Retail margins

wrote

Standard trade discount on most model railway items (excluding sets) is

33.33% - so something with an RRP of £100.00 would cost me £66.67. Start knocking discount off that RRP to compete with the box shifters and you'll soon see how little profit there is to be made from model railways.

There are some relatively small discounts available for quick cash settlement - usually meaning payment has to be made within 7 or 10 days of the invoice date.

John.

wrote

The standard trade discount on model railway equipment (excluding trains sets) is generally 33.33% off the RRP, or the trade price on an item retailing at the full RRP of GBP100.00 is GBP66.67.

Discount the RRP to compete with the box shifters and you'll see that the margins on model railway items is hardly anything to get excited about.

Train sets tend to carry a much lower margin.

Some manufacturers offer small additional discounts for prompt payment in full usually within 7-10 days of the invoice date.

John.

Thank you for confirming my fears.

MBQ

That surprises me. Here in the US, most retail markups are greater tha= n that.=20 While there are some with a 33% or less markup, most items are around 5=

0% with a few, mostly house brands, even more than that.

--=20 It's turtles, all the way down

That surprises me. Here in the US, most retail markups are greater than that. While there are some with a 33% or less markup, most items are around 50% with a few, mostly house brands, even more than that.

I believe in the days of Hornby-Dublo it was a 100% markup or 50% margin? Somebody correct me if I'm wrong. Also retail price maintenance ensured that no item was sold (openly) for less than that amount.

(kim)

You're mixing mark-up and discount. A discount of 33.3% translates into a markup of 50%. That is, you buy the stock for 2/3rd of its retail price. The difference of 1/3rd the retail price is 50% of the discounted price.

Over here, the standard discount is 40%, which translates into a markup of 66.7%. By the time shipping and non-refundable taxes etc are added, and prompt payment discounts are subtracted, that discount is somewhere between 30 and 35%.

BTW, the standard discount for clothing is 50% or more.

HTH

"kim" wrote

I can't pass comments on the trade discount in those far off days, but I can say that there was no need for retailers to discount as there was often a waiting list for stock to arrive from the factory - at least in the first

10-12 years of the post-war period.

My Dad bought me my first train set for Christmas 1954 and he had to order it at Easter of the same year. He related tales of difficulties in buying further stock until the late 50s when the shortages all but disappeared.

John.

"Wolf" wrote

A friend in the antiques trade tells me he aims to buy at between 30 & 40% of his eventual selling price - less if the item needs work. I'm told that's fairly standard.

John.

Normal Discounts work like this:

Maker sells at 10% to 25% of final expected price to distributors, they sell at 40% to Wholesalers or 60% to retailers. Wholesalers sell at 60-70% to retailers.

You can then juggles these figures for bulk discounts etc.

Go into your bookshop, look around, a book selling for £10 will cost the bookshop £6, a book selling for £10 on there 342 offer table will have cost them £4.20.

Different trades will have slightly different numbers due to volume and transport costs etc but this is a rough set of figures to work on.

Its also where many hobby business's in the Railway field struggle, if you sell direct you can make a nice living, you go through the retail supply chain, you suddenly realise your prices are much too low.

Since the abolition of resale price maintenance there is no longer any distinction between retailers and wholesalers. That is why there are no longer any independent record shops or hi-fi showrooms and the same thing will happen to model shops. People will buy direct from the wholesaler then complain they are not getting the same level of service as they did previously from a retailer.

(kim)

It depends, there are still trades where you have wholesalers, the book trade is one, and the Electrical trade, mostly as goods are sourced from so many places its easier for a smaller unit to buy from them than the sheer number of manufacturer and distributor deals you would nneed to service. The difference is now the public will get a wholesaler to sell to them, where in the past that was unusual.

In message , kim writes

Please let us know, then, who owns

Farringdon Records Music Discount Centre -

(the UK's leading independent Classical Music retailer) Bath Compact Discs - to name but a few.

what about Richer Sounds, then?

or Riverside Hi-fi, Richmond, Surrey -

Hi-fi - Audio - C Snelling -

Ah, so. That makes more sense. Just another case of two countries separated by a common language :-). Thanks.

I'm in the same business as they are, specialist titles for customers with unusual needs. It is not typical of the music market as a whole.

The fact is that every branch of MVC, Music Box, Silver Screen, etc has gone out of business. The remaining record depts in chainstores are cross subsidised with the profits from other branches of the same business. Supermarket now account for some 40% of all record and video sales while chart hits are now downloaded from the internet rather than sold over the counter.

No swearing please :o) "Richer Sounds" is what's known in the trade as a "bucket shop". Pile it high, sell it cheap. It is a discount warehouse and not a proper showroom like Cleartone and others who went bust many years ago. (Asset-stripped by crooked accountants).

I can't comment on these as I have little personal knowledge* of them but my personal experience (as a one time wholesale supplier) is that specialist showrooms up and down the country have been replaced by discount bucket shops offering little if any technical advice. My friend and business partner Paul Thompson quit the retail business some years ago in protest. Likewise Mark Tallis at Superfi. I do know retailers such as AV Land who still at least have some knowledge of what they are selling but they are few and far between.

(kim)

*It is possible I have a previous business connection with the owner of the shop in Richmond.

In message , kim writes

No, you're right. They sell "Classical Music", i.e. serious art-music (not to be confused with the stuff the pop-music business calls "classical"). AIUI, it is the only part of the music business that makes a profit, which is probably why these places are still in business.

That would be like Hattons, then.

In that case how can you say that there are no hi-fi showrooms left?

That makes sense, since "needs work" in this context means "needs more than a clean up" and "clean up" means more than "wipe it with a rag." IOW, there are considerable costs besides the usual ones in this trade. Also, if the item doesn't move, he needs enough margin to be able to sell at decent-seeming discount and still make a few dollars. He also needs room to offer a discount to buyers of large numbers of items. Besides, to judge from the antique shops I occasionally stumble into, they have a low turnover. At any given time, only a few kinds of things are fashionable enough to move quickly.

What passes for a "showroom" today is a lot different from what it was ten years ago. Many former salesmen will tell you there are no real showrooms left.

(kim)

In message , kim writes

That sounds like sour grapes from people with an axe to grind. Don't believe everything about an industry from people who used to work in that industry.