Do retailers and wholesalers rip us off?

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#2175412 9-Feb-2019 11:38

Price is a big factor and it is what mainly motivates me, but the discussion has broadened into how retail can compete, and service is one way. There will always be customers who can afford the best and are prepared to pay extra for super service. That is one area in which businesses can specialise. But even normal retail can do better at attracting and retaining customers who prefer to buy local by at least providing decent minimum service without putting people through hell over things like CGA claims. There is definitely room for improvement.

Like many people, I balance things like price and service when making purchasing decisions. For expensive items I don't like the risk of overseas shopping so will buy local unless the price difference is so great that I just can't justify it. For the many smaller $20-$30 things I buy, the risk is well worth it.

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#2175415 9-Feb-2019 11:59

While good service is nice, I don't go out of my way for it. Factors are how close is the store, parking easy, traffic easy. Ultimately I will grab the product, take it to a checkout, they will take my money. A smile is nice but its not that important, it wont cause me to endure a longer drive etc.

Naturally for some products that differs, I might want more buy in from the sales person, but I am also aware that I cannot easily tell how much that buy in is real, or is from session 3 of the last sales meeting.

But, as Ive stated, there are limited opportunities for retail here as price is a big issue, and they cant move a lot on that.

Related, we often see shops being fully refurbished, so they attract more customers, thats a huge cost. And fleeting as people are then attracted to another store for the same reason. Its a fickle industry, you wont catch me in it

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#2175437 9-Feb-2019 13:18

Rikkitic:It often depends on the individual you are dealing with. It costs businesses the same to employ cheerful, bright, helpful people and indifferent, dull, useless ones.

It does not.

A good staff member will be more expensive to employ, they are more experienced, they are proven, they are liked by co-workers and customers and they get results through either their solution selling approach / empathetic tact... whatever their style.

The day 1 recruitment cost MIGHT be the same if they're recruiting only juniors from the bottom of the heap, but many businesses don't do that. The company I work for wouldn't employ a sales cadet, there's far too much to lose.

Does staff attitude come from the top?

Maybe?

Maybe not.

Good people work for good companies, bad people work for good companies.

Ask experienced managers in any business, you can't get a team of "A's".

A team of B's and B+'s with a few "A's" is where most want to end up at the end of the day.

If you have a team of over-achieving, type A personalities it will be an almost insufferable existence.

So why aren't there better staff on the floors of retailers?

Well... you know those cheap prices that people are always shopping around for (on-line or in-store), well they cut margins... and the profit needs to be found from somewhere else - reducing costs. Hence they don't recruit higher end sales people OR can't afford to keep the good ones.

Then customers go on-line in threads on forums exactly like this one and complain about prices being too high and service levels being too low.

It's a no-win for retailers, right?

Personally, I don't see a service equation with buying on-line, I do all the work... I find the product, I research the product, I enter my info, I enter my bank account details, I choose the shipping, I wait while the goods arrive.

There's no useful interaction that furthers my enjoyment of the product...

It's all a bit crap and cold.

Oh, but they do now have my e-mail address and sometimes the inclination to spam that with things I don't want.

So what do I do?

I have people out there in the wider community that I do trust and that do look after me.

I have a 'tyre guy' for my car, I have a plumber, an electrician a woman who makes my lunch when I buy it etc.

I could import my tyres from overseas, I could watch YouTube videos on plumbers / wiring a home... but I will pay for that as I want to be safe and know things are done well the first time around.

Those who don't want that sort of thing will probably always shop on-line or in catalogues etc, but they will also be the first to decry bricks and mortar stores as they don't suit their personality / preferences.

dejadeadnz

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#2175446 9-Feb-2019 13:52

tdgeek:

But, as Ive stated, there are limited opportunities for retail here as price is a big issue, and they cant move a lot on that.

