Markdown Mom has been following a disturbing trend with regard to clearance items on one of the home shopping networks. One way to follow a desired item to get the best deal has been by putting it on a “wishlist,” especially with clearance items that are limited in quantity. Usually a price change on a clearance item is a downward one, but recently these prices have fluctuated, countering accepted business practices, and in fact have increased. Markdown Mom has seen this done in more than one case. For example, a pair of shoes goes on clearance for $39.99, it may or may not become sold out. One color variation may sell out at $39.99, but then the item reappears at $59.99 What has happened?
Well, some may argue that the new stock is the latest version of a tried and true style. However, this is doubtful for a sandal being sold in the middle of winter–it is definitely from last season. What has happened is that more of this item did not sell and the shopping network was able to buy up the remaining stock. However, to warrant returning the item to original price, the remaining stock would have to be purchased by the retailer at the original wholesale price –doubtful even in good economic times. Since it ostensibly was new stock, the retailer raised the price; however, instead of pricing the “new” merchandise at the clearance price, the price was raised on all the remaining stock including the old stock that wasn’t sold. This would provide retailers a greater profit on the item then when it was first introduced when you figure in the reduced wholesale cost on the remaining stock plus the regular markup the retailer takes when the item is repriced to its’ original nonclearance price.
What is being played here is game concerned with “when the item was purchased” by the retailer. This is not a new pricing scheme, Markdown Mom has found that popular chains have done the same thing. Ever wonder why you may find the same style and even the same color with one on clearance and another exact replica at full price? When asked, store personnel have stated that the item for full price became a part of the inventory at a later time. All clearance/markdowns are based upon how long the item has been in stock, and the remaining quantity. Usually, past season is more important when dealing with changing styles such as in apparel and accessories. Markdowns are taken to move old merchandise out to make space for new merchandise at full price.
What this shell game involving time represents is I-N-F-L-A-T-I-O-N either at the wholesale or retail level. So when is a bargain, a bargain? Well, the only way to tell is to know the stock and follow the pricing–and whenever you can, use the “wishlist” option, it’s one way to keep track!
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