Posted on

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.

 

Posted on

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

 

Posted on

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.”  

Posted on

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.