She asked me many questions but the one that got her a little sidetracked was when she asked me about my career background. I explained I had been in consumer goods and worked for some divisions of Newell Rubbermaid, Waterpik, etc.... The question really came up in regards to product pricing because consumer goods pricing is straight forward as compared to my current industry.
I'm guessing she's a shopping kinda girl because she immediately asked me "What are the mark ups at Macy's and places like that?? I've always wondered!!!"
I told her and I'm going to tell you. Because I know we're all bargain shoppers. And because we're all bargain shoppers I'm confident that you'll be able to keep up with my explanation that contains a lot of percentages....
Department stores and big box stores usually have a 50% (or more) markup. NEVER buy anything at one of these stores that isn't on sale. That said, I wouldn't even venture to buy anything at these stores unless it's one heluva sale, at that... like at least 50% off or more.
Wal-Mart - usually have smaller mark ups - between 25 - 45%. The issue with WM is that they demand such low prices from their suppliers that it's not uncommon for a supplier to lose money on a product just to get in WM. 'Cuz once you've got something in there you're more likely to get something else - hopefully something you actually can make some money. So when you shop at WM know you're most likely getting the best deal (and if WM finds out the supplier isn't giving them the best deal they'll drop 'em like a hot potato).
Target takes higher mark ups than WM, but lower than department stores. I'm thinking around 30 - 45%. And although they want great prices from their suppliers too I'm not aware of them pushing them quite as hard as WM. The way WM and Target keep from treading on each other's feet is to have suppliers provide them with "Target" or "WM" specific products, designs, or even packaging.
And the warehouse stores are almost always your best best. Granted you do need to do your due diligence since you might not get a deal on toilet paper but do expect to get the best deal on electronics and some other items. However, these rules do not apply to food because 1) I'm not from that industry and not sure of their usual margins (although I've always heard grocery margins are very, very low) and 2) it doesn't make sense for every household to purchase three years worth of vinegar just so you can get it for $0.10 an ounce...
Your other best best at a warehouse stores - jewelry. I tried to explain this to the hubby when we discussed engagement rings years ago. But he wouldn't have any of it. The stigma of buying a diamond at Sam's was too much for him to bear. But why not??? Diamonds are all certified on a universal scale. So you know exactly what you're getting.... I didn't care if my ring came from Sam's!! (as a matter of fact, you know what you're going to spend on a diamond - but you can get a bigger one from a warehouse store...)
Here are a few caveats:
- I haven't worked in consumer goods for the past 4.5 years. So things may have changed. But I doubt it. If department stores took smaller margins in the past few years it probably had more to do with the economy, not a trend they expect to continue.
- These are extreme generalizations. And margins differ within a store depending on the actual items/ department. Grocery items are going to get much lower margin than vacuum cleaners. (think sell through volume... the faster something is likely to turn on the shelf the lower the expected margin at discount stores. That doesn't necessarily hold true to department and box stores, though...)
- Kohl's, JCPenny and the like are sometimes grouped as department stores, but take lower margins. (they have a category of their own) They are generally a good bet if you like to shop there. But again, I would highly advise to only buy items on sale.
- Remember - all stores (except WM, Target, warehouses) purposely mark up regular prices pretty high with the expectation that they have a scheduled sale in which they will lower the price to a point they know the item will move. They bank their margins on the sale price, not the regular price. So remember that regular priced items essentially have a "sale mark up" in them.
- There are certain brands that demand an MSRP. have you ever tried to bargain shop for Oakleys? How about an iPod? The only bargains you will find on these name brands are those styles that have been discontinued. Stores are not allowed to mark them down. If they do they will lose their "privilege" of carrying that brand.
