Retailers out to axe TV discounts

Press, 19 November 1977, Page 1

Retailers out to axe TV discounts

Cut-throat competition for sales of colour television and stereo sets in Christchurch has led to allegations of attempted price rings and counterallegations that discounters are threatening the existence of the industry. "Retailers won’t survive with discounting — it will only cripple the industry,” said Mr Noel Leeming, proprietor of Noel Leeming TV, Ltd. To prevent the collapse of die industry, retailers who have resisted offering discounts to the public will meet manufacturers’ representatives on Monday to try to persuade them to take action to stop the discounting. The "hard word” has already gone out from at least one manufacturer to discounters. It has been alleged by a discounting retailer that a manufacturer made a veiled threat to cut off his supplies unless he stopped discounting. Davis and Hughey Hi Fi, Ltd, has been asked by a manufacturer to withdraw its discount. The firm “had not been told in as many words” that sets would no longer be supplied if the discount continued, Mr A. Hughey said last evening, “but if I went down there tomorrow and started to load up, I would not be supplied.” The branch office for the manufacturer had asked for the sets back. “He told me I was rocking the boat,” said Mr Hughey. “I told him, 'No, I’d bought and paid for them’." Under trade and industry regulations, a retail firm that was already an agent for a manufacturer could not be denied stock from that manufacturer while stock was on hand and the retailer held the franchise, said Mr Hughey. Davis and Hughey was one of the first firms to advertise colour-television discounts in a bigger way than the usual notices on shop windows. Others jumped on the bandwaggon. Manufacturers would not do themselves out of a “good thing,” said Mr Hughey. “If we are turning over 150 sets a month for them at 12.5 per cent discount, they are not going to try to stop us. “Some manufacturers

are backing us in our discount bid. Six manufacturers might agree verbally that discounting is out but two of them will be whispering in our ears while we discount: “Would you like a few more?” Mr Hughey said that five suppliers had approached him in the last week but only one had said that he would stop his supply. Discounting was an illdefined term in the trade. Although some retailers were being penalised for selling colour-television sets at 12.5 per cent discount, others got awav with $lOO reductions on colour sets bought when black-and-white sets were traded in as part of the purchase price. This was comparable in some cases to a 12 per cent discount. Mr Leeming said that in the last two months there had been a slump in sales of colour-television sets in Christchurch. "The only reason why some retailers are giving discounts is that otherwise they cannot get cash sales, and if they cannot get sales, they cannot pay their bills.” Some retailers had been offering discounts of 15 per cent or, in cash terms, about $l5O off the new price of colour-television sets. The average mark-up was 30 per cent to 40 per cent. “Retailers like us could not afford to give discounts and maintain the type of service we pro» vide," said Mr Leeming. “When a customer comes in with $lOOO to spend on a colour-television set. he wants to get what is best

for han. There are 40 different models available. It is not a matter of giving him the first thing he sees, or what is discounted, but the particular model that suits him.” Mr Leeming said that the discount firms had generally been in the business for two or three years. Several were cash-and-carry firms, with nothing else to offer. None of the six manufacturers supported discounting. When asked about Monday’s proposed meeting, a manager at Haywrights, Ltd, said it was the first that he had heard of it. “But that is not the sort of thing a retailer would tell you about — an attempt to hold prices under a price ring.” said Mr G. A. McKee, the appliance manager and head of the Canterbury and Westland Retailers’ Association subgroup on home appliances. “If there was a meeting, it would be to find out the manufacturers’ intentions — if they want to lower prices. “Retailers not discounting would be distressed if they discovered that manufacturers were supnlv colour-television sets to discounters cheaper than to other retailers. For a 15 per cent discount off a colourtelevision set, they must be getting close to belowwholesale prices.” Mr M. W. Brice, secre tary of the Canterbury and Westland Retailers’ Association, said that the meeting had not been organised by the association but it would be attended by members and would probably be under the auspices of the association.