RRP & retailers
Discussion
Essentially we have a few product lines that are currently being cannibalised price wise due to retailers cutting prices on the products.
I have been tasked with trying to find a solution, but from my research there isn't much that we can do legally to prevent aggressive retailer discounting.
Short of simply refusing to sell them the product in the first place, from what I can see the retailer can price the product as they want?
I am interested to know how do the big brands do it?
Thanks
I have been tasked with trying to find a solution, but from my research there isn't much that we can do legally to prevent aggressive retailer discounting.
Short of simply refusing to sell them the product in the first place, from what I can see the retailer can price the product as they want?
I am interested to know how do the big brands do it?
Thanks
Retail price maintenance was abolished in the 1960's, mainly because of lobbying from Tesco and others.
You could try to restrict sales to some firms, Adidas refused to sell Sports Direct their "premier" products because they didn't like their downmarket image, which annoyed Mike Ashley who spends millions with them.
I notice recently SD has gone a bit more upmarket in some sections of their stores.
However, I think ultimately you are powerless to do anything, but I can't say for sure.
You could try to restrict sales to some firms, Adidas refused to sell Sports Direct their "premier" products because they didn't like their downmarket image, which annoyed Mike Ashley who spends millions with them.
I notice recently SD has gone a bit more upmarket in some sections of their stores.
However, I think ultimately you are powerless to do anything, but I can't say for sure.
What is the contractural nature of the relationship between you and the retailers?
If you are selling the products at an agreed price then its down to the retailer to apply whatever margin they like and from your perspective, shouldn't really matter unless a reduced price is impacting on the 'image' of the product - in which case, you would most likely have a control on what the customer pays anyway.
If you are selling the products at an agreed price then its down to the retailer to apply whatever margin they like and from your perspective, shouldn't really matter unless a reduced price is impacting on the 'image' of the product - in which case, you would most likely have a control on what the customer pays anyway.
Thanks for the feedback. Thought I would ask incase I was missing something, but looks like I had the correct measure of it. Namely we cant do much about it. From my perspective I also don't see why we need to worry. We get what we want for the product at the end of the day, after that its up to the retailers to battle it out. At the end of the day there is only around a 10% difference between RRP and retailer price. Hardly worth worrying about! The products in question aren't so unique or establish that we can also be to bolshy with how we treat the retailers - if we were an keystone brand like Nike then we might have been able to exert more influence. But we aren't!
moustachebandit said:
Thanks for the feedback. Thought I would ask incase I was missing something, but looks like I had the correct measure of it. Namely we cant do much about it. From my perspective I also don't see why we need to worry. We get what we want for the product at the end of the day, after that its up to the retailers to battle it out. At the end of the day there is only around a 10% difference between RRP and retailer price. Hardly worth worrying about! The products in question aren't so unique or establish that we can also be to bolshy with how we treat the retailers - if we were an keystone brand like Nike then we might have been able to exert more influence. But we aren't!
Why not just issue a simple trade price list, and don't mention any "rrp" or "srp"...that way you are in the clear.You could however offer incentives to buy more...for example:-
Over 10 Less 5%
Over 100 Less 10%
This of course would benefit the bigger buyers.....
Wacky Racer said:
Retail price maintenance was abolished in the 1960's, mainly because of lobbying from Tesco and others.
You could try to restrict sales to some firms, Adidas refused to sell Sports Direct their "premier" products because they didn't like their downmarket image, which annoyed Mike Ashley who spends millions with them.
I notice recently SD has gone a bit more upmarket in some sections of their stores.
However, I think ultimately you are powerless to do anything, but I can't say for sure.
I seem to recall that Dunlop Slazenger were fined 10% of their annual turnover by the EU for attempting to fix the price of tennis balls. (A long time ago).You could try to restrict sales to some firms, Adidas refused to sell Sports Direct their "premier" products because they didn't like their downmarket image, which annoyed Mike Ashley who spends millions with them.
I notice recently SD has gone a bit more upmarket in some sections of their stores.
However, I think ultimately you are powerless to do anything, but I can't say for sure.
And of course there was the famous "There is a club in the North, son, and you're not part of it," (Dave Whelan to Mike Ashley) episode which led to JJB and others getting huge fines for attempting to fix the price of football kit.
The key is not to supply the discounters in the first place. Once you do you're stuck unless they do something egregious like not paying their bills....
