Women’s consignment pricing software

Women’s Consignment Pricing – What We’ve Learned

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.

Women’s Consignment Pricing – The Importance of Demand

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.

Online Price-checking Imperative

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.

  1. 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.
  2. 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.
  3. 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!

Automated Price Markdowns—a losing strategy

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