David Rubenstein from Rubensteins New Orleans has a question for upscale retailers: With everyone complaining about tough business, which is likely to remain tough for at least a few more seasons, might this not be a good time to work on slightly longer markups? Retailer markup on most sportswear these days is not much more than keystone and, with traffic down and expenses up, it’s hard to make a living on 50 percent.
“The problem evolved because manufacturers selling direct to consumers are pre-ticketing goods too low,” notes Rubenstein. “It’s acceptable for suppliers who sell direct with no middleman because they’re still making plenty of money. But for retailers to sell these same goods at these same prices, there’s too little margin to be profitable.”
Rubenstein offers two suggestions: 1) On basics like navy blazers where price comparisons are easy, encourage your branded makers to preticket at a higher markup (at least 60 percent instead of 50). 2) On fashion items like patterned sportcoats, don’t worry so much about the competition and mark it up to where you need it. Men are not likely to start shopping around once they find a fashion piece they love that fits. Even if they do comparison shop, your store is (hopefully) offering much more than just product (i.e. exceptional service, expert tailoring, a personalized shopping experience, lifetime alterations) so guys are not likely to complain about an extra few bucks.
Do you agree? Do you have any other ideas for making money in this era of Amazon, flash sales and numerous off-price options? MR would love to hear your thoughts on pricing and/or other ways to compete. You can respond to this post or email me directly: email@example.com.