Hyperdeflation Has Begun

Originally posted by LoneGunMan
Walmart does the same thing. It works like this:

The buyers of K-mart bought so many thousand of these bikes from the manufacturer. They sold enough of them to make the money back plus turn tidy profit. The bikes that are left over are pure profit. They need floor space for something else they got a deal on and its best to blow them out. They are not losing a dime but still making money selling them way less than what they bought them for because they already made profit plus on the others they sold.

All too easy.

Sure would be nice if they did it this way with sports cars!

reply to post by dbloch7986


You sir are in denial. Did you see the stock market today? Do you know what's going on in the world around you at all? Have you heard the financial reports lately? Maybe you should check it out, then come back and post.

Yep, the stocks are down over 100 points today.

Here are some more deals I found recently at Kmart

Exercise bench and weights.....$19.99

Another exercise bike, different model......... $43.00 regularly $169.00

Perhaps Kmart is going under.

This certainly provides some window into just how much of the price of items are related to the actual material/labor/shipping costs and how much is pure profit for the sellers. Really makes you wonder how any store can actually go underwater if they have an 80% item markup baseline with which to work with to entice buyers.

reply to post by dbloch7986

I doubt that "Business 101" will tell you it's always done this way. And "Accounting 101" won't tell you how to run retail at all, just how to keep the books. And in both these areas it's better to get beyond the 101 level. At the most someone with an associate's degree only will have some responsibility in a single store.

At higher levels in the corporation they have to make company wide policies to protect their reputation, to prevent their own stores undercutting each other, etc. At this level reputation is considered important, and a well run corporation will monitor things like this. Maybe there's suddenly a corporate willingness to have blowouts like this, but I don't know why, other than that stuff isn't selling at the prices it used to.

Originally posted by burdman30ott6
This certainly provides some window into just how much of the price of items are related to the actual material/labor/shipping costs and how much is pure profit for the sellers. Really makes you wonder how any store can actually go underwater if they have an 80% item markup baseline with which to work with to entice buyers.

I don't think that an exercise machine with an 80% markdown is recovering its manufacturing and material cost. But that cost, and what the store paid for the nonreturnable inventory, are both "sunk cost" and at some point one ignores sunk costs and just moves them for what little the market will bear.