Terminal Discounting

So my friend works at a women's clothing and home-furnishing chain. It's a nice shop, the kind of place with lots of oddly-shaped carafes and ornate quasi-foreign/antique-looking furniture. And racks of $90 t-shirts.

Anyway, the store has a thing about its Brand, see? The Brand - anchored by its premium price points - must be protected. Sure, the $90 Ts sometimes find their way to the sale rack. Ditto for the carafes and furniture. And yes, the crummiest things eventually go on clearance for a significant discount. But when the orphans don't sell, the brand is faced with a dilemma. What does it do? Take a guess...

A) They're carried out to the dumpster
B) They're picked-up and redistributed to the company's low-end brand
C) They're donated to local charities
D) They're returned to the original manufacturer for a partial refund

Answer after the jump...

Sorry, I kind of lead you into a blind alley, there. The actual answer is that employees are instructed to destroy the goods. Putting them in the dumpster in one piece is no good -- with stores all over the country, the chain would find itself fending off a loyal sub-customer base of dumpster divers. And the Brand can't afford to have people walking around with free stuff (hence donating it won't fly, either; people won't keep buying $90 t-shirts if they show up at the Salvation Army a couple months later.) So the stuff gets destroyed *before* it's thrown out. Most of the time, right there in the store. In front of the customers. (Gotta make room for new goods, after all.)

Now, the word from the managers is "destroy it, we don't care how." Understandably, these conditions give rise to a little game called Who Can Think Up The Most Outrageous Way To Break This? Stacks of picture frames meet their fate one by one, crushed under a high heel. That (admitedly ugly) floor-length mirror with the carved-wood African frame? Hammer time! The wretched deco desk that was supposed to sell like mad, but didn't? Drop it from the second floor!

My friend has played the game, too. Grabbing a large bag and winking at her coworkers, she walked out to the floor, set the bag in front of a display of unfortunate martini glasses, and proceeded to drop them, individually, from chest height. It wasn't the customers' horrified looks that kept her from ever playing again (she said smiling at them glibly was actually kind of fun)... it was the waste. The sound of shattering glass broke her heart.

Destroying the stuff is bad enough, but why does the company allow it to happen right there in the stores? I have no clue. (I do know it's a national policy - my friend has worked in locations from coast to coast). Hell, breaking goods in front of customers most likely hurts the Brand more than any amount of dumpster diving. Anybody want to take a stab at rationalizing this policy?

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10 Comments

  • bob

    now mr.angry, i see your point of view as understandable. I might take a guess that you live in finland or some other such scandanavian country. I entirely agree that america has over emphasized the fact that we are the land of the free. As compared to most European countries, we are not. It's not the citizens you should be mad at, it's the two major political parties we have you should be angry at, and the people who vote "left" or "right". people dont understand that there are more than two camps to vote for. Both the "dems" and "GOP" are corrupt, with in the last election, John Kerry being a traitor and Bush supporting the war in Iraq(I actually think that it was all Cheney's idea to begin with{Halliburton maybe?}) I can see where you are coming from and you are in fact right, America is not the greatest country in the world like we say we are. This is all coming from an 8th grader(9th year if you use the Europe/Asian grade system) who understands more than most adults. I have been opressed because of my views and my peers see me as a martyr. i have been suspended, given detentions and otherwise punished for free thinking. I can see a dictatorship in the making...

    As for the trash, yes it is wasteful. They shouldnt do it, but being the dumpster diver i am, i have found certain stores that do not in fact do this. It is too wasteful, there are people even in AMERICA that are needy and poor as well as around the world.

    -Bobby

  • Jayen4

    Well,I think this sort of behaviour is disgusting!! This is the retalers being childish and selfish! They couldn't give a flying f*ck about the poor and needy !! In my opinion,this behaviour WILL come back to haunt them and the sooner the better.....
    Makes my blood boil !!!

  • angry

    This is f*cking disgusting. slave labour makes these useless items to begin with, and then they are destroyed so noone can have them. these people make me sick. im glad i live in a decent country not so retarded as yours. f*ck.

  • JSmith

    Unwanted property is a serious problem for stores. Handle it improperly such as destroy, toss, and no records = high shrinkage and resulting corporate focus on the wrong problem... which was the marketing/purchasing decision to put the material in the store. On-site destruction is used due to excessive return freight costs (cheaper to pay store salespeople to destroy and "ship to the dump" than back to warehouses or manufacturers). Most exclusive products are priced well enough that they cover the destroyed goods. But there are definitely serious flaws with the current work methods followed by the above (and many other similar) stores.

    What to do if it were your national store system and premium brand?

    1-Avoid the problem - Make sure all non-sold items are recorded by each location along with local sales force opinions on the reasons why. This data goes back to the Quality and Marketing analysts to redirect & learn from for the future. Same process with the original markdown sales (which there shouldn't have been in a premium brand). The goal was to stock one less item than sells, right?

    2-Create a “branding tool” that can mark 95%+ of all the merchandise offered and stamp the non-sold items (it need not be large or ugly but it needs to be used). If any item were to leak out it will have the “seconds” stamp on it. Original buyers will be protected.

    3-Sort merchandise into three categories – “Seconds” Sales (the auction houses, manufacturer outlets, appropriate shippable items), Reusable (local non-profit organizations that create jobs shredding t-shirts to be used as factory cleanup rags), Recyclable (steel desks into auto-shredders). If the type of discards follow a regular pattern (such as a t-shirt and jeans store or a paint store having similar recyclables week after week or can be sorted into one such as all metal, all glass, etc) then local recycling companies are more willing to make arrangements for possible pickups (thus “zero” freight cost). Such a recycling company will be more responsible with this merchandise so it won't end up potentially damaging the store brand (remember they are protecting their own brand too).

    4-Publish in corporate annual reports & other media the amount of material processed this way each year (which better be going down!), the organizations that are being helped, and the reductions in land-fill usage. This keeps the company focused on the right things and informs the consumer that the company is acting responsibly – and miraculously improves brand image in the process.

    Do you own or run such a company? Stop by my web site - we can improve your profit line.

    John Smith
    Private Productivity Consulting

  • Pepper

    How about if we stop supporting a resource of goods that are so openly propogating an American "Caste System"!!

  • Bill Ricardi

    I actually think that's a reasonable policy, but the execution should happen in a back office. Maybe once in a great while, stage a public display as part of a promotion. But for the most part, I agree with the policy of destruction of excess for high end brands. Why?

    Customers pay exclusive prices for brand name items with the expectation of rarity. If everyone had them, it wouldn't be an exclusive brand. If you even take the discards outside of the building, there's risk of loss or theft. You've betrayed the trust of customers who've bought the products in the past, after you implied that they were buying something difficult to attain. Thus, destroying the items on-site to preserve the rarity of the line is an acceptable solution.

    The problem comes in the method. Destroying a set of crystal wine glasses once every few months as a sort of performance art could be a form of shock advertising. But doing it on a regular basis sends two bad messages. 1) We make the sausage, and we don't care who watches how we make it, even if it sickens them. And 2) Our products don't actually sell that well, we don't have a good model for predicting demand, and that might mean we don't track or listen to our customers' feedback.

    The action may be right in some cases. But the message is wrong. They should take these things to a back room, destroy them in a safe and quiet fashion, and file all the correct paperwork. That's how a professional company preserves product rarity in the case of over production.

  • Ask Bjørn Hansen

    Giving at least some of it to the employees for free or even just extra extra discounted would seem like a low-cost (in terms of brand devaluation etc) and make for happier and more loyal staff.

    - ask