The Myth of Chain Store &
Mail Order Super Savings
GOPD is a market research and technology company in
the officeproducts industy. GOPD has been monitoring
chain store pricingpractices since 1999 and is the un-disputed
leader in the field.During the years of analysis,
several trends appeared & continue today.
Low Price Leaders
Everyone has heard the advertising by the office supply
chain stores. Guaranteed lowest prices, 110% low-price guarantee,
and claims of 50% discounts. But what is the real story?
It is true that some items are deep discounted, but these are more than
made up for when you look at the whole picture.
Below is a chart of the number of items the major chain stores have
priced at a 10% discount or less.
Items Priced at 10% Discount or Less:
While office supply chain stores like Office Depot claim huge discounts,
the majority of their prices are not that low. Compare 40% of Office Depot's
prices at 10% discount or less while only 6% are true loss leaders and you
start to see how the pricing game is played.
The chain stores are experts at mixing the pricing to achieve the maximum
amount of profit while attempting to fool the consumer with loss leaders.
Items Priced at or Over List Price:
In addition to over 40% of Depot's prices being only 10% discount or less,
it is quite common for the office supply chain stores to price items
substantially higher than manufacturer suggested list price.
The only way to accurately evaluate the pricing for the office supply chain
stores is to look at the complete picture. Compare all the items, loss leaders
and regular supply items and the results are not what they advertise.
Average Discount Off List Price:
None of the top office supply chain stores average more than 25% discount
off list price. Depot and Reliable struggle to average 15% discount off list.
So what is the answer?
Do the office supply chain stores truly have the lowest prices?
Some items are cheap some are high. How do you know?
The truth is you can't know. As you will see, the chain stores are constantly
changing prices to keep the low-price perception while reporting increasingly
higher profits to Wall Street.
Constant Price Churning
The chain stores are constantly churning prices. Getting a good deal often
depends on what day of the week you purchase the product.
Counts of Items with Price Changes:
It is common for consumers to spend dozens of hours researching office
supply pricing to find competitive sources. Unfortunately, even the most
careful analysis is obsolete within as short as a week due to constant
price changes by the major office supply chain stores.
Prices Going Up
In order to stay in favor with Wall Street, the office supply chain
stores must constantly report more profits. Profits can only be
increased by cutting costs or raising prices. Once costs are reduced,
the only alternative is to raise prices.
Counts of Items With Price Increases:
These counts include those cases where the same item has changed price.
It is not uncommon for the office supply chain stores to change the price
on a single item, multiple times, within the same week.
To appreciate the magnitude that these constant price changes have on the
typical consumer office supply budget, look at the following chart detailing
the number of price changes by month for a single office supply chain store.
Counts of Depot Price Changes by Month:
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There is no way the consumer can be assured of any pricing
consistency with this constant change.
What Can You Do About This?
Decide for yourself, but know the facts.
Our reasearch has shown, time and time again, that most local
independent office supply companies are substantially lower in
overall cost to the consumer.
Most independent office supply companies also offer "fixed"
pricing that they honor for a length of time. This allows the
consumer to accurately budget office supply expenses and not be
surprised by budget overruns.
The document was produced by GOPD, which is solely
responsible for its content.
www.gopd.com