Related, we often see shops being fully refurbished, so they attract more customers, thats a huge cost. And fleeting as people are then attracted to another store for the same reason. Its a fickle industry, you wont catch me in it

I keep seeing the assertion that retailers have limited room to move on price. That might be true but your example above highlighted the issue that I posted about earlier. Yeah, they might not have much room to move if they insist on staying within the paradigm. The paradigm of saturating themselves into every mall, having excessive numbers of staff, terrible inventory control, large floor area, and low ROI per square foot of rented space (years ago when I was in private equity we had access to a study that showed that NZ retailers had one of the worst rates of return in the developed world in this regard). There are disruptive retailers that are doing a great job -- an example I have in mind is Chemist Warehouse. They manage to hold a wide range of stock, have excellent opening hours, don't bullrush into malls, and provide a shopping experience that is so much more superior than most pharmacies in my view. You don't see seven to ten staff standing around all beelining towards you just when you want to take the time to compare a couple of products. If I have a question/need someone to help me, I've always found their staff to be polite and responsive.

We just need more disruptors and they are coming. And that's great for everyone, except for useless, old-school retailers like Farmers, Whitcoullls, and most of our fashion boutiques.

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#2175966 10-Feb-2019 15:56

Rikkitic:

Price is a big factor and it is what mainly motivates me, but the discussion has broadened into how retail can compete, and service is one way. There will always be customers who can afford the best and are prepared to pay extra for super service. That is one area in which businesses can specialise. But even normal retail can do better at attracting and retaining customers who prefer to buy local by at least providing decent minimum service without putting people through hell over things like CGA claims. There is definitely room for improvement.

Like many people, I balance things like price and service when making purchasing decisions. For expensive items I don't like the risk of overseas shopping so will buy local unless the price difference is so great that I just can't justify it. For the many smaller $20-$30 things I buy, the risk is well worth it.

I get cost +10% from a retailer (Yes I understand what "cost" is in this case), but even then I have got items like a $49 SD card for $12.

But even with cost+10% I can often buy it cheaper elsewhere and do, I also import a lot of stuff from China, Europe, USA.

Things like computers, DSLRs etc I buy in NZ because the CGA is worth a lot.

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#2176051 10-Feb-2019 19:13

dejadeadnz:

tdgeek:

But, as Ive stated, there are limited opportunities for retail here as price is a big issue, and they cant move a lot on that.

Related, we often see shops being fully refurbished, so they attract more customers, thats a huge cost. And fleeting as people are then attracted to another store for the same reason. Its a fickle industry, you wont catch me in it

I keep seeing the assertion that retailers have limited room to move on price. That might be true but your example above highlighted the issue that I posted about earlier. Yeah, they might not have much room to move if they insist on staying within the paradigm. The paradigm of saturating themselves into every mall, having excessive numbers of staff, terrible inventory control, large floor area, and low ROI per square foot of rented space (years ago when I was in private equity we had access to a study that showed that NZ retailers had one of the worst rates of return in the developed world in this regard). There are disruptive retailers that are doing a great job -- an example I have in mind is Chemist Warehouse. They manage to hold a wide range of stock, have excellent opening hours, don't bullrush into malls, and provide a shopping experience that is so much more superior than most pharmacies in my view. You don't see seven to ten staff standing around all beelining towards you just when you want to take the time to compare a couple of products. If I have a question/need someone to help me, I've always found their staff to be polite and responsive.

We just need more disruptors and they are coming. And that's great for everyone, except for useless, old-school retailers like Farmers, Whitcoullls, and most of our fashion boutiques.

Good points. I see Chemist Warehouse has 5 stores in NZ? All in AKL, all seen to in or near malls. Why aren't they everywhere in NZ? I assume they are quite a bit cheaper than a pharmacy, so if they operate a warehouse bulk pharmacy that makes a lot of sense. Good idea. I shop at Bunnings and Mitre10 quite a bit of late, they are busy, lots of stock, I'm not being pressured, help is good, I get helloed every time I walk in the door. Thats all good, but we are too small to do a lot. NL etc, thats different, I get bothered, unsold, and so on.

If NZ was a lot bigger, there would be more opportunity to get better prices, and better experiences.

