Subject:
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Retailing (was Re: Next year)
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Newsgroups:
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lugnet.market.theory
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Date:
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Thu, 21 Sep 2000 17:07:16 GMT
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Viewed:
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848 times
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In lugnet.market.theory, James Brown writes:
> In lugnet.general, Kevin Zwicker writes:
> <snip>
> > Hello again,
> >
> > Sorry about replying to my own post, but I remembered something else that the
> > rep told me. TLC gives stores permission to put their products on sale. It
> > seems that when store discounts or deep-discounts our favorite toy, TLC takes
> > the hit profit-wise. In other words, the store keeps its regular profit • margin
> > and Lego absorbs the loss.
> >
> > Just thought that I would share the info...
>
> Hmm. Interesting. I would *guess* that this is only partly right. It seems
> reasonable to me that if LEGO tells a store to put set X on sale, then LEGO
> takes the hit. But at the same time, there are store-wide sales (Bay Days
> comes to mind, or Zeller's 'early bird' sales on (some) Saturday mornings)
> which I can't imagine LEGO taking the hit for, or having any say in.
>
> There have also been reports of individuals talking store managers into a
> discount, or a deal. LEGO clearly isn't involved in that kind of deal, and
> would almost certainly raise a holy squawk if someone told them they were
> getting dinged for a retailer's decision.
>
> Ah, the murky and troubled waters of the retail industry... :)
>
> James
I wouldn't be surprised if LEGO retailing is similar to the automobile
industry.
The manufacturer sells the sets/cars to the retailer/dealer for a specified
price and provides pricing stability through the MSRP. Retailers/Dealers
occasionally hold sales which take a bite out of their profit margin.
Occasionally, they will even sell the merchandise below cost to free up
inventory and shelf space.
Auto manufacturers often offer special dealer incentives to sell slow moving
vehicles or to clear out end of year inventory. If TLC follows the same
practice, they might give retailers a specified rebate from the "normal"
manufacturer's price. I suspect that this is why so many stores will have 20%
off sales around the same time. Perhaps LEGO staggers the incentives so that
retail competitors don't have sales during the same week.
Special deals like Zany Brainy's famous 50%-off sales are probably subsidized
through special TLC rebates.
As an aside, what sort of volume does a store need to generate to be able to
sell the LEGO line? Would it be feasible for the LUGNET community to create a
buyer's co-op and buy/sell sets at near cost?
Price well,
Andreas Stabno
http://www.megsinet.net/~stabno/SimiLego.htm
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Message is in Reply To:
 | | Re: Next year
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| In lugnet.general, Kevin Zwicker writes: <snip> (...) Hmm. Interesting. I would *guess* that this is only partly right. It seems reasonable to me that if LEGO tells a store to put set X on sale, then LEGO takes the hit. But at the same time, there (...) (24 years ago, 21-Sep-00, to lugnet.market.theory)
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