First retail ‘name’ to pop off 2018
Discussion
Henners said:
jayymannon said:
I was in last week and they had some deep discounting going on.Given the lead time for a new carpet, 2-3 weeks in our case, I expect this story will result in them losing a few sales.
Money up front to a failing business? A la Land of Leather? Alarm bells will ring for plenty.
Seventy said:
Henners said:
jayymannon said:
I was in last week and they had some deep discounting going on.Given the lead time for a new carpet, 2-3 weeks in our case, I expect this story will result in them losing a few sales.
Money up front to a failing business? A la Land of Leather? Alarm bells will ring for plenty.
I believe though that their fitters are subbies, you pay them on the day rather than paying CR.
Henners said:
Seventy said:
Henners said:
jayymannon said:
I was in last week and they had some deep discounting going on.Given the lead time for a new carpet, 2-3 weeks in our case, I expect this story will result in them losing a few sales.
Money up front to a failing business? A la Land of Leather? Alarm bells will ring for plenty.
I believe though that their fitters are subbies, you pay them on the day rather than paying CR.
It is utterly depressing how many national chains and businesses are going under through nothing more than gross mismanagement.
Maplins is closing down. I popped into my local a few weeks ago and was chatting with a member of staff who told me that at one point they were offering home installation/fitting services. I was totally unaware of this detail and had never heard of it before even though i am a fair regular to my local store.
Apparently Maplins only very lightly advertised the service.
They failed entirely on so many levels. Lack of revenue diversity. Lack of cmpetitive pricing etc.
Then we have carpetright, Toys R Us, Carillion etc etc etc
Maplins is closing down. I popped into my local a few weeks ago and was chatting with a member of staff who told me that at one point they were offering home installation/fitting services. I was totally unaware of this detail and had never heard of it before even though i am a fair regular to my local store.
Apparently Maplins only very lightly advertised the service.
They failed entirely on so many levels. Lack of revenue diversity. Lack of cmpetitive pricing etc.
Then we have carpetright, Toys R Us, Carillion etc etc etc
frankenstein12 said:
How the hell does somewhere like carpetright end up in trouble?? Its not like there are an abundent number of national carpet sellers or like people buy carpeting online.
Home moving transactions are way down (less new carpets at move-in time). General retail spending is down (less new carpets at other times). Credit is tight. Retail rents have gone up. Business rates have gone up. Staff costs have gone up.CW may control a chunk of the market, but if the market is shrinking and profits are drying up that is scant consolation.
frankenstein12 said:
How the hell does somewhere like carpetright end up in trouble?? Its not like there are an abundent number of national carpet sellers or like people buy carpeting online.
Crap naming, I can't believe they didn't rename their stores. Demand for carpet is down as everyone is after wood so having carpet as the actual name was pretty stupid. Someone previously said they also did beds and stuff which I would never have guessed.They should have renamed and rebranded long ago, Ive never been in, but would have no idea to go unless I was after carpet.
frankenstein12 said:
Henners said:
Seventy said:
Henners said:
jayymannon said:
I was in last week and they had some deep discounting going on.Given the lead time for a new carpet, 2-3 weeks in our case, I expect this story will result in them losing a few sales.
Money up front to a failing business? A la Land of Leather? Alarm bells will ring for plenty.
I believe though that their fitters are subbies, you pay them on the day rather than paying CR.
Agree with the point re: shrinking market and renaming.
skwdenyer said:
Except that model is not sustainable.
Having sold wholesale and retail fashion in the recent past, returns rates are north of 33% for most online retailers. Free returns are the norm (for now). A great many returned garments are not re-sellable (no packaging, obviously worn, inadvertent marks, etc.) and there's no effective way of charging customers for non-re-sellable returns (credit card companies will not support charges in the face of customer chargebacks, for instance).
Without breaking any confidences, I saw one customer who would buy a whole slew (many £k) of garments at the start of the season, in multiple sizes. She would then return them all, only to re-buy those she liked come the sale.
The Distance Selling Regulations allow returns, but not free returns. The model is wholeheartedly broken.
Someone I knew a few years ago handled returns for a major consumer goods brand. All returns were simply sent to him (never for re-sale); he would fix any that were broken, and then re-sell online / to market traders / etc. at knock-down prices. The brand essentially wrote off the value of returns. That model is common - in one form or another.
Which of course means that the "real price" of your goods is considerably lower to account for the very large level of returns.
