Richard Wilson of Colorama Wholesale Nursery in California chimes in on last week’s discussion related to the ability of manufacturers to set retail pricing.
“On the subject of the article, ‘Can manufacturers establish retails?’ they are already doing so,” he says. “One of the big seed companies has sold some of its products to a major big box. They provided the retail with the cost breakdown going back to the grower. In this particular instance, the cost analysis came out to where we were still making a decent net profit. But who is to say in the future when they (big box) will tell you what you will charge them because XYZ seed/vegetative producer has sold them on a new ‘loaf of sliced bread’ and we have to live with the cost analysis of someone who might not know the entire picture, especially if it is a national program.”
We then pondered the implications of setting prices when the grower is the manufacturer and owns the inventory until it is rung through the register. In last week’s story, Sony was an example of a manufacturer setting pricing by retaining ownership of the inventory at retail.
“Oh, yes, we are totally involved with pay by scan,” Wilson says. “You thought the same as I in that it is our merchandise on the tables until it goes through the registers. We do to some extent involve ourselves with the pricing when we are talking to the buyers, but as a general habit, no. Normally, they need a certain markup to net them a certain gross profit. It would be interesting to really discuss the issue with the buyers and see if the growers’ feedback helped them sell more.”