Retail Mark Up
Discussion
I am involved in our local town regeneration committee, and one significant concern is the lack of people shopping on our High Street. The reasons for this are likely to be many including lack of multiples, lack of choice, price etc.
However there are of course many who feel that shopkeepers are made of money and should be able to give loads of money to marketing, shopfront improvements etc.
Having stood in the High Street and watched pedestrain flow recently on several occasions it doesn't surprise me the retailers are struggling, there are no customers!
However I need to persuade others and therefore what I want to do is create a rough calculation of the costs of running a shop, and the amount of sales needed to cover those costs. But what I need to know is the approximate markup retailers add to the price of the goods they are selling to arrive at retail price.
So if we assume that the costs of opening a shop to include rent rates, repairs, salaries etc is £70,000 per annum. You would obviously have to sell more than £70,000 worth of stock to cover that as you have to pay the purchase price of the stock.
So is the average mark up 20%, 25%, 30% or more? I know different retailers will have different markups but I just need a figure which has a vague chance of being slightly realistic.
However there are of course many who feel that shopkeepers are made of money and should be able to give loads of money to marketing, shopfront improvements etc.
Having stood in the High Street and watched pedestrain flow recently on several occasions it doesn't surprise me the retailers are struggling, there are no customers!
However I need to persuade others and therefore what I want to do is create a rough calculation of the costs of running a shop, and the amount of sales needed to cover those costs. But what I need to know is the approximate markup retailers add to the price of the goods they are selling to arrive at retail price.
So if we assume that the costs of opening a shop to include rent rates, repairs, salaries etc is £70,000 per annum. You would obviously have to sell more than £70,000 worth of stock to cover that as you have to pay the purchase price of the stock.
So is the average mark up 20%, 25%, 30% or more? I know different retailers will have different markups but I just need a figure which has a vague chance of being slightly realistic.
10 Pence Short said:
Very difficult to be accurate with so many variables.
High Streets are dying for lots of reasons, but over-zealous councils banning people from being able to park easily and cheaply on them is one reason they've declined so successfully.
My town has quadrupled some of the parking costs and brought in some new traffic wardens High Streets are dying for lots of reasons, but over-zealous councils banning people from being able to park easily and cheaply on them is one reason they've declined so successfully.
they don't seem to realise this is a bad bad idea... the place is dead enough as it is!10 Pence Short said:
Very difficult to be accurate with so many variables.
I don't need to be accurate, because different types of retailers will have different figures, so I guess card shops will have a high mark up, whilst TVs would be less.But what I want is an average figure that looks reasonable to retailers and the lay person. I'd guess at 25-30% but would that sound totally wrong?
cannedheat said:
10 Pence Short said:
Very difficult to be accurate with so many variables.
High Streets are dying for lots of reasons, but over-zealous councils banning people from being able to park easily and cheaply on them is one reason they've declined so successfully.
My town has quadrupled some of the parking costs and brought in some new traffic wardens High Streets are dying for lots of reasons, but over-zealous councils banning people from being able to park easily and cheaply on them is one reason they've declined so successfully.
they don't seem to realise this is a bad bad idea... the place is dead enough as it is!
1500 customers a day in my store, turnover of £105,000 last year. The mark up is probably massive as I work for a multinational, Ive heard of over 100% mark ups on some goods and that still undercuts the smaller businesses so much that they try to buy our goods in bulk to sell on in their shops. I used to work for tesco in a store that was in the town centre and turned over £300,000 a week, it made no profit and was essentially an advert for the out of town megastores.
The independant traders days have been and gone in anything other than niche markets. Sad but true.
The independant traders days have been and gone in anything other than niche markets. Sad but true.
drivin_me_nuts said:
2.5 multiplier on some goods.
Crikey, DSG must have made good money back in t'day when there was no real internet, they seem to suffering now as their rip you off retail exclusivity is now closed.One thing to save the high st is to cut business rates, but then the out of towners will want their rates cut.
Edited by jamoor on Sunday 25th May 04:35
Chrisgr31 said:
I am involved in our local town regeneration committee, and one significant concern is the lack of people shopping on our High Street. The reasons for this are likely to be many including lack of multiples, lack of choice, price etc.
No idea what additional work has been done on this but have you tried asking the people? Are the shops actually ones people would choose to shop in? Is there a diverse choice? You could lower prices or make the shops look as shiny as you like - if every other shop is a chemist I'd be unlikely to shop there. Have you actually surveyed the local residents and people in the catchment area of your town? Have you checked out the competition?
I don't doubt shopkeepers could maybe help out (it is in their interest after all) but the fact you've identified them as a problem just smacks very much of how councils seem to go about doing things (i.e. it's never the councils own policies that are at fault). What is parking like? Is it nasty multistories or wide open parking? Is there enough? Is it cheap? Do you have coffee shops and cafes that will keep people out for longer?
There are many reasons why there are fewer and fewer pedestrian shoppers on our high streets, out of town shopping centres being one, extended shopping hours and free car parking of the same being another. Myself, I have decided after 30 years of being a retailer, that this year will be my last. With online shopping, and more local post offices closing, schools closing, free bus passes for the over 60’s, profit margins being slashed by multiples situated either out of town or on city shopping centres, there will continue to be a decline in numbers of local pedestrian shoppers.
Monday mornings 30 years ago, I was often met when opening the shop first thing in the morning with a queue of potential customers, now I might not see my first customer until about 10.30 in the morning.
