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To: driftdiver; giotto; Marty62
Stores such as Walmart, Home Depot, Costco, etc., operate on razor-thin profit margins on their merchandise. They really only make a few cents on each dollar invested. The way they make a reasonable return on their stockholders' investment is by turning that dollar over and over throughout the year. Therefore they have to get rid of any product that their customers don't want. A coat hanging on a rack does not make money and so must be replaced with a product that their customers will buy.

This is the process which enables such low prices to their customers.

If they decide that storing, processing, and shipping unsold merchandise costs more than destroying it, then that's what they do.

Again, that is the process through which their customers are able to purchase what they want at low prices.

Also, many products are bought through what is called guaranteed sales. The retailer doesn't pay for any of these products that don't sell quickly. Since storing, processing, and shipping products that the public does not want is unprofitable for the wholesalers, they often only require proof of the product's destruction. Magazines, for instance, only require the cover to be returned, and the rest is thrown away.

Previous posters have already pointed out that the costs of liability for donated products and the costs of paying for illicit returns of donated products are prohibitive.

As for discounting unsold products, large chains generally determine their sales strategies in advance of ordering products from the suppliers. As proviously stated, unsold merchandise takes up valuable floor space better used for displaying profitable merchandise.

Suggested reading:

Basic Economics at Amazon.com



133 posted on 01/10/2010 8:56:23 AM PST by Jeff Chandler (:: The government will do for health care what it did for real estate. ::)
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To: Jeff Chandler

I always carefully chose merch for my stores.
Ran a 4 turn rate. That is where the real profit is achieved. It takes a thorough knowledge of your customer base and providing the proper amount of Inventory per space allocation.


134 posted on 01/10/2010 11:10:33 AM PST by Marty62 (former Marty60)
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