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The Honolulu Advertiser
Posted on: Friday, December 26, 2008

Shoppers now haggle — and even lie — to get bigger discounts

By Allison Abell Schwartz
Bloomberg News Service

NEW YORK — Susana Ortega was shocked when a woman walked into B.O.C., a 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. 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 amazed that people are just going for it."

Seventy-two percent of U.S. 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 a recent poll 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 firm.

Boutiques are reeling as bigger department stores such as Macy's Inc., Bloomingdales and Saks Inc. offer discounts up to 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.

"It's almost like Monty Hall on '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 at the mall, and they were selling it at this price. What can you do?' "

Susan Weiss, a 60-year-old 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. But Delfino, a handbag store with three Manhattan locations, will match most department-store discounts upon request, without giving additional bargains.

"The store loses credibility," said Delfino president Harun Keskinkaya. "Then, the next time, the customer expects it. It's better to stick to your principles."

Part of Delfino's strategy has been to sell a higher percentage of less-expensive products instead of heavily discounting. More than 60 percent of the handbags the store carries are priced between $150 and $350, whereas $600 to $700 used to be more common, he said.

Sellers 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 come in saying Bloomingdales had a sale on Ugg boots, which retail for $130 to $160, when it didn't, he said.

"The department stores are severely discounting and marking down everything — of course, that makes it harder on a small retailer," said Kirsch.

Weiss said she's selling some items at Forreal for less than their cost to clear out inventory. The shop is selling $70 sweaters for $19.99 and $32 Petit Bateau t-shirts for $14.99, less than what the store paid for them.

"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.