By Allison Abell Schwartz
Dec. 19 (Bloomberg) -- Susana Ortega was shocked when a woman walked into B.O.C., the Manhattan boutique where she works, and asked for $300 off of an $800 purse. In exchange, the woman said, she’d pay cash.
Ortega refused the offer. Other customers have asked her to waive the sales tax in exchange for a cash payment or to throw in extra items like underwear or candles. Some try to negotiate over the phone so they can skip the retailers who won’t give them better deals, she said.
“It’s unheard of,” said Ortega, who’s worked at the store for about a year. “I’m just really amazed that people are just going for it.”
New York boutiques are reeling as bigger Macy’s Inc., Bloomingdales and Saks Inc. offer discounts of as much as 70 percent. The smaller stores, which pay more for merchandise because they buy less, are being forced to match prices and accept eroding profit margins, said Adrienne Tennant, an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Virginia.
Sellers also need to exercise caution because some shoppers lie about or exaggerate the discounts they’ve seen, said Sean Kirsch, 31, vice president at the Shoe Box, a women’s shoe store with four locations in Manhattan.
One customer told a sales associate that a pair of boots his store had for $535 cost $150 at Saks. The sales associate called Saks to confirm and found out it wasn’t true, Kirsch said. Others have also come in saying Bloomingdales had Ugg boots, which retail for $130 to $160, on sale when they weren’t, he said.
‘Let’s Make a Deal’
“It’s almost like Monty Hall, ‘Let’s Make a Deal,’” said Marshal Cohen, chief industry analyst at market research firm NPD Group Inc. Consumers can “say ‘Listen, I just saw something just like this down the street or down the mall, and they were selling it at this price. What can you do?’”
Seventy-two percent of consumers said they have negotiated for a lower price in the last three to four months, compared with 56 percent a year ago, according to poll conducted this month by America’s Research Group.
Consumers are successful in their negotiating about 80 percent of the time, compared with about 50 percent a year ago, said Britt Beemer, chairman of the research firm.
The Shoe Box does match department store prices upon confirmation, Kirsch said, adding that he instructs employees to refuse to haggle.
Meeting the Price
“The department stores are severely discounting and marking down everything -- of course that makes it harder on a small retailer,” said Kirsch. “If we have to meet a price a department store is offering, we’ll meet the price.”
Susan Weiss, 60, a manager at Forreal, a women’s clothing store in Manhattan, says that if a customer is on the verge of walking out of the store after considering an item, she’ll offer an extra discount to make the sale.
While Delfino, a handbag store with three Manhattan locations, matches most department-store discounts upon request, it won’t give additional bargains.
“The store loses credibility,” said Delfino President Harun Keskinkaya. “The second time the customer expects that. It’s better to stick to your principles.”
Lydia Cochran, manager of Purdy Girl, a women’s clothing and accessories boutique with three Manhattan locations, said while the store’s policy is to not bargain, it’s trying to be “flexible” in dealing with customers’ requests.
“Everybody wants to feel like they’re smart shoppers right now,” Ortega said.
‘A Lot of Work’
Making a sale takes more work than it has in the past, Ortega and Weiss said.
“Sales skills are more valuable than ever,” Ortega said. “You have to work with people. You have to accommodate them as much as you can. It’s a lot of work.”
Part of Delfino’s strategy has been to start selling a higher percentage of less-expensive products instead of heavily discounting, according to Keskinkaya. Sixty to seventy percent of the handbags the store carries are priced from $150 to $350, whereas $600 to $700 used to be more common, he said.
Weiss said she is selling some items at less than cost to clear out inventory. Forreal is selling $70 sweaters for $19.99 and $32 Petit Bateau t-shirts for $14.99, less than what the store paid for them.
“The name of the game is, ‘come January and February, the hardest two months, even if you take a loss, you have to get rid of your old merchandise,’” Weiss said.
To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.
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