There is a widespread belief that mail order returns is fundamentally broken. For now, the costs of allowing returns is less than the cost of running bricks-and-mortar outlets, but only for so long - returns rates are on the rise again. I know of 2 national clothing etailers who have many large warehouses chock-full of returned goods - they appear not to want to write them off on their books, nor be seen to be creating waste, and are simply choosing to carry the storage costs for a few years...
The music will stop eventually. Or something will change. Better fit software and - perhaps - a ban on multiple size purchases might help somewhat. But the illusion that online is always cheaper to fulfill is slowly ebbing.
As a point of reference, research has shown that conversion rate in stores amongst those who actually try on clothes is around 67%, vs 10% for those who don't. 67% would fit with a 33% returns rate online.
A "bricks and clicks" strategy has the potential to work well. IIRC Monsoon decided to reverse a round of store closures for this reason, instead opening smaller "try and feel" outlets in market towns to drive online sales. John Lewis have also correlated closely store visits against online purchases and are refining their integrated model.
i always wondered how the online clothing businesses managed to make any money at all, certainly in the womens market. i have heard a number of friends of my wife and my eldest daughter say they will order an outfit for a specific event, wedding, parties etc then send it back once it has served its purpose.it is one of the reasons i know my wife is a decent person and my daughters have been brought up correctly as they view this behaviour the same way i do. they did roll their eyes when i told them they need to get better friends though.Having sold wholesale and retail fashion in the recent past, returns rates are north of 33% for most online retailers. Free returns are the norm (for now). A great many returned garments are not re-sellable (no packaging, obviously worn, inadvertent marks, etc.) and there's no effective way of charging customers for non-re-sellable returns (credit card companies will not support charges in the face of customer chargebacks, for instance).
Without breaking any confidences, I saw one customer who would buy a whole slew (many £k) of garments at the start of the season, in multiple sizes. She would then return them all, only to re-buy those she liked come the sale.
The Distance Selling Regulations allow returns, but not free returns. The model is wholeheartedly broken.
Someone I knew a few years ago handled returns for a major consumer goods brand. All returns were simply sent to him (never for re-sale); he would fix any that were broken, and then re-sell online / to market traders / etc. at knock-down prices. The brand essentially wrote off the value of returns. That model is common - in one form or another.
Which of course means that the "real price" of your goods is considerably lower to account for the very large level of returns.
There is a widespread belief that mail order returns is fundamentally broken. For now, the costs of allowing returns is less than the cost of running bricks-and-mortar outlets, but only for so long - returns rates are on the rise again. I know of 2 national clothing etailers who have many large warehouses chock-full of returned goods - they appear not to want to write them off on their books, nor be seen to be creating waste, and are simply choosing to carry the storage costs for a few years...
The music will stop eventually. Or something will change. Better fit software and - perhaps - a ban on multiple size purchases might help somewhat. But the illusion that online is always cheaper to fulfill is slowly ebbing.
As a point of reference, research has shown that conversion rate in stores amongst those who actually try on clothes is around 67%, vs 10% for those who don't. 67% would fit with a 33% returns rate online.
A "bricks and clicks" strategy has the potential to work well. IIRC Monsoon decided to reverse a round of store closures for this reason, instead opening smaller "try and feel" outlets in market towns to drive online sales. John Lewis have also correlated closely store visits against online purchases and are refining their integrated model.
frankenstein12 said:
How the hell does somewhere like carpetright end up in trouble?? Its not like there are an abundent number of national carpet sellers or like people buy carpeting online.
Well you also have Tapi which I believe was started by the son of the man who owns carpet right. I went in both when I needed to carpet my house, Tapi were very helpful Bd spent half an hour with me, Carpet right the salesmen ignored me and carried on talking amongst themselves.I think this and a combination of the number of house sales failing, people having wooden floors and people not wanting so spend any money means the market is tough.
I personally think there is a recession coming And people can always hold off replacing their carpets for a year or two if money is tight. Got to pay the lease payments on the white Audi TDi S line somehow......
Joey Deacon said:
frankenstein12 said:
How the hell does somewhere like carpetright end up in trouble?? Its not like there are an abundent number of national carpet sellers or like people buy carpeting online.
Well you also have Tapi which I believe was started by the son of the man who owns carpet right. I went in both when I needed to carpet my house, Tapi were very helpful Bd spent half an hour with me, Carpet right the salesmen ignored me and carried on talking amongst themselves.I think this and a combination of the number of house sales failing, people having wooden floors and people not wanting so spend any money means the market is tough.
