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Shop Chat - Pricing Offenses
L probably didn't know what she would stir up when she wrote her letter asking about our high prices on certain items (see your say below). My reply:
Hi L,
Sorry it has taken a few days to reply to your letter - but it was such a big question! No offence was taken of course, but I needed to think about the answer.
A little background history. The whole Australian retail industry was set up when we were an isolated country - importers and distributors had exclusive distribution arrangements and charged a "healthy" margin over what they had paid. Shops in turn were able to pass these onto the customer, usually pricing at double what they had paid wholesale. They actually needed this buffer as rents and wages are both relatively high here - compared to overseas, but everyone seemed to live in harmony - until the world was opened up via the internet.
The twin problems now are having to compete with countries with lower margins / costs (US wages in retail are as low as $7 per hour, while the whole UK retail cost structure is based on only 50% mark ups and not 100% like us). And secondly, because basically anyone can now set up a retail business without the overheads of shops and staff - and even without having to actually buy any stock.
So to look at the bag you were interested in for instance. They are made in the UK. We charge the "official recommended retail price" set by the sole Australian importer. The recommended price in the US seems comparable, especially taking into account some postage. In the UK prices are lower however due to lower industry margins and lower transport costs.
It has almost become a "sport" for buyers to find the lowest price. Now as the internet allows widespread price comparisons across countries we find a lot of online stores charge less than the official retail prices just to get a sale - in some cases a lot less - perhaps some amateurs are happy to make just $10 or $20 on such an item.
It is interesting that I got a big order late last year for some similar leather bags from Lisa J Smith - the Author of the Vampire Diaries. She was using the bags as prizes in a facebook contest and the suppliers had sold out. We got talking and she was very grateful to have connected with a "real business" over these - as she had tried ordering them from many other websites only to have them later not be able to supply (no one held stocks), and in at least one case keeping her $600 and closing down their Paypal account so they could not be chased for it.
In another case I've investigated recently a new online retailer in the same industry is not even covering all their costs. So while they may get some orders in the short term it is unsustainable if they are effectively losing money on each sale - so they soon go out of business. In the meantime we are not getting the sale as we are seen to be relatively too expensive - so our profit suffers as well - it is a vicious cycle.
One of the many many reasons the whole retail industry is in crises now.
So the short answers are :
that there are institutional reasons why prices In Australia are higher.
As a professional retailers trying to make a living we charge the recommended retail prices. Small retailers can never compete on price alone
To stay viable small retailers need to be creative, engaging and relevant to their market in other ways by offering more value than just a cheap price.
We try to do that with our newsletters, customer community, information courses, surprise parcels, inner circle rewards for good customers etc etc - as well as by being professional, reliable, friendly and helpful.
Finally as I've warned elsewhere - if no one were to value and support small businesses the retail industry will be reduced to a few very big and very bland stores selling very cheap produce that few will be able to afford.
End of Rant Margaret have your say on our facebook page or email me direct | 
Indications are that LEADERSHIP is a factor in your life now. This is a wands suit card so it's generally something to do with work and/or skills