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dejadeadnz

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#2176133 11-Feb-2019 00:14

tdgeek:

Good points. I see Chemist Warehouse has 5 stores in NZ? All in AKL, all seen to in or near malls. Why aren't they everywhere in NZ? I assume they are quite a bit cheaper than a pharmacy, so if they operate a warehouse bulk pharmacy that makes a lot of sense. Good idea. I shop at Bunnings and Mitre10 quite a bit of late, they are busy, lots of stock, I'm not being pressured, help is good, I get helloed every time I walk in the door. Thats all good, but we are too small to do a lot. NL etc, thats different, I get bothered, unsold, and so on.

If NZ was a lot bigger, there would be more opportunity to get better prices, and better experiences.

Chemist Warehouse stores are, bar one, in shopping precincts near large, expensive shopping centres. One is inside a Westfield. But overall I'd still venture to say that they pay a lot less rent than they would if they were pursuing the usual NZ strategy. To illustrate how much cheaper they are: a small bottle of Buccadine (iodine mixture to gargle for sore throat) typically sell for around $12 at most pharmacies. They sell it at either $6 or $7.

I also don't agree that people should just raise the white flag and accept crappy prices and/or service. Personally, I believe that in most instances one can easily avoid bad retailers and get good prices and/or service from either local or international alternatives. Most of the typical retail cancers can be easily avoided -- if you are smart enough to be reading this site, there's no reason to buy a thing from Whitcoulls or Paper Plus, for example. In terms of most electronics, once you account for the protection of the CGA and the fact that we are a smaller market, the prices here are very reasonable provided one has the patience to wait for one of the frequent sales. Generally I am quite pleased and optimistic about the options available to people in NZ.

The problem that I see with some NZ retailers (and certain retail segments overall) is that in addition to bad prices, they also provide **** all service. I am a small Chinese guy who (partly) started wearing disposable contacts in my mid-30s because despite the large Asian population in Auckland, most optometrists make zero effort to stock Asian-friendly frames. Generally speaking, most Asian people dislike the very pronounced and large frames favoured by Pakeha. I prefer semi-rimless Oakley or Ray-Ban frames but dislike the very deep lenses on them which, IMO, really spoil the minimalistic look on me. You wouldn't believe how hard it is to convince anybody (forget the chain stores) to help me take a couple of a couple of mm off the lenses for a fee or to copy the shape of another display lens so that I can get a look that I like. I had to call around everywhere in Auckland before I found a couple of independent boutiques that were willing to do this.

Buying glasses here is truly a nightmare for anyone who doesn't have a bog, bog standard prescription (i.e. -2 to +2), assuming you'd like to go to a shop and try some frames on etc. Even at so called "cheap" places like Specsavers and Bailey Nelson start to really add up for me with a -3.5 script wanting hi-index lenses. $400 - 500+ is the norm and this is for full frame glasses (rimless will be even more expensive). And not to mention that any of the non-designer frames at Specsavers are terribly ugly. It's also impossible to compare the prices of glasses across different boutiques as nobody (apart from Specsavers) display any kind of even indicative pricing for lens/coating upgrades. Many optometrists now decline to even provide this information over the phone because they don't want you to compare.

And for anyone who's been to Asia where having your lenses cut in the outlet is very common and same day glasses a piece of cake for anyone wanting single-vision glasses, it'll be a shock to learn that typically you'll be lucky to be able to get your glasses within 3 to 5 days in NZ even with my prescription. And nobody (bar the likes of Oakley with the odd modular pairs) had previously shown any interest in developing/selling modular systems. So if you find a frame that you really like and it breaks, bad luck! Until now -- Dresden Vision has arrived in NZ. The promise to make single vision glasses on site, will sell me an ultra hi-index pair for $130 bucks and their frame system is completely modular. I simply have no words for how pleased I am that there's an entity that seems interested in catering for people who potentially want great prices, a bit of fashion, quick in-store service, and upgrade options. If you ask any of the existing players here, they would all swear till they are blue in the face that this is undoable. But someone else has managed it -- they also claim to be using Zeiss lenses and the frames are manufactured in Australia. If things only hold up by 80 - 90%, they are still going to be streets ahead of their competitors.

The point is when innovative players come along, people need to at least give them a look in and, if they work for you, buy something from them when you need to buy. I intend to put my money where my mouth is and buy a pair from Dresden this week. But it wouldn't surprise me if they fail here -- your average Kiwi has been made cynical about "cheap" players in the optometry field.

