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 #16 Re: Interesting article regarding online snowboard retail Posted 10/03/2010 @ 19:14 |
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Revision #1 (Last edited: 10/03/2010 @ 19:17) |
Collusion betwen supplier and stores is not legal in this country.
Supermarkets have been warned of this.
Having an RRP is different from forcing a product to be sold at a certain price. |
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Still Loving my Nidecker Platinum
Karl Goldsmith
Biofuels The Myths and Lies! Food Crisis - What a bloody surprise.
I Want Those Flashing Lights |
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| #17 Re: Interesting article regarding online snowboard retail Posted 10/03/2010 @ 19:16 |
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| In reply to post #16
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But a company setting a minimum price isn't collusion and its completely legal and done by many companies in many industries |
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| #18 Re: Interesting article regarding online snowboard retail Posted 10/03/2010 @ 19:18 |
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| In reply to post #17
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Having an RRP is different from forcing a product to be sold at a certain price. |
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Still Loving my Nidecker Platinum
Karl Goldsmith
Biofuels The Myths and Lies! Food Crisis - What a bloody surprise.
I Want Those Flashing Lights |
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| #19 Re: Interesting article regarding online snowboard retail Posted 10/03/2010 @ 19:26 |
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| In reply to post #18
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for a start they're not forcing anything to be sold at a certain price, they simply wont allow retailers to discount their product more than 40%. Its not illegal its the same agreement that every single Burton stockist in the world signs. Sierra Snowboards were discounting their stuff by 50% and undercutting all the other stockist who were abiding by the rules, and because of this Burton are refusing to supply them with any further stock. Its their stock and their brand, they dont have to supply it to anyone if you dont want to. |
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| #20 Re: Interesting article regarding online snowboard retail Posted 10/03/2010 @ 19:46 |
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QUOTE (inactive_16115 - 10/03/2010 @ 19:26) for a start they're not forcing anything to be sold at a certain price, they simply wont allow retailers to discount their product more than 40%. Its not illegal its the same agreement that every single Burton stockist in the world signs. Sierra Snowboards were discounting their stuff by 50% and undercutting all the other stockist who were abiding by the rules, and because of this Burton are refusing to supply them with any further stock. Its their stock and their brand, they dont have to supply it to anyone if you dont want to.
Very true Nick - it's Burton's brand and it's upto them how they wanna police it.
The areas I find interesting are, as I said, Burton moving into retail (both physical and online) produces a conflict of interests (ie. they are now a competitor for the shops) and Burton's current brand strategy of wanting to be a 'luxury' brand.
To me a snowboard will never be a 'luxury' item in the sense of a Prada bag. It has a functional pirpose whether it's a Malolo for powder or a Hero for park. Maybe for some people the want a 'luxury' item. |
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http://www.phunction.net/ |
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| #21 Re: Interesting article regarding online snowboard retail Posted 10/03/2010 @ 19:49 |
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Yup but people starting out have always seen Burton as the premium brand, only difference is now they are actually saying it themselves. |
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| #22 Re: Interesting article regarding online snowboard retail Posted 10/03/2010 @ 20:05 |
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Agreed - Burton have always been slightly more expensive than 'equivalent' boards from different brands, as far as I can remember (been riding about 10 years).
Again, I'm just disappointed to see a company like Burton, who, despite what people think them, have been there from the beginning of the sport, wanting to position themselves as Porsche 
Can't see how that helps attracting new riders to the sport, especially with all the LTR centres and Burton acadamies - seems like there's conflicting messages there. |
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http://www.phunction.net/ |
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| #23 Re: Interesting article regarding online snowboard retail Posted 10/03/2010 @ 21:26 |
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As best I know whilst this type of behaviour is legal in the US it is not so over here. I quote
"The Competition Act 1998 and Article 81 of the EC Treaty prohibit anti-competitive agreements. Agreements which fix the price at which a product must be sold are considered to be 'hard-core' restrictions that are presumed to infringe the competition rules.
