdowns. Percentage markdowns can be set at pre-determined intervals (e.g. 30, 60, 90 days). Markdown Tags indicate both the date of the price reduction and the new price. Then, when an item sold, the sales clerk is not required to change the price at the register as any price markdown is recognized when the price tag is scanned. This means faster sales transactions and improved accuracy.
It also means slower inventory turnover and thus less sales revenue according to NextGen’s limited data to-date and related reports from NextGen clients having moved from automated markdowns to NextGen Pricing, This has been born out by studies in the retail sector.
Whether actively promoted or not, if markdowns are near-continuous, regular shoppers become accustomed to the process. This not only increases off-price demand, but also can decrease full-price sales. As some retailers assume ever more aggressive markdown strategies, the net effect is a serious erosion of price and more importantly margin much earlier in the product’s lifecycle. Promotions are one of the reasons commonly given for Kmart’s near demise. It has been estimated that some retailers actually sell less than ten percent of their products at full price – their customers have been trained well. White Paper: Managing Markdowns: Why Prevention Is Better Than The Optimization Cure
NextGen’s value proposition lies typically in the user’s ability to avoid the time and risk involved in setting prices based on retail and resale prices found online. However, in a few cases online price checking makes sense, and the NextGen System’s [Checkit] function is designed to expedite the process.
- Top Brand prices. Designer –brand Children’s and particularly Women’s apparel, footwear, jewelry and accessories sell for wide-ranging prices, e.g. a child’s fashion boot prices for a Burberry may range from just under $100 to over $600, a women’s handbag from around $200 to more than $2,500. These ranges are much too large to derive reliable suggested prices. Using the checkit button to view retail and resale prices for items in the same category, brand and like descriptors(key words ) supports a more well-founded pricing.
- The prices for selected equipment and large toys, online and off, can drop sharply for short periods of time—sometimes longer–as retailers use them to drive traffic. For this reason, even for categories where the system shows suggested prices, it can be worth a click of the checkit button before committing to a suggested price.
- In addition to brand, suggested prices for smaller toys are lumped into categories defined by size, what they are made of(cloth, metal, plastic, …, ), and whether they are electronic. These suggested prices are built for speed. Using the descriptors(key words) to name or describe a particular toy and the [CheckIt button] permits a more refined pricing referent… time permitting!
Women’s Consignment Pricing – The Importance of Brand
According to Brand Keys the New York-based brand and customer loyalty research firm: since 2008 the importance of brand names has consistently increased, standing in 2012 at 29%–more than tripling in importance over four years. The more considered a purchase, the greater the role a strong brand plays in the decision making process, especially when it comes to fashion. Moreover, it can be expected to continue. According to Brand Keys’ latest Fashion Shopper Survey, the youngest fashion buyers (21-34 year olds) showed the strongest lift in brand importance. What’s more, it’s as true for leisure and casual apparel as for luxury apparel. The Survey shows, Nike and Hilfiger ranking right at the top along with Armani and Chanel in terms of importance in the purchasing decision.
In the 2012 Brand Keys Fashion Brand Index, the top spot goes to Ralph Lauren/Polo, followed by one’s favorite sports team, Armani and Nike with Versace and Chanel, tied for fifth place. I would argue that Brand is even more important to Consignment shoppers who are far more value conscious than the average shopper. Indeed, it is what NextGen has found, ….in spades!
Several years ago the number of brands appearing in the NextGen Women’s and Children’s Pricing Systems numbered just over 4,000 each. Today the number is triple that. The growth in number reflects New brands being introduced continually as manufacturer’s, wholesaler’s and retailers create new labels for new products and to keep the identities of existing products fresh.
The growth also reflects obsolete brands–those associated with discontinued products and those replaced with fresh brand names. NextGen continues to show obsolete brands (connoted with a trailing X) to alert buyers and inform the buying/consigning decision. As a rule, obsolete brands should not be purchased or consigned for resale as they often mark apparel that is out-of-style or at least out-of-favor among brand-conscious customers. If the decision is made to purchase an item, the NextGen Buy/Consign and resale prices suggested in the NextGen Pricing System drop to the lowest level. Carrying too many obsolete brands can tarnish a Resale store’s reputation.
Since NextGen first built its Children’s Pricing System in 2011, the number of children’s off- brands and no-name brands has increased dramatically. So much so, that NextGen has had to add a “bottom” brand level and corresponding resale pricing specific to this group.
In 2011, we would never have imagined apparel being offered at such unforgivably low prices. Despite numerous media accounts of overseas factories employing children in 19-to-20-hour shifts, often for seven days a week, for wages as low as 6 ½ cents/hour to manufacture it, this clothing and footwear continues to find its way onto our sales floors in the U.S. and Canada.
Women’s Consignment Pricing – The Importance of Demand
Brand, i.e. perceived value and original price is, of course, central in setting resale prices. Indeed, along with condition, they’re the only factors mentioned in consignment pricing guides. But of overriding importance is demand.
There are four principal outlets for resale apparel. 1) Individual Garage and online sales, 2) Seasonal Consignment Events, 3) Online Resale Sites and 4) Brick and mortar resale shops. The pricing metrics for the Seasonal Consignment and Online Outlets are only now being established as these ventures are new on the scene. While, Ebay and the like have the metrics, the enormous range in prices for like items renders them useless. In short, We aren’t able to speak to these, nor will the surviving ventures be able to do so for a time.
But the sharp difference in demand between the other two: 1) garage sales and 2) shops serves to clarify demand’s import in pricing. First consider garage sales. The number of shoppers looking for the type and size of resale apparel offered (demand) is typically less than a hundred–generally far less. Contrast this with a typical consignment shop typically showing apparel to 5000 or more shoppers over a period of 90 days.
It explains why guides for garage sale pricing suggest giveaway prices for women’s apparel at $1-3 per item or 10% of original price, while guides for women’s consignment pricing range into the hundreds of dollars and 25-40% or original price.
It explains why the highest prices at which items will sell invariably differs from one outlet type to another, and why a set of prices can only be pegged to one type of outlet and attendant demand. It explains why women’s apparel and accessory prices in NextGen’s Pricing System, are calibrated specifically to women’s consignment shops based on years of sales statistics across multiple stores.
The Women’s Fashion Pricing System is created to make pricing easy—to take away the anxiety that comes with being unsure of how to go about it.
If you can read the label in a piece of clothing (for example: Ann Taylor, J. Crew, etc), you can price. All you have to do is enter the category in the space provided (blouse, sweater, etc), and then enter the brand!! I’m not kidding! The system will prompt you to fill in the information and then show you the appropriate price range, which you can select or adjust. There are no tricks. It’s very clear cut.
Our price ranges have been selected from information on pricing that we have collected from several successful consignment stores across the country. The suggested prices are prices that these items have sold at…proven sales. We give you a price range for each item is so that you have the ability to adjust the price as needed according to other variables, such as condition, age, locale, and demand. The important thing to remember is that we give you a price range—not just one price. You have the freedom to choose the price that is appropriate for your shop, but with confidence, that this range of prices is the right one.
Your staff can price with the same confidence. All they have to do is enter the category and the brand, follow the prompts for the additional details and the price range will come up. If they are very new to pricing, they can choose the mid point price and it will be a safe option. Of course, you can always enter any price you choose, but if you stay within our price range, you can be sure that you are pricing appropriately.
This is an amazing product! Your entire staff can price after a couple of hours with this system!
Talk to you soon,
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.