Retail Prices and Furniture Dealer Discounts

Recently the NY Times rain a couple of articles about retail prices and dealer discounts on new, modern, vintage and antique furniture. One is called How Low Will they Go and the other is Adventures in Haggling, The Retailers View. The articles state how many shops and dealers are now more willing to negotiate prices, including giving dealer discounts to consumers and further discounting sales prices. Other dealers take a harder line and avoid discounts and negotiating. It is the state of the market, and as a dealer I understand the importance of inventory turnover and cash flow. If a dealer does not understand those basic financial concepts, then they are in trouble. It is a fine balance retailers have to abide by, with accepting a smaller profit margin and turning inventory, or holding onto the merchandise.

Relating these realities to the appraisal business, be careful when using asking prices as comparable property and make sure you take into account the potential for dealer discounts. Given the economic times at the moment, the discounts are probably greater than just a year ago.

According to the NY Times article on the retailers view, Graham Head, the vice chairman of ABC Carpet, who described the current state of the rug business as “an absolute disaster, a train wreck.”

“I’m very keen to clear out our stock,” Mr. Head said. “When we emerge at the other side of this mess, nobody wants last year’s fashion.”

Customers should always ask for the best possible price, he advised. “The price of each rug is calculated individually, based on how many are in stock, how long has it been in the store and how much we paid for it,” he said. “Then we decide what it will take to wrap up a deal.”

The article on How Low Will They Go article states At Intérieurs, a shop in TriBeCa that sells French contemporary furnishings and other pieces, furniture from a Belgian company, Luz, was being sold at repo prices. The slightly damaged floor model of a $3,300 desk and file cabinet set was marked down to $500 — a $2,800 reduction that I greedily tried to haggle even lower, with no success.

The store’s owner, Francine Gardner, said she’s been resistant to shoppers trying to haggle, but in response to slowing business she has devoted more time to customer service; she recently spent four hours helping a client decorate her apartment, free of charge.

The severe markdowns do seem to suggest serious anxiety on the part of retailers, but it can be disconcerting for shoppers, too. Just how much margin exists in the retail world? Have we all drastically overpaid for years?

I was beginning to regret having paid full price on everything I’d bought in years past, including furnishings — a feeling that intensified when I went rug shopping at ABC Carpet & Home, near Union Square. The store’s basement had thousands of discounted rugs, stacked like Gap sweaters, with deeply slashed prices. “$5,499, now $1,199” was a recurring numerical motif.

Click HERE and HERE to read the NY Times articles.