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#2176154 11-Feb-2019 08:29

dejadeadnz:

I keep seeing the assertion that retailers have limited room to move on price. That might be true but your example above highlighted the issue that I posted about earlier. Yeah, they might not have much room to move if they insist on staying within the paradigm. The paradigm of saturating themselves into every mall, having excessive numbers of staff, terrible inventory control, large floor area, and low ROI per square foot of rented space (years ago when I was in private equity we had access to a study that showed that NZ retailers had one of the worst rates of return in the developed world in this regard). There are disruptive retailers that are doing a great job -- an example I have in mind is Chemist Warehouse. They manage to hold a wide range of stock, have excellent opening hours, don't bullrush into malls, and provide a shopping experience that is so much more superior than most pharmacies in my view. You don't see seven to ten staff standing around all beelining towards you just when you want to take the time to compare a couple of products. If I have a question/need someone to help me, I've always found their staff to be polite and responsive.

We just need more disruptors and they are coming. And that's great for everyone, except for useless, old-school retailers like Farmers, Whitcoullls, and most of our fashion boutiques.

PB Tech has had some success with this. They operate big warehouse type stores in lower cost rent locations that never include malls. They also have their own on site technicians so warranty stuff is better (yes I know there have been some horror stories). I build a gaming PC bit by bit a while back and a good two thirds of the components were cheaper at PB tech and this is considering I didn't pay GST on the bits I brought from Amazon as it was under the limit.

Try returning something to Noel's and see how it goes. Standard answer is this will take two weeks to send back to xyz manufacturer. Noels employ professional salesmen, PB tech employs geeks.

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#2176158 11-Feb-2019 08:48

landcruiserguy:

dejadeadnz:

I keep seeing the assertion that retailers have limited room to move on price. That might be true but your example above highlighted the issue that I posted about earlier. Yeah, they might not have much room to move if they insist on staying within the paradigm. The paradigm of saturating themselves into every mall, having excessive numbers of staff, terrible inventory control, large floor area, and low ROI per square foot of rented space (years ago when I was in private equity we had access to a study that showed that NZ retailers had one of the worst rates of return in the developed world in this regard). There are disruptive retailers that are doing a great job -- an example I have in mind is Chemist Warehouse. They manage to hold a wide range of stock, have excellent opening hours, don't bullrush into malls, and provide a shopping experience that is so much more superior than most pharmacies in my view. You don't see seven to ten staff standing around all beelining towards you just when you want to take the time to compare a couple of products. If I have a question/need someone to help me, I've always found their staff to be polite and responsive.

We just need more disruptors and they are coming. And that's great for everyone, except for useless, old-school retailers like Farmers, Whitcoullls, and most of our fashion boutiques.

PB Tech has had some success with this. They operate big warehouse type stores in lower cost rent locations that never include malls. They also have their own on site technicians so warranty stuff is better (yes I know there have been some horror stories). I build a gaming PC bit by bit a while back and a good two thirds of the components were cheaper at PB tech and this is considering I didn't pay GST on the bits I brought from Amazon as it was under the limit.

Try returning something to Noel's and see how it goes. Standard answer is this will take two weeks to send back to xyz manufacturer. Noels employ professional salesmen, PB tech employs geeks.

Well, you mentioned horror stories, and ComCom has fined them for multiple offences re extended warranties, so this isn't a great example. Its actually a failed example, the big no frills warehouse not in malls is no different it seems. Same issues, less flash inside, pays less rent, so can charge lower prices, but we still have horror stories and Commerce Commission intervention

To me it smacks of its hard work doing retail in NZ, so dodgy behaviour by some is used

gzt

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#2176412 11-Feb-2019 13:41

In practice we know Noel's does the same thing.

landcruiserguy

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#2176493 11-Feb-2019 14:51

Yes I am aware of the whole PB Tech \ com com thing. Also the recent complaints about them using second hand parts in repairs.

They are still my preference as both Noles and Hardley Normal have had their adventures with the com com. I think it's worse with those retailers are they push the extended warranty so hard then need to make the normal one crap.

