Are People Buying at Williams-Sonoma?

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Oct. 9 (Bloomberg) -- Forester Research Vice President and Principal Analyst Sucharita Mulpuru discusses retailers battle against "showrooming" with Trish Regan on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Inventory.

Why is it?

You can only get it at that particular store, or it is cheaper to carry that inventory?

It is both.

You have products that are only available at retailer x, which is valuable.

The other piece is once you get into the business of manufacturing, your margins should be better because you are not paying the brand.

You become the brand.

That should theoretically increase the margins by a significant level.

Are we starting to see more retailers doing that in a bigger way?

Absolutely.

Usually every one of them take box retailers is getting into that space.

They are all essentially private-labeling at least some level of their inventory.

Some are even buying brands.

Companies like toys "r" us have gotten into the business of actually buying some of the smaller manufacturers.

That is a way to protect margins.

What about leveraging your brand and selling more of it online, being less heavy on the real estate side?

That is absolutely what williams-sonoma has done.

The vast majority of their business now -- 80% of their direct to consumer business, meaning catalog and web is down online.

That is something they are going in the direction of.

The challenge is with the web, they are more honorable to price.

-- laudable to price.

That is where the competition with amazon is or online retailers.

You can romance the experience.

That is the opportunity to get somebody to buy an impulse purchase they would not have bought otherwise like the asparagus cooker.

One of the challenges is in the middle market, you want the luxury product or the cheap product, because why else is someone incentivized to go to your store and buy it?

That is true.

Typically, retailers talk about a good, better, best strategy.

You have good, your opening, those that are at mid-range, and then there is the product assortment that drives the high- margin.

That is the customer you want coming back to the store that drives value.

So, absolutely.

This text has been automatically generated. It may not be 100% accurate.

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