I personally think there is a recession coming And people can always hold off replacing their carpets for a year or two if money is tight. Got to pay the lease payments on the white Audi TDi S line somehow......
As others have said there were many failings with carpetright including its name. At the heart of its problems yet again comes down to my original post point of spectacular mismanagement.
Lack of proper branding or marketing. Poor staff management from the sounds of it.
Probably poor cost controls. Lack of proper diversification and revenue streaming.
frankenstein12 said:
How the hell does somewhere like carpetright end up in trouble?? Its not like there are an abundent number of national carpet sellers or like people buy carpeting online.
Hard to understand isn't it? They need to generate some interest, some excitement. Perhaps if they had a sale or something....
wc98 said:
i always wondered how the online clothing businesses managed to make any money at all, certainly in the womens market. i have heard a number of friends of my wife and my eldest daughter say they will order an outfit for a specific event, wedding, parties etc then send it back once it has served its purpose.it is one of the reasons i know my wife is a decent person and my daughters have been brought up correctly as they view this behaviour the same way i do. they did roll their eyes when i told them they need to get better friends though.
I'm most familiar with branded apparel. I can't be too specific for confidentiality reasons, but I can give you some broad numbers to consider.Retail multiples for branded clothing are often in the region of 2.5 - 3.5. Sometimes higher. So wholesale price (ex VAT) x 3 (say) = retail price (inc VAT) (using the middle of those multiples).
Buy a shirt for £30 (inc VAT) in a store. The brand sold it to the major retailer for perhaps £10 (ex VAT).
(BTW children's clothes don't attract VAT, but the customer only compares cash prices, which is why there are so many brands trying to get into premium baby clothes).
All retailers will assume a certain level of sale goods on average. So the average price across a season might actually only be £25 (inc VAT) = £20.83 (ex VAT). Often less than that (although some retailers demand brands make a "contribution to markdown" - i.e. cashback - if stuff has to be discounted too much to sell).
Some retailers will hold stock for longer to sell it out; most want to turn it quickly, so will discount until it sells. If returns are 33%, and if only half of those are re-sellable, that's a wastage that eats further into the margin on the sold goods. So maybe if they're lucky they'll clear the stock at 30-40% gross margin (including the non-sellers). From that 40% margin, the customer expects (if online) free delivery, free returns. There are credit card fees, packaging fees, warehousing and fulfilment fees, etc.
Bricks-and-mortar stores have lower returns rates, but still some wastage and obviously higher costs of operation.
ASOS' gross margin is currently about 49.8%. Its operating margin is 4.1%, and net profit margin 3.33%. ASOS buy a lot of stock directly from manufacturers in order to cut out the brands and get that margin as high even as that (a simple white tee or a baseball cap doesn't need a brand in the middle to make it happen). Own-label stuff is the key to making it work, providing the profits whilst the branded goods help to attract customers.
So, no, things aren't actually all that thick on the margin front.
And that £30 shirt? The manufacturer was paid no more than £3 to actually make it, including the cost of fabric, buttons, labels, packaging, and so on, as well doing sample-making, working on patterns, etc. etc. and carrying probably at least 6 months' credit before payment.
Now think what that means for a really cheap shirt. If you think that might be a problem, take a look at this: https://www.youtube.com/watch?v=KfANs2y_frk
When everything "goes right" apparel can be profitable. But more often than not it doesn't - for every "hit" there are many misses. A small turn in the market can represent a big hit in profits.
skwdenyer said:
I'm most familiar with branded apparel. I can't be too specific for confidentiality reasons, but I can give you some broad numbers to consider.
Retail multiples for branded clothing are often in the region of 2.5 - 3.5. Sometimes higher. So wholesale price (ex VAT) x 3 (say) = retail price (inc VAT) (using the middle of those multiples).
Buy a shirt for £30 (inc VAT) in a store. The brand sold it to the major retailer for perhaps £10 (ex VAT).
(BTW children's clothes don't attract VAT, but the customer only compares cash prices, which is why there are so many brands trying to get into premium baby clothes).
All retailers will assume a certain level of sale goods on average. So the average price across a season might actually only be £25 (inc VAT) = £20.83 (ex VAT). Often less than that (although some retailers demand brands make a "contribution to markdown" - i.e. cashback - if stuff has to be discounted too much to sell).
Some retailers will hold stock for longer to sell it out; most want to turn it quickly, so will discount until it sells. If returns are 33%, and if only half of those are re-sellable, that's a wastage that eats further into the margin on the sold goods. So maybe if they're lucky they'll clear the stock at 30-40% gross margin (including the non-sellers). From that 40% margin, the customer expects (if online) free delivery, free returns. There are credit card fees, packaging fees, warehousing and fulfilment fees, etc.
