Is the packaging worth enough for it to effect the value of your purchase?

[gdmetro]

On the topic of paulbot/bowspearer's discussion- I find it is highly interesting, but on the whole it does go back to the root of the problem, and that is the attitude/direction of the retailers.

The current retailers are whinging because they failed to anticipate and change in the face of online buying and for the longest time, took advantage of the lack of options and information and ignorance that the public had with regards to retail goods. Now that internet and online buying has had time to develop and be adopted by more of the general population, the retailers have to change their overall retail model, attitude and structure- to adapt to the current climate. This is certainly not an easy task and will probably cost a lot of time, planning, research and over all expenditure, but needs to be done. I'm not entirely sure that the fault lies solely on retailers, but they are the ones that need to initiate the change. If they don't, they will die out and be replaced with more adequate players- assuming the current trend continues.

Once that change comes, then we will probably see a major change in how retail operates, and it would follow that the way toys are sold/marketed will also change (hopefully to the benefit for us, the collectors).

[bowspearer]

I'm not entirely sure that the fault lies solely on retailers, but they are the ones that need to initiate the change.

Yes and no- retail buying groups have alot of clout. I used to work for Bing Lee (head of the NARTA group, the big electronics buying group in the country) and one day this customer came asking us to match a price at one of the majors that was lower than the invoice cost Bing Lee got it for and the rep was immediately called to give a "please explain" by my assistant manager.

Buying groups have a lot of power when it comes to retail and so they could easily force a change.... if they wanted to.

Based on what I've been told, stores here don't approach hasbro for exclusives. Hasbro has to 'beg' the stores to take on exclusives in this country, and its only when the brand is doing well (at its most profitable to stores) that stores take on exclusives.
US stores are the ones who solicit exclusives to get kids and collectors into their store over their rival's.
The stores here though, have no interest in accommodating or targeting collectors (TRU would be an exception - not for getting the product, but in the promoting of it by being the only store to approach us to advertise TF toys). Any other store that had the slightest interest in collectors in this country, would promote that intention and products to the collector communities (like here and other AUS fansites, and at the collector fairs).

Which really only highlights what I was saying about this fitting into the larger scheme of things. It just goes to show that Australian retailers really only have themselves (and really it comes down to their head offices and marketting depts within them) to blame for such lousy retail spending, due to missed opportunities.

[Prowl]

one day this customer came asking us to match a price at one of the majors that was lower than the invoice cost Bing Lee got it for and the rep was immediately called to give a "please explain" by my assistant manager.

I would not expect the assistant manager to know any different. There is a huge difference between the "invoice cost" & the actual cost paid by stores like Bing Lee. Stores get to see a "invoice price" that is what the system price is & they make their mark up & any discounts on that.

The buying group themselves negotiate far higher discounts at a national strategic or global level. This is done to protect their bottom line & especially to minimise commissions paid to staff who are renumerated on GP $ figures.

That way staff can even "show you" their "cost" on the system & you can see they are making only 5% Gp on the item but that does not take into acccount the buffer margin that is put onto the items by exec level management & procurement teams who are renumerated & KPI'd on rebates & maximising sales margin for supply to channel partners.

Think of it like this

Buying Group A pay $1000 for X brand TV.
Buying Group A get a discount of 5% for every 100 units they take.
Buying Group A also get a settlement discount of 2% for 30 day terms
Buying Group A also have factored in a 3% rebate to be paid quarterly by brand X.

That means that the TV itself costs $900 after the rebates & discounts are factored in.

The now $900 item is resold to the store/franchisee for a price of $1300 with similar discount structures applied to the store in question.

This now $1300 item is listed on the shelves at $2400 with a RRP of $2600 offering a $200 saving when you walk in the store.

After some heavy negotiating the buyer pays $1600 making a huge $1000 saving off the RRP & is satisfied with their discount.

The store banks on selling 10 of these units that month so they get their rebate from HO so that $1300 TV costs them $1170.

