Do retailers and wholesalers rip us off?

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#2175070 8-Feb-2019 14:28

MichaelNZ:

Self interest is only equal to cheap and crappy for people with no money, who incidentaly are also not a good source for economic advice.

Michael, I have no good idea what you actually mean by this comment? It seems to imply that poor people are idiots who will always buy rubbish unless the option is taken away from them, and need to be protected from having choice in what they buy, but I doubt that's what it was intended to mean?

Anyhow, self interest in this context means buying whatever provides the best value-for-money from a consumers experience. It doesn't mean necessarily buying either the cheapest option, or only crappy products. Depending on what someone wants and can afford, it can also mean buying the upmarket option (Mercedes instead of Lada), or paying a premium to buy local because of convenience, support and knowledge that the retailer brings to the equation. It can also mean importing something yourself if the local supplier is charging way over the odds compared to where it can be otherwise sourced, and not providing value commensurate with the premium they are seeking to charge. Retailer in this space will likely go out of business, just like other business models that have been overtaken by history. Ultimately, as detailed by Joseph Schumpeter, this process is beneficial overall.

You also seem to imply that NZ Consumers have some sort of moral obligation to pay over the odds to a retailer here rather than a cheaper retailer (in effect making a substantial charitable donation to that business), just because their owner is "local" and they employ people. They don't. And that sort of thinking ultimately takes you into the zone of protectionism, tariffs, quotas and import licencing - which can be made to appear a sensible economic strategy in glib soundbites, but doesn't withstand serious analysis, or work when tried.

tdgeek

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#2175075 8-Feb-2019 14:36

It would be easier just to let people buy what they want and from whom. The market will work it out. There is no right or wrong, and no secrets here

JimmyH

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#2175078 8-Feb-2019 14:46

tdgeek:

What tactics are those? They cant reduce prices permanently by 50%+. Retail is not a cash cow here, prices are higher based on the many reasons already stated, so as prices are not a rort they cannot reduce much. Retailers face competition by their superior product competing with cheap rubbish. The other is higher costs here are hard to compete with the identical product that an overseas seller does not have, and who also has massive economies of scale. Best option is let nature take its course, retail can drop away, courier costs here will be added to imports as well as the country to country freight. Freight is fake currently, that needs to be fixed

I'm not a retailer, and clever retailers who come up with innovative solutions that no one else has thought of will be the ones that survive, those that don't likely won't.

Just looking at retailers today, there are a ton of ways of taking out cost being widely deployed now. Off the top of my head one is reducing labour costs through automation (chatbots, self service checkouts in supermarkets, self ordering at MacDonalds automating warehouses). A second is bypassing expensive distribution channels by parallel importing grey market product like the Warehouse has been doing. A third is having own-brand generic product manufactured under contract and selling that cheaper than branded product. A fourth is getting big so that you can exploit economies of scale to reduce unit costs and undercut competitors (I wouldn't want to be Freedom Furniture when Ikea launches in Auckland). A fifth is providing such amazing service and support that people greatly prefer to buy from you. A sixth is cutting property costs (eg by moving from the high-street to a cheaper location). A seventh is good inventory management to cut capital costs.

But the winning approach likely won't be one of these, it may be something entirely new that no one else has thought of, and gives a huge advantage to the innovative first-mover.

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#2175081 8-Feb-2019 14:56

JimmyH:

tdgeek:

What tactics are those? They cant reduce prices permanently by 50%+. Retail is not a cash cow here, prices are higher based on the many reasons already stated, so as prices are not a rort they cannot reduce much. Retailers face competition by their superior product competing with cheap rubbish. The other is higher costs here are hard to compete with the identical product that an overseas seller does not have, and who also has massive economies of scale. Best option is let nature take its course, retail can drop away, courier costs here will be added to imports as well as the country to country freight. Freight is fake currently, that needs to be fixed

I'm not a retailer, and clever retailers who come up with innovative solutions that no one else has thought of will be the ones that survive, those that don't likely won't.

Just looking at retailers today, there are a ton of ways of taking out cost being widely deployed now. Off the top of my head one is reducing labour costs through automation (chatbots, self service checkouts in supermarkets, self ordering at MacDonalds automating warehouses). A second is bypassing expensive distribution channels by parallel importing grey market product like the Warehouse has been doing. A third is having own-brand generic product manufactured under contract and selling that cheaper than branded product. A fourth is getting big so that you can exploit economies of scale to reduce unit costs and undercut competitors (I wouldn't want to be Freedom Furniture when Ikea launches in Auckland). A fifth is providing such amazing service and support that people greatly prefer to buy from you. A sixth is cutting property costs (eg by moving from the high-street to a cheaper location). A seventh is good inventory management to cut capital costs.

But the winning approach likely won't be one of these, it may be something entirely new that no one else has thought of, and gives a huge advantage to the innovative first-mover.

You are not a retailer, as you say. You can't just fix retail, there are too many factors you wont have much control over. Being innovative is just words, you can't pay people from words

Geektastic

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#2175094 8-Feb-2019 15:48

Certainly they do not commonly deliver outstanding customer service.

