It’s hard to see how some “bricks and mortar” retailers will survive the relentless growth of online sales.
And sometimes its hard to argue against it.
A couple of weeks ago my car remote died. No amount of tinkering, application of blue tack or fidgeting with batteries and tiny metal gadgetry could get the thing to work.
So I headed off to Highpoint Shopping Centre in search of a new one – they sell them at those kiosks, where they also repair watches and cut keys.
The affable guy behind the counter quoted me about $110 for a brand new remote and said the best price he could do was about a $95 if he included a 10% discount voucher, which he placed in my hands.
It seemed quite a lot for a little gadget so I said I’d think about it and left, thinking I might get a couple of other quotes.
In the Moonee Ponds arcade, the guy behind the key cutting counter quoted me $130 and I thought, “Yeah right mate” and left.
Of course it always pays to look online – specifically eBay.
Typing in a few key words into the search bar, I came across an online store selling a brand new remote for $68 in one of those “this is not really an auction – “Buy it Now” deals, including free shipping.
So I did some checking as you should always do when shopping online and discovered that they’re a “bricks and mortar” locksmith in Five Dock, Sydney – with an address, phone number and very high seller rating – and so I bought it.
It came in the post four days later and works like a charm.
I walked around basking in that strange warm, enveloping glow that happens when your research has paid off and there’s a couple of extra bucks in your bank account as a result.
It also got me thinking about retailing, specifically – are consumers being taken for a ride every time they buy something in a mall?
After all, I got the gadget for roughly half the price of what it would have cost me to buy it in Moonee Ponds and about 30% less what I was offered in Highpoint, even with discounts thrown in.
Of course, bricks and mortar retailers have to factor in things like rent – which can be very high – the cost of holding stock, staff wages, insurance and many other things which is partly why they charge more.
I say “partly” for good reason.
Recently I came across an article about the float of the Dick Smith electronic stores by the Australian Financial Review’s retail writer, Sue Mitchell.
She writes that Dick Smith chief executive and turnaround specialist Nick Abboud has established a “new sourcing office in Hong Kong and is now sourcing direct products for Dick Smith’s growing private label range”.
“The private label products are cheaper than international brands but gross margins are around 80%,” writes Mitchell.
What this means is that a Dick Smith $396 television is only costing the company $79 before factoring all those other costs I’ve mentioned above.
Even when you tally up those costs, Dick Smith is making a healthy profit on each item they sell under their own brand and continue to do so even after offering as much as a 50% discount.
Clearly not all retailers operate on such wide margins, but still food for thought the next time you see the words “sale” and “discount” pasted across every shop in your favourite mall.