Something Weird I Noticed...

magenta321 · #1 11-10-2007, 10:35 AM

I wonder how off-price retailers set their prices. I'm talking about stores like Marshall's or TJ Maxx (those are the ones I have locally, so they're all I know).

In college I was shopping in my college city at such stores. It was a poor city, and the towns around it were not very well-off either. At the time I was into brands like Tommy Hilfger and Polo. The manufacturer's price tag was usually on it. Let's say the item "should" have cost $80. There was a tag from the store that would say "compare at" and have another number. It was always lower than the manufacturer's tag. So let's say it would say $60. Then the price from the discounter would be half that price. So the price I would pay would be $30. Score!

Then I moved back home. I was shopping in another city. The city itself is poor, but, since it was Fairfield County, every single surrounding town is "rich." The items had the same set of tags -- a manufacturer's tag, and for the example, we'll say it was $80 again. The "compare at" tag would have the manufacturer's price every time. So, compare at is also $80. The price you pay is 50% off, so it's $40. Hm, not quite the deal it was before.

Now I'm in a town that is just weird. It's totally in transition. It was a rural farming town, but now it's booming. I wouldn't call it a "rich" town, but it's not a poor town. It's outside of Fairfield County's insanity, however. The prices are so much better. They're more like the city when I went to college. I think they might even be better, but it's hard for me to say that with certainty. (The brands are more upscale than in the city where I went to college, and less picked through than the city where I used to shop).

Do you think that these discounters do "zone" pricing like the gas companies?

**mjfrombuffalo**[$] · #2 11-10-2007, 10:44 AM

Prices are B.S. and never really attached to anything meaningful, like the actual cost of material and labor. It used to be buying upscale and paying upscale prices meant higher quality, but now, not so much.

That said, I wouldn't be surprised if discounters did like the gas stations and adjusted their prices based on the demographics of the neighborhood. If you have more money, you have the wherewithal to drive around looking for better prices, so they have to compete with prices in a larger radius (including outlet malls) instead of just the immediate vicinity.

**pippadaisy**[$] · #3 11-10-2007, 06:49 PM

Most retail prices based on where they are located. I have actually shopped at two Macy*s IN MY OWN CITY and seen things priced differently. Grocery stores also do the same thing. "Market will bear" and all that.

Also, TJ Maxx and Marshalls are the same company. They buy lots from other retailers and manufacturers at close-out and then parse them out to their stores the following year.

**amykhar** · #4 11-10-2007, 07:58 PM

The wal-marts in our town have different prices. The ones in the poorer sections that have bus service are dirtier and have HIGHER prices. The store across town that doesn't have regular bus service is much cleaner and lower prices.

A Wal-Mart employee told me that the prices differ because of the stores that are near them - the competitors. But, the funny thing is, the cheaper Wal-Mart doesn't really have much near it while the other two have targets, k-marts, and more nearby.

Grocery stores do the same thing. In neighborhoods where many people don't have cars or a way to easily go elsewhere, the prices are higher. In the burbs where people can vote for a store by going somewhere else, the prices are lower, the service is better and the stores are cleaner.

Amy

**theworm**[$] · #5 11-10-2007, 08:45 PM

the stores in the "poorer" parts of town also have higher shrinkage, so they can be covering that.

Places like Marhsalls and TJMaxx buy closeouts at greatly discounted prices, so their actual costs may vary a lot in each purchase and have little to nothing to do with the MSRP listed.

*emeleel* · #6 11-11-2007, 12:18 AM

Stores in poorer parts of towns are probably also more likely to have a higher number of customers on monetary assistance - so they can charge whatever they want and many people won't care because it's the government's dime, not theirs.

magenta321 · #7 11-11-2007, 08:46 AM

Doesn't seem so cut and dry, however.

I just looked up the census data. The city where I went to college has a 22.3% poverty rate. I cannot believe it's that high. Anyway, those prices were low.

The next town I mentioned, where the prices are half the MSRP across the board, and therefore "expensive" compared to others, has a 7.6% poverty rate.

My town, which is priced low, like the city where I went to college, has a 3.3% poverty rate.

I don't know why I'm analyzing this, becuase, just like the gas prices, it doesn't make any sense to me.

**mjfrombuffalo**[$] · #8 11-11-2007, 09:08 AM

Quote:

emeleel said

Stores in poorer parts of towns are probably also more likely to have a higher number of customers on monetary assistance - so they can charge whatever they want and many people won't care because it's the government's dime, not theirs.

Um, the monetary assistance one gets from the government is not a lot of money, and has to cover rent, transportation, and other expenses, not just clothing and food. Also, Food Stamps don't cover toilet paper and shampoo, which would have to come out of the TANF money (if a person gets TANF too - you can be poor enough for Food Stamps but not TANF).

Each state has different maximum benefit amounts, but they're all pretty low. In Virginia in 2007, a mother with two kids (regardless if they're infants or teens or anything in between) can get a maximum $389 TANF check monthly. If she gets TANF, she probably gets a hundred or so in Food Stamps monthly. It does not mean she's eligible for or getting rent subsidies, child care subsidies, or any other benefits.

In my experience, people getting TANF think of it as their money, and not always in an attractive way (e.g., "Where's my check?!"). But they don't think of it as the government's money, and generally they don't stop doing price comparisons because they didn't work for the money - they want to max out "their" money. Yes, the stereotypical Welfare Queen stories exist because some people do stupid things with the money. Yes, many of TANF recipients are not the most planful people in the world and will get flat-screen TVs from Rent-A-Center and end up paying twice as much for the TV as they would have if they'd saved up to buy one. After all, some people end up on TANF because they aren't the most future-focused people to begin with. Generally most TANF recipients are in a temporary bind and get off TANF within 18 months, and while they're on TANF they look for ways to make the few TANF dollars they get stretch as far as they can. But if you ain't got money for a taxi to get back from the Costco* over in the next town, you gotta pay whatever the local ABC store is charging you.

(*Now that I think of it, the amount they get in TANF is low enough that perhaps people can't afford to take advantage of bulk sales from warehouse stores in the first place - it takes money to save money on large bulk purchases)

**Helen_B**[$] · #9 11-16-2007, 01:30 AM

What you said, MJ. It takes money to save money. Low income families can't travel far, and can't invest much on the specials if there ARE any, because there's just not enough money to do that. Even storage is a problem: if you can afford the big tray of chicken or hamburger, it will probably need to be repackaged in smaller amounts and frozen for later, requiring freezer bags, and freezer space. If you buy the great big bag of rolled oats, it may need to go into a bug and/or mouse proof container, and that's the only cereal you may be eating for a while.