Everyone wins in this situation as HO has protected their baseline margin, the store has achieved their rebate/strategy target & the consumer has received their inflated discount.

This is why when buying any major item you are best to walk in knowing what you want at the end of the month when staff are trying to meet their targets & will sell you anything they can to get that extra $100 GP & hit their number. The store will approve any discount as they are going to get their rebate & so on.

Ever wondered why a salesman will push you as hard as they can to take a particular model over another especially at end of month? So they hit that magic rebate number which is worth more to them than selling that other item for $100 more.


A harsh but accurate truth especially in the retail marketplace.

[UltraMarginal]

Something that we don't have to deal with when purchasing online that all retailers have to deal with, is import duties, any shipment coming into the country that has a value over $1000 is subject to import duties, as well as broker charges, customs charges and all that adds up, sure there are economies of scale here too, but I have looked into it as a potential side income and decided that importing more than $1000 worth from the states or anywhere else, just isn't worth my time.

I agree with a lot of what has been said so far about retailer attitudes, and archaic practices, but import duties in australia are high to promote local primary industry over importing from other countries, the thing is, it just doesn't work for electrical items, toys and other goods with a similar manufacturing profile. there is a lot of cost there that is not in place in other countries.

I also feel though that Australian retail needs a shake up as people have been saying above.

Anyway, that's all a bit off topic, the picture I posted above was something I found at my local Kmart on the weekend, and I immediately thought of this discussion and thought I would share it.

[bowspearer]

I would not expect the assistant manager to know any different. There is a huge difference between the "invoice cost" & the actual cost paid by stores like Bing Lee.

Not quite true. I'd been there for about 5 years on and off at that point (I later discovered that at one point I was being groomed for a AM position myself) and so I tended to hear a few things, including the difference between Bing Lee's "floor cost" and actual invoice cost (and no I'm not going to spill as matter of principle), and it did come down to a percentage markup on the invoice costs.

Things like rebates only tend to come into play during promotions and if there was older floor stock which needed to be cleared by slashing the cost (which meant a rebate to reduce the invoice cost).

So sometimes it can in fact be very straightfowrard with that sort of thing.

Something that we don't have to deal with when purchasing online that all retailers have to deal with, is import duties, any shipment coming into the country that has a value over $1000 is subject to import duties, as well as broker charges, customs charges and all that adds up, sure there are economies of scale here too, but I have looked into it as a potential side income and decided that importing more than $1000 worth from the states or anywhere else, just isn't worth my time.

I agree with a lot of what has been said so far about retailer attitudes, and archaic practices, but import duties in australia are high to promote local primary industry over importing from other countries, the thing is, it just doesn't work for electrical items, toys and other goods with a similar manufacturing profile. there is a lot of cost there that is not in place in other countries.

I also feel though that Australian retail needs a shake up as people have been saying above.

Anyway, that's all a bit off topic, the picture I posted above was something I found at my local Kmart on the weekend, and I immediately thought of this discussion and thought I would share it.

I agree there are certain duties and overheads that bricks and mortar retailers face and certainly online retailers shouldn't be expected to pretend they don't.

However, and it's a pretty big however, bricks and mortar retail prices in the states have no shifted to much of an extent (I'm not aware of any increases, but I could be wrong) since 1997.

I bring that up because back then our dollar was around $0.77USD and with the same overheads that they have now, basics retailed at $10, deluxes at $17, megas at $30 and ultras at $40.

Admittedly, the Asian Economic Crisis sent our dollar tumbling like a lead ballon and prices went up accordingly, which is perfectly reasonable.

However the dollar is now doing much better, in fact for at least the past few months has been greater than parity with the USD and for a year before that was at its worst, at 1997 exchange rates. Yet prices have yet to get anywhere close to where they should be even at 1997 exchange rate leveles, with the exception of toy sales.