Suppliers may provide retailers with regularly updated lists of recommended retail prices during the term of the agreement without breaching the competition rules. However, if suppliers use pressure to enforce recommended prices, e.g. by refusing to supply further goods or threatening to terminate contracts if recommended prices are discounted, retailers may feel they have no choice but to comply with the suppliers' demands. By agreeing to adhere to recommended prices, retailers also breach the competition rules"
However when looking at UK prices it seems there is obviously pressure being applied to maintain prices. Perhaps someone would like to complain to the Office of Fair Trading. Having said that there is some good in maintaining prices at a sensible level in that it allows small traders to compete - would you want to have to buy boards from Argos or Amazon ? |
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Buckinghamshire |
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| #24 Re: Interesting article regarding online snowboard retail Posted 11/03/2010 @ 09:34 |
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And that’s where the distribution policies come in.
They won’t sell boards to Argos and Amazon and never will as they will say they “won't fit with the brand” however it’s the risk of prices getting slashed and the brand devalued.
A supplier can set an RRP however they cannot force a retailer to sell @ that price.
Search Argos/Littlewoods - Hasbro collusion.
The retailer can sell at the price they wish to sell at.
Sierra case is just a pre determined distribution policy that the OFT would rip to shreds in the U.K.
philw
"I think not. Canon UK won't allow you to be a Pro dealer if you sell Canon gear under their price minimum - trust me on this, been there, tried that. BMW dealers will not remain BMW dealers if they break the suppliers' rules. Sure, it shouldn't be legal to try to control the market like this, but it obviously is because it happens all the time"
This is what I am on about in terms of a distribution policy... the retailer can do what they want... they can make the decision to sell below a minimum and then that follows with the decisions on whether or not they want to pro gear obviously they don't if they sell under the minimum. If Canon where to say we wont supply you if you go below the minimum on goods currently supplied the OFT would have a field day. |
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| #25 Re: Interesting article regarding online snowboard retail Posted 11/03/2010 @ 11:25 |
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Yeah, Burton certainly isn't the only company out there to impose how their products should be sold. |
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| #26 Re: Interesting article regarding online snowboard retail Posted 11/03/2010 @ 12:26 |
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what about bike companies...saying you have to collect in store...so if your local bike shops run out of a certain model of Treks, Giant and you see it on line say in Liverpool - guess what....you have to pick it up in person... |
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| #27 Re: Interesting article regarding online snowboard retail Posted 11/03/2010 @ 12:54 |
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Revision #1 (Last edited: 11/03/2010 @ 13:00) |
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The practice of a manufacturer seeking to control the price at which its good are sold is known as "resale price maintenance". Philw is correct that "price fixing" is typically used in the context of cartel arrangements between competitors.
The Antitrust Review of the Americas, published by Global Competition Review (I know what you are thinking - my job gives me access to some pretty racy publications) had this to say in a comparative review of the regimes applicable to resale price maintenance:
"The [US> Supreme Court’s 2007 reversal of precedent from 1911 that imposed per se illegality on minimum resale price maintenance (RPM) continues to create controversy in the US. In [the Leegin case>, the court (by a 5-4 margin) overturned precedent by examining economic evidence that the suppression of intrabrand competition between retailers often serves to stimulate interbrand competition among manufacturers. The court recognised that RPM has the potential to give consumer more choices, to eliminate free-riding on the promotional efforts of the distributor and to facilitate entry for new firms and brands.
While the court also acknowledged the potential anti-competitive effects of RPM (such as discouraging price cutting), the court concluded that such effects are not always or almost always present and therefore the per se rule is not appropriate. Accordingly, it directed that claims of illegal RPM be examined under the rule of reason. There have been several efforts in the US Congress to overturn Leegin, but as of yet, none have been successful."
