Rant in Aisle Two! (Part 1)
Signs of the times: passed by a shopping plaza yesterday, and in the same plaza saw a shuttered Linens-N-Things a couple of doors down a soon-to-be-closed Circuit City. Both were scarcely a mile from a Fortunoff, another chain that’s soon destined for the Great Store in the Sky.
In a sense, it’s appropriate that these particular retailers should be going under at roughly the same time. Each followed the same philosophy in “death” as they had in “life”: offer cut-rate service, coupled with higher prices for the same swag you could get cheaper at another, friendlier, brick-and-mortar. So, “Up to 70% Off The Entire Store!” ends up looking something like this, in practice:
Good HD television:
MSRP $1,600.00. Price at competitor: $1,175.00. Price at GOOB store, after 20% “discount”: $1,580.00.
1 Cubic Foot Fridge (”Great for Dorm Rooms!”):
MSRP $100. Price at competitor: $75.00. Price at GOOB store, with 30% “discount”: $80.00.
Junk that was obsolete in 1998:
MSRP: God only knows. Price at a competitor: They took this crap out of their bargain bins in 2001. Price at GOOB store: FINALLY, the 70% discount! Is to having non-working Tamagotchis in damaged blister packs for enjoyment everyone! (though they might be worth it for the Engrish in the instructions)
And before someone says, “Hey, your math is wrong!” consider the following: this isn’t math like you or I learned math. This is how they teach math to retail managers. I can speak from experience here, having worked for another company I’d predict will not exist at this time next year. They were in the habit of jacking up the prices on their product before holidays, and then offering it at a “sale price” that was the price of the item before they changed the price table. So what these stores have done as they’ve gone out of business is nothing new. It’s a time-honored formula of jacking prices–sometimes for more than manufacturer’s suggested retail price (MSRP)–before applying discounts.
Really, none of these places should wonder why they went out of business. Retail, for the last several years, has closely mirrored the housing market. When there’s easy credit available, companies will buy product on spec knowing that people will lap up even the overpriced crap peddled by the likes of a LNT or Fortunoff. Once the credit dries up, or the economy takes a dive, the same companies that depended on ridiculous pricing to keep the profits up and the shareholders happy suddenly find themselves in desparate straits. Warehouse, and store, space is suddenly chock full of merchandise that won’t move.
Of course, the reverse is also true. Stores like Nobody Beats the Wiz (whose name I loved simply for the fact that when the signs malfunctioned, they’d usually flash the cryptical injunction ”Nobody Wiz”) learned the hard way that when you use the sales from one department to subsidize the markdowns in another department, or if you cut too far into your margins, sooner or later you’ll have the Reaper standing by the customer service desk, tapping one foot impatiently.
Photo credit: http://keithooper.smugmug.com/
Tags: Circuit City, economy, Fortunoff, Linens N' Things, retail, store closings
March 13th, 2009 at 3:56 pm
Hey, was this on Rt. 17 in Paramus? Because those same two stores are now empty husks in one shopping plaza.
And yes, the discounts were a joke.
March 13th, 2009 at 7:26 pm
No, this one was actually on 18, in or near New Brunswick. I’d forgotten the ones on 17, along with the Fortunoff near the Trader Joe’s…
March 19th, 2009 at 5:54 am
I may be in the minority, but I didn’t have a problem with Circuit City. Well, I did when they launched DIVX. In fact, I had planned a lifelong boycott for their evil plan to destroy DVDs. However, it was their price and convenience that brought me back. And I’m talking about fairly big ticket items - stereos, DVD players, and most recently, my PS3. For over a decade I’ve shopped online almost exclusively, choosing the cheapest vendor with a decent reputation. Surprisingly, several times Circuit City has been the cheapest, often with a convenient store pickup option.
My cousin worked there for a while and told me that senior management admitted they’d never beat Best Buy on price, so they’d do it with superior customer service. I don’t know how well that translated to the ground crew, but at least they tried (and I can’t imagine they were worse). And to the best of my knowledge, they never set up a fake in-store web site to lie about prices.