I have a pair of Oakley glasses bought from the store in Queen St.

Sadly they got dropped and now have a big scratch in front of my eye. It's annoying and I want to get new lenses.

Rang the store today. Explained what I wanted.

"We don't have any. I don't think they even make them."

"Well, the US Oakley site lists spare lenses in multiple options."

"Well, we have not got any. Sorry about that. Bye."

Aredwood

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#2175101 8-Feb-2019 16:18

Geektastic:
Certainly they do not commonly deliver outstanding customer service.

I have a pair of Oakley glasses bought from the store in Queen St.

Sadly they got dropped and now have a big scratch in front of my eye. It's annoying and I want to get new lenses.

Rang the store today. Explained what I wanted.

"We don't have any. I don't think they even make them."

"Well, the US Oakley site lists spare lenses in multiple options."

"Well, we have not got any. Sorry about that. Bye."

@Geektastic Ask them for a refund under the CGA. As the CGA requires that spare parts be readily available. And you have already proved that the manufacturer makes spare parts.

Since lenses will be small and light, they could easily be sent by courier from the USA.

Dyson

Shop now for Dyson appliances (affiliate link).

Rikkitic

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#2175119 8-Feb-2019 17:11

Part of the anti-retail argument is surely that so many retailers seem to do this kind of thing, and have to be reminded by customers of their CGA obligations. This shouldn't even be necessary and it shouldn't ever happen. Maybe once these are gone, those remaining can do good business providing real service.

Plesse igmore amd axxept applogies in adbance fir anu typos

tdgeek

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#2175162 8-Feb-2019 18:52

This thread blows me away. I guess the size of NZ is quite irrelevant. As to @geektastic lens, why did you buy the sunnies in NZ? They will be cheaper offshore, better service, better range, more staff, the staff will know everything. We can easily have that here, and for internet providers, we can easily have superior knowledge, wait times of seconds, very very easily. Its not hard. And we can ensure that the retailers are not ripping us off as they do, and as Sky does, hoarding all these profits somewhere. To achieve these benefits they just need to provide them, knowing that no one will pay the prices to do so. Its not LA or NYC here, its NZ

There are very few items that we need right now, we will need supermarkets, but I feel everything else can be online, and why not? Solves a lot of issues.

I'll just pop away to the W.H.O sponsored Global Whinging Index to ensure NZ is still No.1 :-)

Fred99

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#2175164 8-Feb-2019 19:00

Geektastic:

"Well, we have not got any. Sorry about that. Bye."

LOL. I've spent enough time in your mother country to know that a retail staff member saying "Sorry" should be something to be celebrated.

Basil Fawlty didn't spontaneously generate from a vacuum.

Shame - post Brexit - it'll probably return to that.

Geektastic

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#2175169 8-Feb-2019 19:30

Aredwood:
Geektastic:
Certainly they do not commonly deliver outstanding customer service.

I have a pair of Oakley glasses bought from the store in Queen St.

Sadly they got dropped and now have a big scratch in front of my eye. It's annoying and I want to get new lenses.

Rang the store today. Explained what I wanted.

"We don't have any. I don't think they even make them."

"Well, the US Oakley site lists spare lenses in multiple options."

"Well, we have not got any. Sorry about that. Bye."

@Geektastic Ask them for a refund under the CGA. As the CGA requires that spare parts be readily available. And you have already proved that the manufacturer makes spare parts.

Since lenses will be small and light, they could easily be sent by courier from the USA.

I might try that, thanks. Worth it for the entertainment value if nothing else...

Geektastic

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#2175249 8-Feb-2019 20:48

Does the spare parts requirement affect only repairs under the CGA?
I'm not blaming them for the damage, I just want to buy new lenses.

Dyson

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gzt

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#2175254 8-Feb-2019 21:01

Geektastic: Does the spare parts requirement affect only repairs under the CGA?
I'm not blaming them for the damage, I just want to buy new lenses.

Says spare parts and repair facilities must be available. OPSM sell Oakley frames might be worth a go probably different models.

tdgeek

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#2175321 8-Feb-2019 22:47

JimmyH:

tdgeek:

What tactics are those? They cant reduce prices permanently by 50%+. Retail is not a cash cow here, prices are higher based on the many reasons already stated, so as prices are not a rort they cannot reduce much. Retailers face competition by their superior product competing with cheap rubbish. The other is higher costs here are hard to compete with the identical product that an overseas seller does not have, and who also has massive economies of scale. Best option is let nature take its course, retail can drop away, courier costs here will be added to imports as well as the country to country freight. Freight is fake currently, that needs to be fixed

I'm not a retailer, and clever retailers who come up with innovative solutions that no one else has thought of will be the ones that survive, those that don't likely won't.

