Quote:
Originally Posted by speede5
Most people don't understand loss leaders either. All the big chains have them, like the 99 cent 2 ltr name brand pop, which they actually selll below cost to get you in the door. Smaller retailers can actually buy product at superstore/wal-mart cheaper than their wholesaler. There is no way they can compete and they don't even try, but the perception to the consumer is that they are way overpriced when they are selling at msrp.
Canadian Tire is really bad for that, as most of their stores are privately owned, and the retailers have no control over the flyers, and all those awesome deals end up costing them money.
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Lol. Didn't really want to spawn a guessing war as to what I own, but let's say that I am a pharmacist and I own a franchise that works remarkably similar to Canadian Tire. I have no control over prices for the most part. I can change them if I like, but part of the franchise agreement is to hit a planned overall margin, so I have to be careful. I do not "rake customers over the coals". It's pretty simple. There are no hidden costs. You buy it or you don't. The raw cost of a starbucks coffee is a lot lower than there price of their coffee, should they be put in prison? Telling my cashier how much cheaper it is somewhere else may help us review the price, but getting frantically upset won't help. I just don't understand where the anger comes from.
Anyways, as the quote above, loss leaders are an important part of retail these days. I sell my milk $1.30 below cost (4L of skim cost these days is around $5.50) but you won't find it above cost almost anywhere. You do it for two reasons: value proposition and to bring people into your store. It is an incredibly valuable tool, but even then people get mad. I was at a gas station on the north shore here. It was an ESSO, which are also mostly privately owned. Lady walks in and loses it at the cashier because their gas prices are still at $1.30 and just down the road the gas station has moved to $1.19. I politely asked her why she was mad. They clearly post their price on a big sign, and she clearly knows the other stations price. She squabbled a bit about gouging then went on her way. My opinion is that it's this ridiculous sense of entitlement on customers behalf that makes them think we are some sort of public service and how dare profits be made. I am dead against unfair practices like hidden fees, bait and swap, etc., but when the price is clearly stated, there is nothing unethical about it.