Smart resale pricing – are you building customer loyalty?

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?

Pricing–the most challenging part of your business.

You have the store, the furnishings, the racks, the signage…and you’re taking in inventory.  Are you confident in your ability to price?  There are so many factors involved in pricing—it is one of the most important pieces of making your business a success.  At the same time, it is the most vague and challenging piece.

If you price too low, people will think that your product is cheap.  It’s very tricky–you think low prices will bring in business, and it may, but you will not gain a reputation for having great stuff,  just cheap stuff.  You are thrift. Shoppers will come to you because you have low prices, but you cannot sustain a business at that level, and your consignors will leave.

If you have wonderful labels, top of the line, but you overprice, they will stay on your rack…forever.  Or…you will have to reduce the price, and that sends a different message. Now the customer thinks there may be something wrong with the item, or perhaps start to doubt their taste or knowledge of fine clothing.  Not good.

Either way, you are not building a reputation for wonderful clothes at great prices!  When business is slow, it’s easy to start to doubt yourself, to second guess everything you’ve done.  I’ve been there.  It’s hard and scary.  The most important thing about your business is pricing.  You can have the most beautiful or trendy store–but if the prices are wrong–you’re in trouble.  And don’t forget, there is always another store opening to compete with you.

The bottom line is pricing.  It can make or break your business. Wouldn’t it be awesome if there was a system out there to help you price?  Well– there is. The Women’s Fashion Pricing System is the answer!!!  It works. No more stress, no more guessing, no more anxiety.  We know the business you’re in, and we can help you make it successful.  Just enter the brand and category and we give you the price range.  It’s that easy!

Talk to us.  Let us help you. You’ll sleep better.

Brenda Stark

Women’s Consignment Pricing–Are your Prices too high, ..too low?

The prices charged by stores using NextGen’s pricing system vary significantly. Prices for the same brand and category of apparel, accessory or footwear at some stores can be as much as 2.5 times that of others. The primary reasons: 1) demographics or more specifically client disposable income, and 2) competition. Shops serving well-heeled customers with limited competition from large discounters and resale shops are able to charge higher prices than those located in lesser income markets with nearby competition.

The challenge is finding the right level. While pegging prices to a store’s historic sale prices by brand and category makes for consistency, there is no way of knowing whether these prices could and should be higher or lower, i.e. how much is being left on the table.

Herein lies the NextGen advantage. NextGen’s prices are informed by the pricing/sales experience of stores in high to low demographic and high to low competitive markets across North America. In the case of new stores with no sales history of their own, NextGen sets prices based on the new store’s market demographics and competition. In the case of stores with a pricing/sales history, NextGen analyzes their pricing/sales history relative to the histories of stores in like markets in order to identify pricing potentials. Owners generally opt to move to these prices immediately though sometimes gradually so as not to concern longstanding customers.

 

Consignment Software Review

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

NextGen’s configuration of the Liberty 4 POS system by Resaleworld works for NextGen and our clients.

More About Pricing

I know it seems that we talk a lot about pricing, but that is because it one of the most important parts of growing a successful consignment business.  Next to continuously gathering great consignors, it is probably the most important component of your business.

Your pricing determines if your can pay rent or staff or stay in business.  How you price sends a message to your shoppers and your consignors.

If you price too low, you lose money and can give the impression that your merchandise is somehow not the best, not good quality.  Pricing too low leaves you no room to mark down.

Not knowing the value of your merchandise and pricing it too low can be disasterous. You quickly sell out of the good items and your consignors will not be happy with their share.

On the other hand, if you price too high, your things don’t sell and you are forced to mark them down.  If this is your pattern, you are actually training your shoppers to wait for your markdowns/sales.

So, what are we to do? You can spend all day, every day researching and checking prices and in your spare time run your business, but we all know that that won’t work.

What is needed is something that provides a balanced, real world and reliable approach to pricing.  The good news is that there is such a system.  It’s called the NextGen Women’s Fashion Pricing System.

With the NextGen Women’s Fashion Pricing System, you can be confident that you are pricing at good prices–the right prices, and you are pricing consistantly.

This sends the right message, that you know what you are doing.  Your consignors, shoppers, staff and your bottom line will be very happy.

Talk to us.  Let us help you. You’ll sleep better.

Brenda Stark

 

Price change in women’s fashion is at record high—Why?

NextGen currently tracks the pricing on over 5,000 women’s brands in order to keep its suggested resale prices in tune with the retail prices in women’s fashion.  This involves the timely identification and valuation of brands—new, old, rising, fading, fallen; and distinguishing the many labels introduced by designers to appeal to different markets.  It’s a demanding task in normal times, and especially now as the rate of brand/price change is as high as we’ve seen.

Why?

The significant change we’re seeing in women’s fashion pricing, specifically the growth in the designer brands at the top, and discount brands at the bottom, reflects the broader shift in income distribution.  To quote Schwartz in his recent New York Times article (2/2/14) entitled The Middle Class Is Steadily Eroding. Just Ask the Business World.

“As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.

The top 5 percent of earners accounted for almost 40 percent of personal consumption expenditures in 2012, up from 27 percent in 1992. Largely driven by this increase, consumption among the top 20 percent grew to more than 60 percent over the same period.”

John Graubard’s graphic observation in the same article sums it up “In a few years the consumer choice will be Neiman Marcus or WalMart.”  

Buy Outright Pricing versus Consignment Pricing

Many NextGen clients are beginning to buy items outright, either selectively or completely.  Perhaps this is in responseto an increasing number of women’s resale “Buy Outright” stores or in an effort to improve sales margins.

The most common question about buying outright is, “shouldn’t we lower our prices to be sure they sell?” …and, by extension, shouldn’t NextGen have a set of lower price points for stores buying outright?

The answer to both is, NO!

It all has to do with your “Pay Price” which is how much you pay to have an item for sale.

  • The Pay Price for most consignment stores is 40-60% of the selling price paid to their consignors.
  • The Pay Price for most buy outright is 20-40% of the selling price paid to the seller of the item.

The lower Pay Price and higher sales margin of buying outright provides for any loss associated with items that don’t sell or sell for less than what the store originally paid for them.

It’s the buying or Pay Price not the selling price that needs to be reduced when buying outright.  While the temptation is to lower the selling price to gain the sale, the right strategy is to be more selective in what you choose to buy.   Bottom-line, the right price for an item depends on the market for it, not how it was acquired.

Takeaway Tip:  Many owners moving from consignment to buying outright often start with selected consignors, customers with items likely to sell within the consignment period.

Note:  NextGen Pricing systems are always calibrated to market, variously based on sales history, demographics, competitive landscape and strategy.