Bricks-and-mortar stores have lower returns rates, but still some wastage and obviously higher costs of operation.
ASOS' gross margin is currently about 49.8%. Its operating margin is 4.1%, and net profit margin 3.33%. ASOS buy a lot of stock directly from manufacturers in order to cut out the brands and get that margin as high even as that (a simple white tee or a baseball cap doesn't need a brand in the middle to make it happen). Own-label stuff is the key to making it work, providing the profits whilst the branded goods help to attract customers.
So, no, things aren't actually all that thick on the margin front.
And that £30 shirt? The manufacturer was paid no more than £3 to actually make it, including the cost of fabric, buttons, labels, packaging, and so on, as well doing sample-making, working on patterns, etc. etc. and carrying probably at least 6 months' credit before payment.
Now think what that means for a really cheap shirt. If you think that might be a problem, take a look at this: https://www.youtube.com/watch?v=KfANs2y_frk
When everything "goes right" apparel can be profitable. But more often than not it doesn't - for every "hit" there are many misses. A small turn in the market can represent a big hit in profits.
Great post. Retail multiples for branded clothing are often in the region of 2.5 - 3.5. Sometimes higher. So wholesale price (ex VAT) x 3 (say) = retail price (inc VAT) (using the middle of those multiples).
Buy a shirt for £30 (inc VAT) in a store. The brand sold it to the major retailer for perhaps £10 (ex VAT).
(BTW children's clothes don't attract VAT, but the customer only compares cash prices, which is why there are so many brands trying to get into premium baby clothes).
All retailers will assume a certain level of sale goods on average. So the average price across a season might actually only be £25 (inc VAT) = £20.83 (ex VAT). Often less than that (although some retailers demand brands make a "contribution to markdown" - i.e. cashback - if stuff has to be discounted too much to sell).
Some retailers will hold stock for longer to sell it out; most want to turn it quickly, so will discount until it sells. If returns are 33%, and if only half of those are re-sellable, that's a wastage that eats further into the margin on the sold goods. So maybe if they're lucky they'll clear the stock at 30-40% gross margin (including the non-sellers). From that 40% margin, the customer expects (if online) free delivery, free returns. There are credit card fees, packaging fees, warehousing and fulfilment fees, etc.
Bricks-and-mortar stores have lower returns rates, but still some wastage and obviously higher costs of operation.
ASOS' gross margin is currently about 49.8%. Its operating margin is 4.1%, and net profit margin 3.33%. ASOS buy a lot of stock directly from manufacturers in order to cut out the brands and get that margin as high even as that (a simple white tee or a baseball cap doesn't need a brand in the middle to make it happen). Own-label stuff is the key to making it work, providing the profits whilst the branded goods help to attract customers.
So, no, things aren't actually all that thick on the margin front.
And that £30 shirt? The manufacturer was paid no more than £3 to actually make it, including the cost of fabric, buttons, labels, packaging, and so on, as well doing sample-making, working on patterns, etc. etc. and carrying probably at least 6 months' credit before payment.
Now think what that means for a really cheap shirt. If you think that might be a problem, take a look at this: https://www.youtube.com/watch?v=KfANs2y_frk
When everything "goes right" apparel can be profitable. But more often than not it doesn't - for every "hit" there are many misses. A small turn in the market can represent a big hit in profits.
A lot of people tend to go to carpet right once and not go back either because the sales person is not bothered (as mentioned earlier) or have a bad fitting experience.
The sales they have are a joke as saying things like 50% off our normal price which is simply an inflated price which customers are starting to realise.
Yes I am a retailer with a small shop which has been open for 44 years now and has seen what Sir Phil Harris had done with Carpetright and before with Queensway.
The new owners seem to be letting it slide downwards .
People seem to like good independents where service and good recommendations mean something.
The sales they have are a joke as saying things like 50% off our normal price which is simply an inflated price which customers are starting to realise.
Yes I am a retailer with a small shop which has been open for 44 years now and has seen what Sir Phil Harris had done with Carpetright and before with Queensway.
The new owners seem to be letting it slide downwards .
People seem to like good independents where service and good recommendations mean something.
Drumroll said:
A friend of mine used to earn her living as a rep with a team below her. I was always surprised it was a viable business.From the reports, seems like another example of a big change backfiring (warehouse and logistics and IT). People often seem to think those things are easy.
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