Warehouse Sales Cause Uproar Among Local Shops

The Letter Below was emailed to us from Cheri Johnson, owner of Urban Boardshop. Chime in with your thoughts below. 

Shitting in your own Backyard

In the month of December, during one of the worst economic holiday seasons we (the entire US) have seen in a long time, I was actually sabotaged by my own vendors as well as the economy. I lost thousands of dollars of business because some of my vendors decided to have HUGE warehouse sales right before Christmas. I know it affected other retailers in the area as well, but I obviously can not speak for them. And in all actuality, I will not be surprised if I lose some of my accounts because I am bringing this very “sensitive” issue to light by naming names. But that is okay, as long as I address how warehouse sales are hurting and will keep hurting Southern California retailers if they continue.

You might think that it is not that big of a deal. And that it only happened in December and it only affected my December numbers, but, unfortunately, it is not just December sales that were and are being affected. Because of warehouse sales by our own suppliers, I have local kids who have informed me that they do not need to buy boards for a year because they picked up a dozen or so at Black Box (Zero, Mystery and Slave Distributors) for $20 each, or Kayo Corp (DGK and Organika Distributors) for $10-20 each.

Well that may not seem too harmful, if decks are all they were selling, especially because we, as retailers, don’t make our margins off of hardgoods anyways. Shoes and clothing are where most of us pay the bills from. But wait, hardgoods was not all they were selling. Vox Footwear had a sale in their warehouse where shoes were $10-20 a pair and Black Box (Fallen Footwear) was selling shoes for $15-20.

Okay, so decks and shoes were sold at a significant percentage below what we as retail stores even have to pay. At least we still have the clothing to make our margins on, right..OOPS…I almost forgot that all the above mentioned vendors also decided to sell a huge chunk of their clothing for these same amazing prices. Tees were 3 for $15, hoodies were $10-20, and hats sold for $7, etc.

At these prices, people were taking home bags full of product. Trust me I saw it for myself. Crap, I was practically ready to buy a ton of stuff myself because it was so exciting to see everyone walking out with so much stuff that they had to make trips back and forth to their cars. Plus, technically the stuff was sometimes up to 50% below my normal cost, so it was even a bargain for me.

I think what bothers me most, is how the warehouse sales were handle. I must admit that I did not feel so warm and fuzzy knowing that none of these vendors had the courtesy to inform their local customers (us retailers) in advance of these sales. I personally found out each time from the local shop rats, who were all excited because they were using all their Christmas money allowance from their family at some of these warehouse sales. They told me they “were stocking up big time.” I also wasn’t that excited to find out about these sales after I just ordered skate hardgoods from two of these same vendors within a week before their sales. And there were probably other warehouse sales out there that I didn’t even find out about.

The vendor’s defense will probably be that the product is at least a season old. Which would be an accurate statement from what I saw when I surveyed a couple of the sales. However, how old the product is does not matter when the prices are so low. I would have preferred the vendors at least sold the product for what they sell it to me for. I don’t even care that they would have made a good profit off of it, because at least the pricing of my inventory would not have been so devalued now and in the future.

I also understand that many of us retailers had to cancel some orders here and there because sales were just not taking off over the holiday season. And that sucks for the vendor because this industry is built on “cut to order”. But I also know that all these vendors have many other means of moving large sums of product through distributors that would not cause so much direct harm to the retail shops in their direct vicinity. There are wholesale distributors both in the U.S and internationally that buys large sums of product and distributes it in smaller amounts to vast areas. Moreover, it would have been nice if the hardgoods were offered to retailers at these amazing prices so that we could have enjoyed either better margins or offered sale prices to increase traffic flow over the sluggish holiday season.

In conclusion, if warehouse sales continue in the future, it will eventually lead to the demise of the local shops in the direct area of these distributors. I have actually heard kids say that they will just wait for the next warehouse sales because they don’t want to pay these retail prices anymore: and I can not blame the customers for wanting to take advantage of these great deals.  But most of us will not be able to stay in business if we have to compete with our own suppliers.

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