My local tack shop just advertised a spring sale next weekend and will be offering some pretty great deals on winter things. All winter clothes, boots and blankets are being listed at 60% off. I’m planning to go and pick up some stuff for next year, but it made me wonder what the markup is like. Are they losing money by discounting things so much?
Depends on their relationship with the distributor of the product.
Standard retail markup has the retailer purchasing the item from the distributor for 40-60% of full retail, depending.
Then, if the manufacturer or distributor orders you to discount the product, they typically will rebate you some of the value of that discount. So the retailer usually comes up positive even selling things at 50% off.
Many distributors will have you send back unsold product which they liquidate and meanwhile you are refunded.
I don’t work with tack suppliers, but that is how it has worked for other product-based retail industries I have been in.
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I worked as a sales rep in the tack industry for many years. A standard retail markup, called a keystone, is when the retailer doubles their cost. In this industry tack shops can get this markup on certain items, such as clothing, gifts, and some tack. Saddle markups are generally smaller, and markup on “lotions and potions”(shampoo, fly spray, etc) tend to be much smaller. But retailers will sometime sell older merchandise for minimal profit or at a loss for several reasons. Product may be out of style or shopworn. The retailer may want to avoid paying year end taxes on too much inventory. Or they may just want to free up some money to buy something else. Markups run tighter in the tack industry than in many others, but you can’t hang on to merchandise indefinitely as it’s too expensive to do so.
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Sometimes these things are a loss leader, too - the store may lose some money on the sale items, but the sale itself gets people into the store. And while they are there, they are likely to pick up some other full price things that they need or want.
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What all the others have said :yes:
As long as you are getting namebrand, quality products greatly discounted, why worry about the store’s profit margin?
Sometimes a store needs the money tied up in past seasons’ merchandise to purchase new merchandise, The store might lose a little profit on the sale merch, but it is better than borrowing money to provide cash flow. It’s called ‘Walking the Dogs’ here.
Margin in tack is pretty slim, with the exception of blankets for me. I’m a buyer for a chain company of farm stores. With our buying power, we’re able to negotiate great discounts on blankets, thus making more money. Tack is harder as it it typically items you “want” versus “need” so the turns aren’t there. Western tack is a bit easier to buy for as they are more “fashion” driven than the English market. Blankets are easy as they cross disciplines and in our rainy area are typically more of a “need”. Clothing and gifty type items usually have 50% margin in them as someone said earlier. For the animal health type stuff- supplements, shampoos, treats,- they can run in the 35-50% margin. No money in feed either.
