Run Run Away » nike running shoes » Marketing of Running Shoes
Marketing of Running Shoes
Question:
Dan Melinger writes:
| My take is that the model changes are beneficial to retailers. There is a high | markup on running shoes. Price-sensitive consumers can be sold discounted | shoes because "they’re last year’s model" while less price-sensitive consumers | will be sold the new models on display with the high profit margin. I’m not sure I completely agree. I’ll quibble over the term "high" markup. If the dealer got that money on every pair he sells then I would agree with you. First off, unless things have changed, the dealer buys "blocks" of shoes. They come with some pre-determined set of sizes. They don’t get the opportunity to order x pairs of men’s 8 and y pairs of 12s. My point being, they get sizes that don’t sell. If they individulal order they pay through the nose. In effect the dealer has to make money on the ones he sells to conpensate for those that he eats(can’t sell even at a fire-sale), or sells at a discounted price. What makes this even shittier for the small dealer, he gets his shoes last. The big boys get theirs first. Much like the small movie house owner that can’t get the first run movie and has to pick the bones of what’s left, weeks later. I guess my point is, there may be more to the eye to the independent dealer. He still has to pay his help, rent, electric etc. As Gerald said, how many independent dealers look like they are rolling in money? To me, the gem business is a HIGH mark-up amd they don’t have obnoxious seasons. :) — Doug Freese All opinions are mine. IBM Tele: 8-293-8098
Response:
Petri Helminen writes: | I bought a new pair of Reebok Aztrek today and they feel perfect so | far… | This is what happens when | "As a leading manufacturer of athletic footwear, ASICS has an | obligation to its retailers and consumers to continuously produce | innovative, technical products.[...]
just thought i’d point out something i haven’t seen from other manufacturers, which goes perhaps a tiny amount of the way towards getting them of the hook (i agree that shoe designs change too often). asics’s faq at http://206.96.42.12/faq/faq.htm includes a section which describes the `lineage’ of each shoe, so that you can see what they feel is the `same’ shoe with the new packaging. (it’s point 4 in the faq). they claim to have re-introduced at least one model, only to find it didn’t sell anyway…. andrew — work phone/fax: 0131 668 8356, office: 0131 668 8357 institute for astronomy, royal observatory, blackford hill, edinburgh http://www.roe.ac.uk/ajcwww
Response:
Dan Melinger writes: | My take is that the model changes are beneficial to retailers. There is a high | markup on running shoes. Price-sensitive consumers can be sold discounted | shoes because "they’re last year’s model" while less price-sensitive consumers | will be sold the new models on display with the high profit margin. I’m not sure I completely agree. I’ll quibble over the term "high" markup. If the dealer got that money on every pair he sells then I would agree with you. First off, unless things have changed, the dealer buys "blocks" of shoes. They come with some pre-determined set of sizes. They don’t get the opportunity to order x pairs of men’s 8 and y pairs of 12s. My point being, they get sizes that don’t sell. If they individulal order they pay through the nose. In effect the dealer has to make money on
Stores order shoes in several ways: 1) Futures: these are usually the "hot shoes" like Nike Air Jordans that a retailer can order as many of as his credit with the company will allow. The retailer can order whatever sizes he/she wishes. Often these cannot be "filled in" after the shoe is out; this keeps demand and price high since they will be limited in quantity. 2) Futures #2: These are shoes that will be in line and available for fill in after they are out. 3) In line shoes: These can be filled in at no additional charge. For instance, the Nike Pegasus may cost a dealer $45(this is made up, I do not remember the wholesale cost) no matter when it is ordered. Of course there are shipping fees that are assessed for each order and ordering a pair at a time does get cumbersome, but a good store will do it to satisfy the need of the customer. 4) Close outs: These are shoes that are being taken out of the line. The color scheme may have changed but nothing else or the shoes may be replaced completely. These are available cheap but in limited sizes (usually not 9-12 in men!).