For manufacturers / brand owners, controlling their channels to market can critical
If yours aren’t doing what you want, change things. It is your product and you can choose who you sell it to and in what quantity
Don’t be lazy on this and expect it all to work out how you hoped it would, it needs work by you
If yours aren’t doing what you want, change things. It is your product and you can choose who you sell it to and in what quantity
Don’t be lazy on this and expect it all to work out how you hoped it would, it needs work by you
I come at this from the other side but as a retailer who wishes to maintain a sensible margin. Most manufacturers don't care as long as they shift the units. The down side is that it devalues the product, they end up with a few retailers who take a large percentage of turnover but when things prove tricky they then turn it around and start setting lower purchase price from you. The discounters are also in a race to the bottom and then go bust owing you at least a couple of months stock.
Offering bulk discount magnifies the problem and retailers end up dumping the excess through ebay making it worse. The other thing that infuriates me is when suppliers do a special price which is pounced on by the discounters and a month latter when I do a regular order the supplier is out of stock.
As has been said you cant buy a Rolex discounted, this is not because they set a fixed price but they do set minimum yet high standards, fail to meet those standards and they pull your supply, discounting is not one of those standards but dust on a display might be, nudge nudge wink wink.
Offering bulk discount magnifies the problem and retailers end up dumping the excess through ebay making it worse. The other thing that infuriates me is when suppliers do a special price which is pounced on by the discounters and a month latter when I do a regular order the supplier is out of stock.
As has been said you cant buy a Rolex discounted, this is not because they set a fixed price but they do set minimum yet high standards, fail to meet those standards and they pull your supply, discounting is not one of those standards but dust on a display might be, nudge nudge wink wink.
Thanks for the feedback. Sadly we aren't a premium brand or particularly desirable so cant be too choosy. If we had an in demand brand then the conversation would be slightly different. As we are at the value end there isn't a shortage of competition.
The other issue is that the retailers who regularly come in the cheapest on a range of product lines also shift serious units. If we decided to pull the supply from them, I seriously doubt we would make it up through the other retailers. Having done some market research i appears our RRP might be a tad optimistic, so could do with being reviewed. It might lessen the perceived discounting going on (I dont think one retailer sells our stock for the RRP)
The reality is our retailer base is split down the middle, one lot are commercially savvy and use the internet to move a lot of stock, the other lot are stuck in the past and don't operate online. Problem is the second lot see the first lot selling the product cheaper online and expect them to be brought in line. Or moan that they cant compete. My personal view is that online products are always cheaper than store bought. Fact of life. Also price isn't the sole reason why someone buys - range, selection, quality of service all factor. If the store based customers cant sell when they have their core customer base walking through their shop on a daily basis, then thats not something pricing controls will do much to fix.
The other issue is that the retailers who regularly come in the cheapest on a range of product lines also shift serious units. If we decided to pull the supply from them, I seriously doubt we would make it up through the other retailers. Having done some market research i appears our RRP might be a tad optimistic, so could do with being reviewed. It might lessen the perceived discounting going on (I dont think one retailer sells our stock for the RRP)
The reality is our retailer base is split down the middle, one lot are commercially savvy and use the internet to move a lot of stock, the other lot are stuck in the past and don't operate online. Problem is the second lot see the first lot selling the product cheaper online and expect them to be brought in line. Or moan that they cant compete. My personal view is that online products are always cheaper than store bought. Fact of life. Also price isn't the sole reason why someone buys - range, selection, quality of service all factor. If the store based customers cant sell when they have their core customer base walking through their shop on a daily basis, then thats not something pricing controls will do much to fix.
This is an eye opener:
https://www.bbc.co.uk/news/10395646
Also, one of our suppliers was investigated about price fixing, they went though thousands of emails, text messages and interviewed all the Reps. Make sure you never email anything to your customers about price, not even hint about it.
https://www.bbc.co.uk/news/10395646
Also, one of our suppliers was investigated about price fixing, they went though thousands of emails, text messages and interviewed all the Reps. Make sure you never email anything to your customers about price, not even hint about it.
singlecoil said:
Retail price maintenance may be illegal but try shopping around for Festool products and see if you can get a decent discount anywhere. You can't. I expect it's made clear to those who are chosen to be their retailers that discounting will lead to their losing dealer status.
Festool is very much at the premium end of the tool game. As a result I also suspect the retailer margins are crap, which helps maintain the higher RRP?moustachebandit said:
From my perspective I also don't see why we need to worry. We get what we want for the product at the end of the day, after that its up to the retailers to battle it out.
I wouldn’t be so sure. If your customers are complaining about retained margins or lack of sales because they can’t match the prices online, or if your competitors are offering a better product with better margin or perhaps some other improvements on terms the you very much have a future problem to worry about and the damage that this will do to your business will take more time and effort to fix thanif you can address the problem now. Trust me I live and breath this.Gassing Station | Business | Top of Page | What's New | My Stuff