So resale price maintenance is not per se illegal in the US. The position is the same in Europe (i.e., RPM is not per se illegal) but courts have been more willing to conclude that the ability to RPM is evidence of anti-competitive behaviour and to rule it illegal accordingly:
"Yet around the world, as in Europe, fixing the resale price, or establishing a minimum resale price, have long been considered hard-core restrictions on competition and are therefore presumed anti-competitive. While such treatment is not precisely the same as condemning the restraint as per se illegal, most jurisdictions have not been sympathetic to alleged justifications for either practice....
Nonetheless, in many jurisdictions, and consistent with US practice, neither maximum nor recommended resale prices are treated as hard-core restrictions. Such conduct can be presumed pro-competitive. In Europe, however, recent decisions demonstrate that the Commission, and the European courts, will look beyond mere presumptions to confirm that such pricing is not a cover for anti-competitive behaviour."
Burton has decided it wants to control access to the customer. You see the same phenomenon in the cycling industry, see the comments from the guys who run Competitive Cyclist in Little Rock AR. It happened in mobile phones as well (remember when mobiles were first introduced there were all sorts of "resellers", which were eventually bought back by the operators because they didn't want control of the customer in the hands of a third party).
Burton has traditionally relied on retailers as the focal point of its marketing efforts - Burton advertises, you go to the retailer's store to actually touch the stuff you want to buy, try stuff on etc. Burton needed retail shops, and retail allowed Burton to outsource the hassle involved in owning and operating retail. As you will have noticed, people are increasingly buying things on-line. With all due respect to retailers, there's enough information on-line (Sierra Snowboards own board reviews on youtube, various forums, including this one) and in magazines and other media that you could quite happily buy all of your kit online. (To the people who say you should demo what you want to buy: maybe, but the answer would be to set up demo centres in resorts. Or sponsor the hire shop so that "first contact" with a snowboard is with your brand - see Whistler Blackcomb's snowboard rental which is all Burton, all the time.)
Burton will move to selling direct on-line; they will eventually pull all on-line selling other than via their own website. This will leave many retailers in some difficulty (and not just because many retailers are increasingly reliant on their own websales), which will be exacerbated if other brands follow the same model, and they will complain about it a lot. Burton will have to decide how much it needs its stuff in every snowboard shop in the land; if it decides that it does, then it may have to find a way of subsidizing retail.
Rule number one of brand management - don't let your product be set up cheek by jowl with other brands. Consistent with this, and because customers still like to touch the goods before they buy, you will see an increase in the number of Burton flagship stores in places where there's a big market. This may not necessarily be in big cities, it may be in places where people make their buying decisions (e.g., have a flagship store in Chamonix - people buy on site and you also look "core" because you associate yourself with one of the inconic places for freeriding). I'd be interested to know how much of the cost associated with the flagship stores is considered by Burton to be "marketing expediture". I'd be astonished if the flagship store in Soho (the NY one, not the London one) wasn't running at a loss - rent in that part of town is not cheap.
Basically Burton don't want their sales to be beholden to third party retailers. Right now they still kind of need the third party retailer but increasingly they will try to direct sales through their own channel, and if you don't want to build a retail empire (which is essentially an exercise in real estate management and human relations, i.e., it sucks and you should leave it to experts and people who are happy to live on the edge of penury pretty much constantly) the best channel is the internet.
The condensed version: Burton hates its retailers. The retailers hate Burton. Right now Burton needs the retailers enough (and vice versa) to accomodate one another, notwithstanding mutual loathing. Burton is trying to come up with a strategy to reduce its need to rely on retailers. If it can do this then - unless the retailers can work out a way to live without Burton - being a retailer will become more unpleasant than it already is. |
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| #28 Re: Interesting article regarding online snowboard retail Posted 11/03/2010 @ 13:55 |
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I assume you don't work at McDonalds? That was a good read. |
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Hugs Not Drugs |
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| #29 Re: Interesting article regarding online snowboard retail Posted 11/03/2010 @ 15:23 |
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Good post BJM2. |
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| #30 Re: Interesting article regarding online snowboard retail Posted 11/03/2010 @ 16:57 |
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