True “bargains” are only found online

trolleys

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.

car remoteSo 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.

The kindness of strangers

customer complaintsThey say the retailing environment is tough at the moment.

The online world with its free shipping, discounts and gimmicks is really biting into “bricks and mortar” shops selling books, CDs, DVD and just about anything else you don’t have to eat or drink.

Even clothes.

Who would have thought that so many Australian consumers – men and women- would be buying entire wardrobes online?

But they are. Companies like UK-based fashion house ASOS are selling so much merchandise to Australians they’re having to fly in two jumbo jets a week just to fit everything in.

Anyway, I digress.

This week, amid this tough retailing environment, a complete stranger did me a favour.

I was in an ‘All Books 4 Less’, one of those discount stores that sells books for $5 and $10.

I picked out a book for my wife as a present. It was a nice book on crafts.

It cost $1o.

I walked up to the register and nice young woman scanned the book and told me it was $10.

I took out my wallet and handed her my debit card.

She pointed to the sign behind her and shook her head:

“Minimum EFTPOS transaction is $15” it read.

I shook my head and scrounged around in my wallet for a $5 note. Then I emptied out my front pockets and my back pockets and came up with a few dollars more.

She stared at me, smiling awkwardly, as I scrounged around in my bag for coins.

I laid everything out on the table and counted.

It came to $9.95.

Surely she would not begrudge me 5 cents?

“Oh I am sorry” she told me. “It is $10.”

“But surely…”

“No, sorry.”

I glared back at her. Indignant. Then I searched again in my bag and then in all the pockets of my jeans and then in my wallet.

Nothing.

“You’re being ridiculous,” I told her, the anger rising.

“I am sorry, the manager will see there is money missing.”

“But it’s five cents”

“I am sorry”

“You’re being ridiculous”

“I am sorry”

She suggested I walk to the nearest bank.

I searched through my bag, my pockets, my wallet again, refusing to move.

She watched me.

“Perhaps you can buy another book so you spend $15?” she suggested.

“I don’t want another book,” I replied.

Then a woman came up behind me to pay for some books.

I told her why I was standing at the counter with the contents of my bag spread out before me.

She frowned.

‘You wouldn’t have 5 cents would you?” I asked her.

She smiled, opened her purse and took out a 5 cent piece and gave it to me.

I thanked her.

I gave it to the woman behind the counter.

I left with my book.

I calmed down.

Reflecting back now on this, I have to ask: Has the retailing world gone mad?

Is this how you treat customers when you’re competitors are selling the same products at half the price?

But it seems it has.

There’s the story about the health food store in Brisbane charging customers $5 “to browse”  because the owner was apparently unhappy with giving customers advice, without the guarantee they would buy anything.

This is not an isolated innocent. In Newcastle (NSW), a shoe shop is charging customers $10 to try on shoes.

In both cases, the money is deducted if the customer makes a purchase, but who would bother putting up with this kind of attitude? Half the fun of shopping is the ability to browse.

And is this the best solution these two businesses can come up with to arrest revenue lost to online stores or cheaper competitors? Smacks of desperation. These businesses won’t last very long.

Such contempt for customers is happening at the top of the retail food chain as well.  Recently Myer managing director Bernie Brooks, suggested it would not be a good idea for taxpayers to fund the national disability insurance scheme (NDIS) because it would cut into the money people may spend in his department stores.

The social media backlash was brutal.

And let’s not forget another grumpy old retailer, Gerry Harvey, founder of Harvey Norman, worth close to a billion dollars, who loves to complain about online retailers stealing his business, Then he launched his own own online store.  Of course he is still loves running those “23 month no interest, no deposit, no repayment” dodgy offers that cost unwary customers hundreds of dollars in extra fees and other costs.

The fact is there are plenty of traditional retailers making good money because they know how to sell their products, sell the right kind of products and because they treat the customer as king.

This is just as true in the de-personalised online world, where for example the Book Depository charges no shipping fees at all even for international purchases.

So here’s a suggestion for the people at All Books 4 Less and every other retailer grumbling and looking to gouge their customers, even for a measly 5 cents.

Don’t argue with us. Don’t try and wrestle our money from us.

Treat us like old friends. Make us smile and we’ll keep coming back.

And remember that old saying: the customer is always right.

Even when he’s wrong.