Why Retail Matters, continued....


can go buy fl y-spray at a big box store and save a dollar or two, or they can buy fl y-spray from us, and we can tell them the diff erence between pyrethrin versus permethrin. T ey are not go- ing to get that from a big box store.” Can’t they just learn that on google or Face- book? Michelle chuckles. “We just try to of- fer them the latest scientifi c information and facts.” When Hope sees a client trying to decide


whether or not to invest the money is a new product, such as a new type of boot, she points out that she would not have purchased the product in the fi rst place if she did not trust it. “T ey are just buying one pair! I HAVE to buy 75 pairs! I’m deeply invested, so I would not be selling these boots if I didn’t trust these boots.” Since consumers seem to prefer to get their knowledge these days from the internet, John Nunn has decided to leverage that. With the


The “Mark-Up” Myth T ere are some things that you just can’t put a price on.


We’ve all heard it before: why purchase a product from the local tack


store when “everyone knows they mark things up by 200%.” Well, there is not a lot that can ruffl e the feathers of most tack store owners – except for statements like this and the accompanying implica- tion of price gouging. “It’s not ‘mark-up,’” emphatically states Hope Birsch (owner of Mary- land Saddlery and immediate past president of the American Equestrian Trade Association); “it’s called margins, which is the diff erence between what we pay for the product and what we sell the product for – and that diff erence pays for ‘overhead,’ literally the roof over head, the lights, the fi xtures, the inventory software, the bathroom, the salary for Susie who rides at the local barn, the health insurance I pay all my employees.” A margin is the diff erence between the cost of acquiring a product (a.k.a. wholesale price) and the price for which it is sold (retail price). All retail businesses, including online and big box stores, live and die by margins. T ere is a traditional margin calculation is known as “keystone,” in which a shop owner purchases an item for $1 at wholesale and sells it for $2 at retail; the $1 diff erence is a 50% margin. Margins are not profi t; out of that margin he (or she) has to pay for overhead. Profi t is what is left over after wholesale and overhead – if there is anything left over. However, very few equestrian retail products are sold “at keystone.” For the average Mom & Pop, the margin on consumables (ointments, feed supplements, tack cleaners, fl y sprays, shampoo) is 35% or less. If a Mom & Pop purchases a tube of something for $1 wholesale, they usually will retail it for $1.53…and the 53¢ is their 35% margin. T e margins on items such as clippers and blades tend to be less than 15%,


ability to make a quality video for virtually no cost these days, John regularly posts Youtube and Facebook videos in which he explains the benefi ts of certain products, or demonstrates their use. T ese videos have the added benefi t of keeping his social media content fresh.


Redefi ning Business Models Hope used to invest a great deal of time, en- continued...


while the margin on saddles is around 10%. T e Big Box Store, however, because of volume, is not only able to


purchase that same tube for signifi cantly less that $1…say, 80¢, and then – again because they are moving signifi cant volume, they can sell that same tube for 89¢ - only a 10% margin. Pennies on the proverbial dollar, but they move a lot of pennies. When it comes to consumables, all the Mom & Pops agree: yes, you


can purchase them elsewhere for less. So why pay more? “Knowledge,” explains Michelle, “We can tell you what tests,” refer-


ring to the blood and urine tests taken at certain levels of competition in order to ensure horses are not competing while on prohibited substances; unknowingly using the wrong product can result in fi nes and suspen- sions – and it doesn’t matter if it was just a shopping mistake. But it is more than just product knowledge. Mom & Pops have their


clients’ backs. “We know our clients; we know where they are competing, at what


level,” explains John. “we don’t want to see them get in trouble. We have a vested interest in our clients’ success.” T ey also have their clients’ heads. “We know how to properly fi t hel-


mets, which you are not going to get online or at a big box store,” notes Lyne; and a properly fi tted helmet can be the diff erence between life and death. Of course, not all the knowledge is quite that dramatic, but is still


useful. “We know what breeches will and will not be accepted at certain local riding stables,” continues Lyne, helping students to avoid a ward- robe faux pas. “We know what the local trainers want; we know what it acceptable at the competitions, we know what works. And we are here to help you.”


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OCTOBER 2017 | THE EQUIERY | 81


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