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"Rich Clark" <> wrote in message
news:KZadnX1HVqcDhc-...
>
> "Mark Jones" <> wrote in message
> news:lmn4b.3135$ nk.net...
> > "Rich Clark" <> wrote in message
> > newssadnRzfxfuIYcyiU-...
> > > >, and at the very least it's unethical.
> > >
> > > Why is it unethical? In what way is any business ethically obligated
to
> > > protect it competitors from legal competition? If customers only care
> > about
> > > price, then the retailer that is consisently cheaper will win.
> > This is only true if the business is profitable. If they are
> > selling too low, they are either losing money or not making
> > enough to maintain the business operation.
>
> Are you suggesting that Target and Walmart etc aren't profitable?
I was referring to your comment about "consistently cheaper".

Sharply reduced prices on individual items does not mean that
a business is consistently cheaper. I have seen businesses go
under by reducing prices too far on too many items. You can
selectively reduce prices to get people in the door, but you
have to watch out about making the price cuts too widespread.

"Mark Jones" <> wrote in message
news:rIp4b.3302$ ink.net...

> > Are you suggesting that Target and Walmart etc aren't profitable?
> I was referring to your comment about "consistently cheaper".
>
> Sharply reduced prices on individual items does not mean that
> a business is consistently cheaper. I have seen businesses go
> under by reducing prices too far on too many items. You can
> selectively reduce prices to get people in the door, but you
> have to watch out about making the price cuts too widespread.
>
Of course. But Circuit City isn't committing corporate suicide by making
"Two Towers" a loss leader (if indeed they are; I rather doubt that a $15.99
price is a loss for them).

Walmart succeeds by volume selling, and carefully matching their pricing to
beat local competition. The fact that, say, Target can compete with Walmart
even though Walmart's overall prices are lower indicates that consumers find
other things to value besides price.

My overarching point here is only that the "big box" model of retailing is
part of the evolution of commerce. It has its benefits, and it has its
drawbacks, just as earlier models have had. e-commerce is another aspect of
that evolution. I don't hear anyone suggesting that Amazon.com or ebay are
unethical or otherwise evil because they're displacing the b&m specialty
stores that used to cater to the collector's market. Those specialty
retailers who have adapted are surviving, even prospering.

The OP was complaining about the use of DVD's and CD's as loss leaders,
suggesting that the tactic is unethical, if not illegal. But it's not; it's
as old as advertising, and it would be hard to find an ad flyer in any
Sunday paper in the country that doesn't include some loss leaders (the
CompUSA "free after rebate" page in their current flyer is a good example).
And as for the contention that it's unethical because it's
"anti-competitive," I respond that it just the opposite. It's a time-honored
competitive tactic.

RichC

"Rich Clark" <> wrote in message
news:d7mdneEmsM_Uqc-...
>
> "Mark Jones" <> wrote in message
> news:rIp4b.3302$ ink.net...

> that evolution. I don't hear anyone suggesting that Amazon.com or ebay are
> unethical or otherwise evil because they're displacing the b&m specialty

Actually, I dealt with a mom-pop bookseller who hated amazon.com and didn't
like it that a web site of mine had affiliate links for the same books. I
spoke to amazon about the situation and they thought that was strange
because small booksellers were becoming affiliates, setting up PC's to sell
books they didn't have as a service to customers. So the attitude did exist.

Steve

> The OP was complaining about the use of DVD's and CD's as loss leaders,
> suggesting that the tactic is unethical, if not illegal. But it's not;
it's
> as old as advertising, and it would be hard to find an ad flyer in any
> Sunday paper in the country that doesn't include some loss leaders (the
> CompUSA "free after rebate" page in their current flyer is a good
example).
> And as for the contention that it's unethical because it's
> "anti-competitive," I respond that it just the opposite. It's a
time-honored
> competitive tactic.
>
> RichC

After thinking about it, you're right, it's old as the hills, more pervasive
than I gave it credit for, and ultimately ethical. But you have to recognize
the impact of this behavior. I have no love for Wherehouse Music (never
spent a dime there), but this loss-leading tactic is THE reason most small
business owners can't run a successful music & video store these days,
unless they plan on specializing in rare titles. CC sold the Two Towers for
$14.99 this week, at a significant loss. They intend to make their money on
sales of larger items and accessories. Sooner or later (they are already
doing it on the internet) these megastores, too, will be undercut on the
price of their bread-and-butter products in the same way. That's fun to see


Dumping laws do exist, but from what I know they may apply to more predatory
situations, where company A intends to monopolize the market by undercutting
company B until company B goes belly up. That's all I really know about it.

"Jason" <jasongst @ flex . com> wrote in message
news:...

> After thinking about it, you're right, it's old as the hills, more
pervasive
> than I gave it credit for, and ultimately ethical. But you have to
recognize
> the impact of this behavior. I have no love for Wherehouse Music (never
> spent a dime there), but this loss-leading tactic is THE reason most small
> business owners can't run a successful music & video store these days,
> unless they plan on specializing in rare titles. CC sold the Two Towers
for
> $14.99 this week, at a significant loss. They intend to make their money
on
> sales of larger items and accessories. Sooner or later (they are already
> doing it on the internet) these megastores, too, will be undercut on the
> price of their bread-and-butter products in the same way. That's fun to
see
>

Specialty stores can't usually compete successfully on the basis of low
price alone; they don't have anything they can sell at a profit if they
discount their "specialty" too much. That's one reason we saw so many
e-businesses go under a couple of years ago.

There's no reason for a consumer to care about anything but price when
buying current books, music, movies, and such. So yes, the small retailers
who try to compete in this market will fail, because they can't buy in
sufficient quantity to keep prices down.

It sounds cruel to say it, but that's just too bad. Life moves on, the world
changes, people have to adapt. The former bookstore owner becomes a manager
at a Barnes and Noble, and probably clears more money and now has a
retirement plan. The CD store owner becomes an importer of rare progressive
rock and world-music records, opens an e-business, and maintains his
storefront as a tax loss while living in the back room. The small video
chain gets bought out by Best Buy which maintains it so that they can have a
presence in the mall market.

And I'm still not convinced that selling The Two Towers for $15 was a loss
for CC.
>
> Dumping laws do exist, but from what I know they may apply to more
predatory
> situations, where company A intends to monopolize the market by
undercutting
> company B until company B goes belly up. That's all I really know about
it.

Predatory dumping is usually an international issue -- Chinese manufacturers
dumping consumer goods into India to drive Indian manufacturers out of
business, that sort of thing. Anti-dumping laws operate on that scale. What
you're talking about on the retail level isn't "dumping."

RichC

>CC sold the Two Towers for
>$14.99 this week, at a significant loss.

The local Video Store in my area bought 1,500 copies of Lord of the Rings from
the distributer for about $9.67 a piece in bulk.

Since the local Wal Mart is buying at least 5 times as much, I would either
assume they get a slight price reduction, or the same $9.67.

A real loss leader is when the Wal Mart and Best Buy sell the DVDs for $8.99
(Like when they sold Star Wars, and Spiderman).

Later,
Shaun!
--------

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