Quote Originally Posted by bowspearer View Post
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.