Local shopping is not always about a competitive mark up, it is for the “local” customer, convenience, that convenience being whether the smaller shop will be able to carry the range and depth of stock that a large multiple will carry, and then the smaller shopkeeper will look at the viability of the larger stock holding etc. etc.
Businesses that appear to be opening on the high streets, appear to be those that have a low stock holding and a quick turn over of the same, mainly eating and drinking establishments.
Monday mornings 30 years ago, I was often met when opening the shop first thing in the morning with a queue of potential customers, now I might not see my first customer until about 10.30 in the morning.
Local shopping is not always about a competitive mark up, it is for the “local” customer, convenience, that convenience being whether the smaller shop will be able to carry the range and depth of stock that a large multiple will carry, and then the smaller shopkeeper will look at the viability of the larger stock holding etc. etc.
Businesses that appear to be opening on the high streets, appear to be those that have a low stock holding and a quick turn over of the same, mainly eating and drinking establishments.
To answer some questions I accept that it is a very complex subject, and that as stated in the thread there are many reasons. We are fortunate that there are no parking charges in our town (at present, its constantly under review), and we still have some public toilets. However most sensible people would use the toilets in the 2 supermarkets as they are cleaner!
A retail study has been carried out and that did involve asking local residents what they think but the answers are, in my opinion, obviously wrong.
The survey said that 62% of people who went to the intown supermarkets also did other shopping/banking etc whilst in the town. To the bystander that plainly cobblers as there are lots of people walking in and out the supermarkets from the car parks, and none in the High Street! I collected for RNLI outside a supermarket the other day. In the hour I was standing there 180 people entered the store. I then went and collected for an hour in the High Street, in that hour 60 people passed me.
The survey also said that people wanted more coffeee houses but I have real doubts they do in reality. We already have a wine bar and pub that provide nice places to have coffee, a bakery with a coffee area, and 2 supermarkets with cafes.
I have a suspicion that in surveys like this people say what they think they should say, rather than what they actually do. e.g When asked in a survey how often I go to the cinema I often say 4 tilmes a year as thats what I'd like to do. In reality I haven't been for 3 or 4 years!
Anyway all the views help.
A retail study has been carried out and that did involve asking local residents what they think but the answers are, in my opinion, obviously wrong.
The survey said that 62% of people who went to the intown supermarkets also did other shopping/banking etc whilst in the town. To the bystander that plainly cobblers as there are lots of people walking in and out the supermarkets from the car parks, and none in the High Street! I collected for RNLI outside a supermarket the other day. In the hour I was standing there 180 people entered the store. I then went and collected for an hour in the High Street, in that hour 60 people passed me.
The survey also said that people wanted more coffeee houses but I have real doubts they do in reality. We already have a wine bar and pub that provide nice places to have coffee, a bakery with a coffee area, and 2 supermarkets with cafes.
I have a suspicion that in surveys like this people say what they think they should say, rather than what they actually do. e.g When asked in a survey how often I go to the cinema I often say 4 tilmes a year as thats what I'd like to do. In reality I haven't been for 3 or 4 years!
Anyway all the views help.
You are completely right about the survey.
In practice it is very difficult to write and perform a survey to get meaningful results. The way you ask a question, where you ask the question and which people you stop will have so much affect upon the results, many times the results are meaningless.
Much more useful would be to physically watch people, and look at hard statistics. The thing is, supermarkets are huge juggernauts of selling pretty much everything, branding, expensive advertising and even the shops set up to get maximum turnover and profit.
Many local butchers, fishmongers etc, just cannot keep up. Similarly, independent electrical shops just won't be able to compete with prices for goods on the net.
IMHO the only way for the local high street to survive is to offer something in a market which is needed. A coffee shop? Maybe, maybe not.
In practice it is very difficult to write and perform a survey to get meaningful results. The way you ask a question, where you ask the question and which people you stop will have so much affect upon the results, many times the results are meaningless.
Much more useful would be to physically watch people, and look at hard statistics. The thing is, supermarkets are huge juggernauts of selling pretty much everything, branding, expensive advertising and even the shops set up to get maximum turnover and profit.
Many local butchers, fishmongers etc, just cannot keep up. Similarly, independent electrical shops just won't be able to compete with prices for goods on the net.
IMHO the only way for the local high street to survive is to offer something in a market which is needed. A coffee shop? Maybe, maybe not.
My old home town of around 60,000 people has an absolutely dire high street. I worked in a shop around 15 years ago when it was manic, they then pedestrianised it which resulted in a massive decline in footfall, then they allowed a couple of big multi nationals in with the promise of other benefits that would follow (which didn't). The high street is now dead so just last year they bulldozed a massive industrial estate putting people out of jobs in order to house more multi's completely forgetting that bluewater is only 20 miles away.
My friend is a buyer for an underwear company in london and they work on mark ups of x 3.5
Business rates are the number one reason for not having a high street presence in my opinion. Even the small 'barrows' at bluewater cost over £60,000 a year! Long live internet shopping (which is probably the real cause of the high street decline). My old high street is being turned back to housing.
My friend is a buyer for an underwear company in london and they work on mark ups of x 3.5
Business rates are the number one reason for not having a high street presence in my opinion. Even the small 'barrows' at bluewater cost over £60,000 a year! Long live internet shopping (which is probably the real cause of the high street decline). My old high street is being turned back to housing.
I used to have a retail computer shop. The markup in this sector is typically only 10% on the ex VAT price, if you want to be competitive. On Apple stuff its only 3%. We have now closed the shop and are much more profitable being an office based service company. Plus we don't have tens of thousands locked up in stock which may go out of fashion next week.
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