Response:
: : Dan Melinger writes: : | My take is that the model changes are beneficial to retailers. There is a high : | markup on running shoes. Price-sensitive consumers can be sold discounted : | shoes because "they’re last year’s model" while less price-sensitive consumers : | will be sold the new models on display with the high profit margin. : : I’m not sure I completely agree. I’ll quibble over the term "high" markup. : If the dealer got that money on every pair he sells then I would agree with : you…. Recently, I’ve found a great variation in running shoe prices. On encouragement from my sister-in-law, I started shopping around for animal-friendly running shoes (non-leather). Well, I had a real hard time finding such critters, but was delighted to stumble across a Pay-Less shoes place in a discount mall that sold a nice a pair for $17.00. I have been running with them now for several months and have no problems at all to report. Why spend two to three times as much for a comparable shoe? Happy Running, Arthur
Response:
(snip) So, could someone please explain the basic economics of how wonderful frequent line changes are for the retailer and the consumer? You can bet your bippy that the shoe companies don’t take back and refund the older models. Thoughts? Doug Freese All opinions are mine. IBM Tele: 8-293-8098
Hi Doug For the average retailer the continuous parade of new shoes or colors is a pain in the neck. I always felt the continuous changes was started by Nike to create a fashion environment. Once good ole #1 started that, all other manufacturers felt they had to keep up. So Asics followed suit, then Reebok, then all others to the extent their resources allowed, followed. In another reply to your post Dan said there is a large markup on shoes. I guess it all depends on what the definition of cost is. Relatively speaking IBM charges over $100/hour for technical assistance, my employer(a software developer of warehousing systems) charges their clients more than that for my consulting services. On weekends I may spend an hour or more helping one customer select a pair of shoes. Or they may walk out without selecting any shoes(maybe we only had the older color in that size) and the newer color is what they wanted. I hope this helps everyone realize that in most businesses no one is making a killing. Look around, how many running specialty shops are still in existence. My store exists because my wife operates it and I went back to a real job(mirth). The manufacturers treated us so poorly (we also do mail order) that it did not pay for me to work for myself. If we did not do mail order, we would have died long ago. This constant model changing favors FootLockers and the big chains that tend to buy for periods. They do not want to place fillin orders, just bring out a new color or change the style and thay make another period buy. Have a great day, Jerry http://www.telarun.com My opinions are not necessarily the opinions of my wife. But at least now I can have some fun.
Response:
Gerald Goldschein replies: | For the average retailer the continuous parade of new shoes or colors is | a pain in the neck. I always felt the continuous changes was started by | Nike to create a fashion environment. Once good ole #1 started that, all | other manufacturers felt they had to keep up. So Asics followed suit, | then Reebok, then all others to the extent their resources allowed, | followed. Marketing at it’s finest. 
| In another reply to your post Dan said there is a large markup on shoes. | I guess it all depends on what the definition of cost is. Relatively | speaking IBM charges over $100/hour for technical assistance, my What? $100 an hour? I only get get $90, I guess they have a right to make a few bucks. 
| On weekends I may | spend an hour or more helping one customer select a pair of shoes. Or | they may walk out without selecting any shoes(maybe we only had the older | color in that size) and the newer color is what they wanted. I hope this | helps everyone realize that in most businesses no one is making a | killing. Look around, how many running specialty shops are still in | existence. I also remember that the larger dealers, the Foot Lockers et al, buy in larger quantities, get a better price AND get them delivered a hell of lot sooner then the small independent. Those that get the earliest – sell the most. | This constant model changing favors FootLockers and the big chains that | tend to buy for periods. They do not want to place fillin orders, just | bring out a new color or change the style and thay make another period | buy. Thanks. I hope your experiences will give folks a different perspsctive on the independent dealer and the crap they have to go through to make a few dollars. As for those folks that go into the small store, try on many shoes, fake a headache or some such excuse, and then order from mail order, well, it’s theft of services. — Doug Freese All opinions are mine. IBM Tele: 8-293-8098
Response:
Hi Doug, My take is that the model changes are beneficial to retailers. There is a high markup on running shoes. Price-sensitive consumers can be sold discounted shoes because "they’re last year’s model" while less price-sensitive consumers will be sold the new models on display with the high profit margin. When I bought my bicycle years ago it was discounted because "it was last year’s model". The dealer knew I wouldn’t care, but it gave him an excuse to offer a sale price. BTW, this is also done with cars, skis, etc. Granted, technology changes are introduced but they’re usually minor from year to year. – Dan — These pearls of wisdom are my own views and do not reflect on the opinions of any organization or sane human being.
Response:
Petri Helminen writes:
| I bought a new pair of Reebok Aztrek today and they feel perfect so | far… | This is what happens when | "As a leading manufacturer of athletic footwear, ASICS has an | obligation to its retailers and consumers to continuously produce | innovative, technical products. In addition, ASICS must strive to meet | the changing needs of athletes and stay competitive in a variable | marketplace. For these reasons, ASICS development team works to update | and improve our products each season" I think we would all agree that shoe geeks spend a great deal of time making changes; changes that in many cases are transparent color modifications and at times major revisions. What I’d like to understand from anyone that either owns a store or is personally close to a store owner, is how does frequent line changes help the retailers. I haven’t keep close accounts but it seems like the shoe companies try to change the line twice a year. I see a vicious cycle for the retailer. As soon as the new models are announced the previous model is no longer desired and must be hawked in firesale mode to make room for next line. This must make it very difficult for the average retailer. I think a valid comparision would be if cars came out Jan and June with the adds for the June model starting in April. It sounds like the dealer spends most of his time changing the line. Not just changing but being very careful not to over-order and have a large inventory when the new models come out. Physical space is also a problem. From the consumer view, if your timing is not right, you get caught between models and they don’t have your size etc. This is obvious from the fact that we shop at the discounters when the local dealer runs short. How aften have to stopped in to buy the second pair of that model you love, to be told they are out and the model is being "updated" and come back in some weeks. So, could someone please explain the basic economics of how wonderful frequent line changes are for the retailer and the consumer? You can bet your bippy that the shoe companies don’t take back and refund the older models. Thoughts? — Doug Freese All opinions are mine. IBM Tele: 8-293-8098