Yes retailers are in a difficult spot, but at the same time, they deserve very little sympathy, if any, when they're happily going along with the blatant scalping that is going on somewhere along the supply chain between them and Hasbro Australia.

[Prowl]

Not quite true. I'd been there for about 5 years on and off at that point (I later discovered that at one point I was being groomed for a AM position myself) and so I tended to hear a few things, including the difference between Bing Lee's "floor cost" and actual invoice cost (and no I'm not going to spill as matter of principle), and it did come down to a percentage markup on the invoice costs.

Things like rebates only tend to come into play during promotions and if there was older floor stock which needed to be cleared by slashing the cost (which meant a rebate to reduce the invoice cost).

So sometimes it can in fact be very straightfowrard with that sort of thing.

A fair enough point. I mostly deal with national contracts & buying arrangements so have not dealt with retail companies in many years.

What I was really getting at is the true cost is never the invoice cost when it comes to big retail chains as there are always buffers.

That said Bing Lee always dropped their pants for me when I asked them to. Then again I am a salesmans dream. I walk in knowing what I want & say model X, Y & Z give me your best price & if it is right I will walk out of here with one in five minutes.

[bowspearer]

A fair enough point. I mostly deal with national contracts & buying arrangements so have not dealt with retail companies in many years.

What I was really getting at is the true cost is never the invoice cost when it comes to big retail chains as there are always buffers.

That said Bing Lee always dropped their pants for me when I asked them to. Then again I am a salesmans dream. I walk in knowing what I want & say model X, Y & Z give me your best price & if it is right I will walk out of here with one in five minutes.

Bing Lee is an example of the way retial has to some extent adapted when it comes to browngoods and whitegoods with negotiable pricing. Part of that in turn has been the formation of buying groups like NARTA where you wind up with 27 companies all in the one buying group- which forces pressure on suppliers to lower invoice costs which then allows for a competitive retail environment.

If the toy industry operated in a similar way across the board in this country, then half of the competition issues would go out the window.

With pricing, much like packaging, the problem seems to be that Australian retailers almost seem determined to maximise profit per unit rather than maximising turnover while maintaining a healthy profit. It doesn't market to collectors and it arguably doesn't even directly market to kids.

Let's presume for a minute that you have a 5 year old kids earning about $6 a week in pocket money and those kids collect action figures (and yes I was one of those kids growing up- I'd layby things like Headmasters as a 8 year old and pick them up 4 weeks later, winding up with a collection of about 74 tfs from memory by the time I was 12).

With the current market it's impossible for kids to go toy shopping every single week and they're generally stuck spending a month to pick up a figure we'd have been able to pick up in a fortnight, tops.

So generally speaking, the kids aren't being engaged with as consumers at all. Sure they're going through their parents maybe buying them something, but how many of them are able to be active and regular direct clients of the retailers' toy depts? Not many.

So what you wind up with is a move to video games much earlier because even though it's generally parents buying games for kids, the kids get the high from playing them, be it a new high score, time or beating that level.

Meanwhile kids don't personally get that same high from buying stuff they love in the form of toys and experiencing that sense of achievement and ownership.

Obviously there are multiple factors at play here, but this is one way where retailers are literally shooting themselves in the foot.

If a Star Wars Figure goes for $6 in the states, there's no reason why it couldn't go for $8 here. If the obstruction to it is that the supplier costs haven't been lowered to factor in the dramatic change in exchange rates weeks ago, then there's nothing stopping retailers forming a buying group to tighten the thumbscrews on Hasbro til they cave (I'd use another euphamism, but this is a PG rated forum heh).

It all comes down to whether retailers in the toy industry want long term markets or a quick buck followed by a slow spiralling death, be it with engaging with collectors, or engaging with kids directly.

[bowspearer]

Interesting update to the incident which prompted the thread. Went into Target tonight and the WFC figure I saw a few weeks was still there. This time I must have had a different manager make the decision. When they heard it was damaged and a year old, they dropped the price down to $16. So all in all I was pretty happy with that.