The truth behind deceptive discount pricing at BigBox chain stores
Everyday, we are bombarded with special offers and amazing sounding discounts on products. We are being led to believe that national merchants are giving away the house just to get you as a customer.
A case in point is a national big-box “discount” arts and craft retail store. This retailer has a huge advertising budget and prints flyers and coupons and all sorts of enticing offers to lure you into their retail stores.
I own a retail picture framing store in Scottsdale, Arizona. I specialize in hand-made specially finished custom picture frames, certainly not the sort of items that can be found in a discount craft store. Our emphasis is on the proper selection and handling of artwork and we do business with a clientele that realizes the difference.
Due to the poor state of the national and local economy the last few years have made it rather difficult for every business. The end result is that many, if not most of my small business competitors have seen their stores fail. Not counting the big-boxes, there are about a third the number of picture framers in the Phoenix metro area than were here just 10 years ago.
As the economy has shrunk, virtually everyone, (at every income and wealth level) has pulled in their reins and are certainly much more frugal in how they spend their hard earned money. We all want to get the best pricing on what we purchase. The large national discount chains constantly advertise sales that give customers from 40-60% off their retail price with out any qualifiers other than just showing up. I can assure you that no retail framing business makes a margin that allows this sort of discounting. It simply doesn’t work or happen that way.
The national discount chains can certainly buy globally in huge volumes and they are able to negotiate better pricing than any small merchant. In order to keep the prices as low as possible they source out the cheapest manufacturers around the world. Low price and high quality simply don’t go together.
The RUDE Awakening:
We and most other framers find that our everyday retail prices for an equivalent job using the same vendors and materials are very close if not less than the “60%” off sale prices at these national discount chains. How can that be? The reason is that they MARK-UP their retail prices to be so high as to allow them to offer a ridiculous discount. They still maintain their normal profit margins, the client thinks that they got a deal (they didn’t), and the market is distorted against fair and honest local small businesses.
The good news is that Michaels got caught. On September 19, 2011, a settlement was reached in New York state in which Michaels admitted unfair advertising practices and is being forced to pay $1,800,000 in fines and restitution. They are also ordered to correct their advertising practices in New York. I have attached a press release from the New York Attorney General office announcing this settlement. https://goo.gl/ZLCAo5
The shopper who buys based on discount percentage alone is the unwitting sucker being mislead by these unscrupulous advertising practices. You usually accept lower quality goods, made by inexperienced workers and pay about what you would have paid for a much superior product made by a caring professional craftsman. I believe that PT Barnum called our attention to this concept over 100 years ago.
Don’t be fooled by percentage discounts. Buy quality and you will get years of value and enjoyment.