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Why quilt stores raise prices (even on existing inventory)

Why quilt stores raise prices (even on existing inventory)

Old 08-10-2011, 08:53 AM
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Andi's post on "Dispelling myths about Quilts of Valor" inspired me. She's right- when a topic reaches multiple pages many people don't read through everything before posting (totally understandable!) and therefore may miss valuable information.

Fabric prices are on the rise and I think all of us understand why, at least the basics. Drought, failed cotton crops, etc. all contribute to the skyrocketing price of fabric. The demand is there but the supply is not, and when that happens prices go up. Believe me, it is not in any manufacturer or retailer's plans to raise prices so high that no one will buy! They are literally forced into this position at this time.

I found a few good links explaining the rise in prices:

http://quiltedblessings.wordpress.co...fabric-prices/

http://americanquiltretailer.com/cotton/

http://whipstitchfabrics.com/blog/wh...ina-this-year/

So what? you say. That doesn't mean my LQS should raise prices on existing stock. It didn't cost that much when they bought it! They're just price gouging!

They're not.

Small retailers don't have the purchasing power of bigger retailers and are often on much stricter payment plans. Many now have to pay up-front for their inventory instead of 30 or 60 days. Add in rising fuel, energy costs, labor costs, import duties, and taxes. If they sell those old bolts at their original prices, they won't be able to afford new inventory as well as their overhead costs and will go out of business.

As with the manufacturers, it is not a quilt shop owner's desire to raise prices so high that customers won't buy! They don't want to go out of business, but they are literally forced into this position.

As polyman mentioned in the other thread: "Notice in these comments that all the stores that gave the good prices are no longer in business."

Hopefully this helps with understanding why a shop will raise prices on existing inventory as well as new.
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Old 08-10-2011, 08:56 AM
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So - in order to buy new inventory - the old/existing inventory has to be priced high enough in order to pay for the cost of the new inventory?
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Old 08-10-2011, 09:06 AM
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Yes- and my understanding is that a lot of that has to do with the credit squeeze. Banks aren't giving lines of credit like they used to and are reducing or eliminating existing lines of credit as well, so a store has to sell in order to buy, instead of buying on their line of credit. A lot also has to do with the huge sudden spike in fabric prices- it can't simply be absorbed anymore.


(I should note that I am not currently in business, but that this is my understanding based on the facts I have at hand and my knowledge of economics/small businesses. If I have erred, which is entirely possible, I don't mind at all having it pointed out! That's how we learn!) :)
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Old 08-10-2011, 09:08 AM
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Sorry to say. . . . . but it makes sense. :roll:
Can you tell me why they have to raise gasoline cost on a daily basis? That gas is already processed, and every company reaps millions in revenue.
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Old 08-10-2011, 09:09 AM
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Originally Posted by bearisgray
So - in order to buy new inventory - the old/existing inventory has to be priced high enough in order to pay for the cost of the new inventory?
:thumbup: :thumbup:
Yes. Whenever you are selling inventory that you plan on restocking (either the specific item or the general class it belongs to), you need to price it at an amount that will allow you to replace the inventory.

Think about rising quilt store costs like your insurance. If you needed to use your homeowner's insurance because your 40 year-old house was badly damaged in a storm, would you want the insurance to cover the amount you paid for it at time of purchase (40 years ago) or the amount that it now costs to repair the damage?
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Old 08-10-2011, 09:09 AM
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Yes.

For example: I buy a something for $10 and sell it for $20. Call in an order to replace same thing only to find out today's wholesale price is now $25!
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Old 08-10-2011, 09:13 AM
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Originally Posted by bearisgray
So - in order to buy new inventory - the old/existing inventory has to be priced high enough in order to pay for the cost of the new inventory?
<snort>
Sorry, gaevren, that is not a valid argument.
In other circumstances, it might even be called price gouging.
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Old 08-10-2011, 09:15 AM
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Also I totally understand being on a budget and the sticker shock on fabric prices. I love a coupon and/or a deal as much as the next person and try to be thrifty whenever I can!

I just don't want LQSs to be blamed for something that they have little to no control over :) I've heard people say that they'll never set foot in a particular store again because they're "price gouging" when really they're just struggling to stay afloat.

Support your LQS! :thumbup:
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Old 08-10-2011, 09:18 AM
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Originally Posted by MTS
Originally Posted by bearisgray
So - in order to buy new inventory - the old/existing inventory has to be priced high enough in order to pay for the cost of the new inventory?
<snort>
Sorry, gaevren, that not a valid argument.
In other circumstances, it might even be called price gouging.
Actually that's not true. Even on necessary commodities (water, food, etc) if a retailer can show that the price increase is solely due to rising costs on their end, it's not price gouging even if the price has spiked.
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Old 08-10-2011, 09:20 AM
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Originally Posted by MTS
Originally Posted by bearisgray
So - in order to buy new inventory - the old/existing inventory has to be priced high enough in order to pay for the cost of the new inventory?
<snort>
Sorry, gaevren, that not a valid argument.
In other circumstances, it might even be called price gouging.
Not:

Noun 1. price gouging - pricing above the market price when no alternative retailer is available ( http://www.thefreedictionary.com/price+gouging )

Price Gouging
A monopolistic pricing technique in which the seller takes advantage of the lack of competition by charging unusually high prices relative to a product's cost. ( http://www.marketing-dictionary.com/p.php )

"Price gouging is a frequently pejorative reference to a seller's asking price that is much higher than what is seen as 'fair' under the circumstances. In precise, legal usage, it is the name of a felony that applies in some of the United States only during civil emergencies. In less precise usage, it can refer either to prices obtained by practices inconsistent with a competitive free market, or to windfall profits. In colloquial usage, it means simply that the speaker thinks the price is too high. Non-pejorative uses are generally in reaction to what the writer believes is an unjustified restraint on the market." and "As a criminal offense, Florida's law is reasonably typical. Price gouging may be charged when a supplier of essential goods or services sharply raises the prices asked in anticipation of or during a civil emergency, or when it cancels or dishonors contracts in order to take advantage of an increase in prices related to such an emergency. " ( http://www.websters-online-dictionar...&sa=Search#906 ) (emphasis is mine)

Nowhere in these easily-found-by-google definitions does it state that increasing prices to cover the cost of replacing inventory in NORMAL market condition constitutes price gouging.


ETA:

To Determine Price Gouging:
Are there alternate suppliers? Yes, quality cotton fabrics can be hand from many stores.

Is there a monopoly by the seller? No, the seller does not control the other stores' business (and pricing) practices.

Is this occurring during a Civil Emergency (some type of disaster like Hurricane Ike a few years ago)? No

Is this product an essential good? No, cotton fabric is not essential to life (food, shelter, utilities, medicine are)

Is a contract being cancelled or altered because of a Civil Emergency? No.

Can the price increase be explained by increased business expenses (wholesale cost, overhead, etc.) occurred in the NORMAL operation of the business? YES!

Since none of the answers indicate a situation where price gouging occurs, then this is a normal price increase that you have to put up with if you want the business to stay afloat.
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