This blog continues in the spirit of the “operating by guessing” theme that was addressed in an earlier post, and is specifically prompted by the inconsistent pricing found during a recent survey of independent resale/consignment stores.
How is it that nationally recognized jeans in identical style and fabric are featured at 3 different price points in the same size in the same store? Or how about a beautiful pair of premium brand jeans priced in the bargain basement category? These are examples of inconsistent pricing that represent a lost opportunity and money left on the table. Typically one quick tour of the sales floor reveals if pricing is a function of guess work or an organized approach – a system.
The value of a pricing system benefits the bottom line and builds shopper confidence in you and your prices. It suggests a pay price based on brand, item type, features, condition, and market demand. In the case of the NextGen POS, the system also provides instant price check capabilities for owners to determine retail prices, real-time.
A pricing system is a terrific training tool for new buyers…and when dealing with consignors helps to keep subjective assessment to a minimum. Consistent pricing keeps those hangers turning, and is a boost to the bottom line.
Many retail professionals assert that comfortable shoppers are confident shoppers, and confident shoppers become loyal shoppers. It all starts with smart resale pricing. Are you building customer loyalty?
NextGen Resale and Consignment is a service bureau providing know-how, software and support to owners of resale and consignment shops. NextGen has grown from supporting stores selling used children’s apparel, toys and equipment to stores selling juniors and women’s apparel and accessories.
NextGen clients buy outright and accept items on consignment. They sell new merchandise and used. All are brick and mortar operations; a small number sell on-line. Some have multiple shops, most only one. All require responsive how-to support as well as technical support. All utilize NextGen’s pricing system to keep prices current, and save time spent on buying, pricing and related training. All welcome as many features as they can get.
Initially, NextGen contracted with one of the few POS vendors supporting both consignment and buy-outright operations to customize its offering by building in NextGen’s buying/pricing application. In the end, the vendor was unable to produce, and NextGen had to forego its investment and renew its search—this time in a more diligent fashion. After an exhaustive and systematic review, we found Liberty 4, by Resaleworld. It was, is, and remains the only software that satisfies the essential demands of our varied clients:
- First and foremost, capable of seamlessly delivering our off-line and on-line women’s, children’s and juniors pricing system
- Full-featured consignment as well as buy-outright modes—clients are increasingly using both
- Fully supports the acquisition and sale of new merchandise as well as used
- Supports on-line as well as off-line sales
- Available for purchase and installation, or on a monthly subscription basis as an internet service
- Supports multiple locations via a private network or the cloud.
- True ‘on-call’ technical support—not the as-available’ technical support characteristic of the little POS vendors that dot the resale & consignment software landscape.
- Lots of features—the most of any POS software in the resale industry
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.
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.
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!
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
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.
The online resale of children’s apparel continues to grow and draw business away from brick-and-mortar children’s resale shops. But here’s the good news: the online resale of children’s baby gear ( strollers, bassinets, pack n Plays…) and toy’s does not. Herein lies a key to the survival and growth of Children’s resale shops today: the reselling of toys and baby gear.
Unlike apparel and footwear, the packaging and shipping time and expense associated with the online sale of toys and gear is generally too high to manage profitably. While there are some local online options, (e.g. Craigslist and social media trading groups), the unknown-stranger dimension of Craigslist buying and selling is a fear for many mom’s, and the reach of the trading groups is limited.
And while gently worn apparel and footwear is certainly a draw to value-conscious mom’s and grandmom’s, add toys and equipment to the mix and expect to see more Dad’s, Granddads and children. Indeed, given that the demand for resale baby gear generally exceeds supply, a number of children’s stores supported by NextGen do well renting baby gear as well.
Starting or growing your offering of toys and baby gear is well worth considering to cement your place in the dynamic world of children’s resale.
A recent article in Forbes magazine on women’s fashion resale contains some interesting statistics about whose shopping for women’s secondhand fashion, where and when.
- The most frequent secondhand shopper demographics:
o women over 65 and between the ages of 18 & 24.
o Women with incomes over $125,000.
- Peak shopping time (ThredUP): 9-10pm
- Average time per visit spent shopping online for retail apparel: nine minutes; resale apparel, 45 minutes.
The significant projected annual growth of the secondhand apparel industry, about 11%, holds promise. However, about 80% of this growth is in online as opposed to offline sales.
Do these statistics suggest that brick & mortar resale boutiques need an online presence to survive?
Why Shouldn’t Consignment and Resale enterprises employ Consignment POS software with Square?
on the sales side, Square is far superior to ANY Consignment POS software out there. In other words, most of the Consignment software for which you’re paying, will go unused.
on the Buying side, the Square Buying Portal is a far less expensive alternative, and one that–unlike the Consignment software– includes NextGen’s widely-used and acclaimed pricing tools (women’s, children’s, men’s and furniture-furnishings) built-in.
IN OTHER WORDS
it amounts to paying for more than is needed and getting less.