PB tech's on site technicians do make a difference. They test things before sending it back to the manufacturer and if it's dead you just get a replacement without waiting weeks. I broke my samsumg screen. Standard turn around time if I went through the samsung Kiosk in the mall was two weeks. I got it replaced by PB tech on site and had it back in two days.

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gzt

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#2176525 11-Feb-2019 15:26

landcruiserguy: Also the recent complaints about them using second hand parts in repairs.

Was this an unsubstantiated reddit thing?

landcruiserguy

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#2176555 11-Feb-2019 15:56

gzt:
landcruiserguy: Also the recent complaints about them using second hand parts in repairs.

Was this an unsubstantiated reddit thing?

I think it was an unsubstantiated geekzone thing but can't remember clearly.

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#2177185 12-Feb-2019 14:48

tdgeek:

But, as Ive stated, there are limited opportunities for retail here as price is a big issue, and they cant move a lot on that.

Some can and some can't. Those that can't are dead. You seem to have a problem with the idea that they have to innovate, but retailers do have to do that or die. Technology and global trends aren't going to go away.

However, NZ (especially Auckland) is big enough that some retailers ought to be able to get big enough to realise economies of scale and offer competitive pricing. Case in point, Ikea is going to open and I suspect they will be very innovative in managing their supply chain and inventory, and have enough volume to enable this as well. Those retailers still trying to compete with them on a business-as-usual model, selling mediocre product in small volumes at 100%+ mark-ups will probably die.

Personally, I think that will the case in other sectors as well. I suspect retailers will compete by bulking up, and there will be a lot of consolidation. Eventually resulting in a smaller number of retailers doing bigger volumes with better per-unit cost structures. Likely many will be in places where they can have bigger premises a lower per-square-meter property costs and with plenty of parking. Most of the smaller retailers, unless high-end boutiques, will likely perish. In some sectors, bricks and mortar retail will probably disappear. Particularly where they are selling items like books that don't require after-sales support, are easily shipped, and where there is no luxury cachet or people who largely can't wait three days for the product.

I wouldn't want to be an investor in a suburban shopping mall, Whitcoulls-type store or similar at the moment. Just like the makers of buggy whips, their time has probably come. I think they will struggle and may be doomed. But others will likely crack it and prosper.

tdgeek

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#2177188 12-Feb-2019 14:59

JimmyH:

tdgeek:

But, as Ive stated, there are limited opportunities for retail here as price is a big issue, and they cant move a lot on that.

Some can and some can't. Those that can't are dead. You seem to have a problem with the idea that they have to innovate, but retailers do have to do that or die. Technology and global trends aren't going to go away.

However, NZ (especially Auckland) is big enough that some retailers ought to be able to get big enough to realise economies of scale and offer competitive pricing. Case in point, Ikea is going to open and I suspect they will be very innovative in managing their supply chain and inventory, and have enough volume to enable this as well. Those retailers still trying to compete with them on a business-as-usual model, selling mediocre product in small volumes at 100%+ mark-ups will probably die.

Personally, I think that will the case in other sectors as well. I suspect retailers will compete by bulking up, and there will be a lot of consolidation. Eventually resulting in a smaller number of retailers doing bigger volumes with better per-unit cost structures. Likely many will be in places where they can have bigger premises a lower per-square-meter property costs and with plenty of parking. Most of the smaller retailers, unless high-end boutiques, will likely perish. In some sectors, bricks and mortar retail will probably disappear. Particularly where they are selling items like books that don't require after-sales support, are easily shipped, and where there is no luxury cachet or people who largely can't wait three days for the product.

I wouldn't want to be an investor in a suburban shopping mall, Whitcoulls-type store or similar at the moment. Just like the makers of buggy whips, their time has probably come. I think they will struggle and may be doomed. But others will likely crack it and prosper.

I have no issue with anyone innovating. But the bottom line is most buy on price, they need to innovate a permanent 30% off the RRP somehow. There are a few topics here where there are all sorts of banter, arguments, etc, and it always ends up being about price once the dust settles.

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