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July 22, 2012 / redman59

Brick and Mortar Retail and How I Buy Things

Going through my Twitter feed I came across a post that was retweeted by Josh Brown (@ReformedBroker). The post he retweeted was from Rakesh Agrawal (@rakeshlobster) who’s post can be found below:

It starts with how Ron Johnson’s strategy for Sears ($SHLD) is being scrutinized by the intellects but it is in fact a long term strategy and not short term. The strategy can be found in this article by the NY Times. Rakesh goes on a nice rant on how some retail stores use their pricing strategy and how they use fake pricing, specifically the Gap ($GPS) and Macy’s ($M). Some excerpts are provided below in regards to Macy’s:

“I was walking through the store and saw an interesting flatware set. It was “regularly” $140. It happened to be on sale for about $105. There was a super-special discount that the cashier rung in for me. Net price was around $90. I get home and find that Amazon sells it for $70. My reaction: “Fuck you, Macy’s.” I ordered from Amazon and took the thing back to Macy’s. (My phone was dead, otherwise I would have searched Amazon while I was at Macy’s.) ”

“One of the more ridiculous practices that Macy’s (I think still) engages in is the “preview day” sales. I was at a Macy’s and wanted to buy luggage. It was something like a $400 bag for $200. At least that’s what the price tag said. But I was there on the “preview day.” To walk out with it that day, I had to pay $400. But I could pay for it, reserve it and then come back in a couple of days. My reaction: “Fuck you, Macy’s”. “

He also mentions how mobile is changing the way people are shopping and I couldn’t agree more. I use my smartphone for all bigger purchases anymore.

A recent example was during this past Christmas when I decided to upgrade from my 19″ TV/VCR/DVD combo (where the VCR/DVD didn’t work anymore) to one of those larger LED SmartTV’s. I wanted to see how they looked in person as these bigger purchases are required to be seen in person, my preference anyway. So I went to hhgregg ($HGG) and found the TV I liked. I then proceeded to take out my phone, pull up my Google Shopper app, and typed in the description of the TV. The lowest price found was at Sams Club and for about $300 less. So I showed the saleswoman and told her I can buy it here or there, I mean this is a $300 difference. She walked away to confirm the price, did confirm, and I walked out of there with a $300 savings. Now that’s winship!

I do this often with mobile apps on bigger purchases all the way down to boots. Its simple to do and it works. I believe that if these brick and mortar corporations want to survive they have to adapt. Hell us traders have to adapt to current environments, why shouldn’t they. The way I see it, its a win-win. I get it now at a cheaper price and they get my business.

 

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