Just looking at retailers today, there are a ton of ways of taking out cost being widely deployed now. Off the top of my head one is reducing labour costs through automation (chatbots, self service checkouts in supermarkets, self ordering at MacDonalds automating warehouses). A second is bypassing expensive distribution channels by parallel importing grey market product like the Warehouse has been doing. A third is having own-brand generic product manufactured under contract and selling that cheaper than branded product. A fourth is getting big so that you can exploit economies of scale to reduce unit costs and undercut competitors (I wouldn't want to be Freedom Furniture when Ikea launches in Auckland). A fifth is providing such amazing service and support that people greatly prefer to buy from you. A sixth is cutting property costs (eg by moving from the high-street to a cheaper location). A seventh is good inventory management to cut capital costs.

But the winning approach likely won't be one of these, it may be something entirely new that no one else has thought of, and gives a huge advantage to the innovative first-mover.

Reducing Labour by Automation.

Many mention customer service, and you are mentioning automated phone response, sorting out your checkout, ordering on a screen at Mitre 10? Thats nit customer service, thats reducing customer service. When people bypass this, you have just added another cost.

Bypass Distribution Channels

You still have to import it. Those 5000 widgets still go from the manufacturer to you, I don't see warehouse after warehouse between China and here. If there was, the cost might be ok as they will be importing for your competitors also, more volume, better price, so no gain. Its still the same 5000 widgets. Grab market is illicit in the eyes of the manufacturer, and agin, its the same product, same volume, and you will ultimately lose service with that manufacturer

Own Brand

Is it the same product, or is it similar? Same product it will be the same price, a tickle cheaper perhaps, due to less packaging and less backup service. If its just similar, you will no doubt be buying cheap, that also has issues.

Getting Big

You cant get big, not unless the population spiked massive in months. The population will change every little

Amazing Service and Support

Extremely easy to do, you will do well. If you hold prices, but you cannot as you have just added a large cost.

Cutting Property Costs

This will reduce foot traffic, and thus sales. You will need to sell more to make that up, but the decision has gone the opposite way.

If the NZ population was much higher, landed costs will be cheaper, both by per unit, and by more costs being shared by much more volume, economy of scale. You can invest in extra staff, support, and these costs will still be much less per unit. You can get big as more sales absorb the lower % extra costs. You can invest in a better more expensive sales property, and get more sales, while the large admin staff can be elsewhere, cheaper.

Rikkitic

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#2175374 9-Feb-2019 10:19

I think you are missing several things here, but I will mention just one. Like most people, I have experienced variable customer service. Overall it is usually best at small, owner-operated boutique shops, and worst at big chains, though not all of them, and not all of the time. In fact, it seems to be getting better, though I could do without the pointless 'greeters'.

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. So more attention to better quality employees, instead of just more bodies, can make a big difference on the front line. Not just people with fake smiles trying to upsell you, but genuinely helpful people who know that if they give you a good experience, you will come back again. This has to do with intelligence and personality, but also with training and supervision. In other words, it comes from the top.

In hierarchical organisations, like banks, the top often seems to be lacking. No-one really notices or cares how individual employees interact with the public as long as sales targets are met. The front line is too far away, too remote. There are few Richard Bransons who understand where the success of a business lies. This is especially apparent in complaints about CGA service and the anal attitude some businesses seem to have about it. Instead of viewing such claims with suspicions, and forcing customers to jump through all kinds of hoops, companies should be going out of their way to apologise and be helpful. That doesn't always seem to be the case.

Of course there are people who will try to take advantage of this, so some conditions must be enforced. But there should be a balance that gives the benefit of the doubt to the customer. Many businesses understand this. Some do not.

Plesse igmore amd axxept applogies in adbance fir anu typos

tdgeek

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#2175405 9-Feb-2019 11:18

The issue here is price, and like all things, it only comes down to price, that has been echoed here a lot. People are the problem as well. There are only so many cheerful people out there, employers dont make people who are cheerful, to be not cheerful, cheerful and empathy and care are limited resources. The online companys will have that as well, but its less obvious, but in any case people avoid retail and go online due to price. Retail NZ cannot do much about price, it can make service, wait time, surroundings poor, to save money and reduce price. It can make them super, and the prices that are already too high, will go up more. Telco service is the same issue. We want better service (which cost a lot more) and we also want cheaper prices, not compatible.

I imagine it will take a long time for online to make a dent % wise, but its a natural thing, just as Local TV vs global SVOD also became a natural thing. One day it might be normal to buy nothing at a store except fruit and veg. I ordered a lawnmower blade assembly yesterday from Stihl. Id like it if it was at Mitre 10 or in stock at Stihl, it's not. be a few days. if it was 2 weeks doesn't bother me. If I had to buy most things online, such as the outdoor sprinkler fittings I am about to go to Mitre 10 for, if that was only online, thats fine, I just need to think in advance. Maybe one day Mitre 10 and Bunnings are almost only online? Maybe. Saves gas, a trip, I'll order online, many things may ship from China direct? Saves distribution. Saves money, = lower prices.

People used to shop to buy what they wanted. malls made shopping a day out. Online may reduce shopping time and effort and we go for a non shopping outing instead?

Food for thought

But its really only about price.

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