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General Retail Business Issues/Target Margins of Retailers for Bathroom Hardware

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Question
QUESTION: We are a wholesaler of bathroom hardware in Canada (towel bars, robe hooks, towel rings and paper holders).  I am interested to learn what a retailers target margin would be in their stores for this product so that I may price my wholesale prices accordingly.  I know it won't be an exact number but a ballpark would be helpful.  Specifically I am looking to sell to a "discount department type store".  Your help, insight and direction is greatly appreciated.

ANSWER: Dawn, the margin a store like Home Depot would want would be around 35 to 40% while a specialty retailer would need at least 50%. Hope this helps, I am on a plane at the moment and typing this on an iPhone! And rember, the margin is on selling price and not cost.

---------- FOLLOW-UP ----------

QUESTION: Thanks for the quick reply!  Don't get in trouble for having your iPhone turned on!  Ok, what would mark-up look like then in the same scenario?

Answer
Dawn,
Sorry for the delay, long flight! Here is an example using a wholesale of $25.00, if the retailer pays $25 and needs to make a 40%  margin, all they need to do is to divide the cost ($25) by the reciprocal of the margin percentage which is 60% (selling is always 100% so if the margin is 40% then the cost is 60%). So, $25 divided by .60 equals $41.66 which is not a retail price so it would be rounded up to $42 which if they sold it at that price at a cost of $25 their gross profit would be $17 which is 40.5% of the retail price of $42.  

I know that this may make you want to pour a glass of wine! But take your time and re-read it many times and plug in different numbers in place of what I have given you. Trust me, eventually it will make sense!  You can email me directly at jimdion@dionco.com if you have more questions! My Father was from Quebec City and I was born in Chicago, I lived in Toronto for ten years and both of my kids are Canadian citizens and currently live in Chicago.

General Retail Business Issues

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James E. Dion

Expertise

Most questions about trends in specialty retail, how customers are changing both in the US and Europe. Demographics for all countries as they relate to retail trends and issues. Store Operations, Buying and Merchandising.

Experience

Over 40 years in the retail industry, store level, store manager, buyer, merchandise manager, Vice President.

Education/Credentials
BS Psychology, MS Psychology, PhD(abd) Industrial Psychology Illinois Institute of Technology

Past/Present Clients
Microsoft, Harley-Davidson, Ritz-Carlton, Hummer, Williams-Sonoma, Ace Hardware, Coleman Spas, Aldo, Intel, Dell, Safeway, New Balance, IBM, Kodak, Bata International, Nortel Networks, Honey Baked Ham Co., Man Alive, Highsmith
B.S Chicago State University M.S. Chicago State University PhD (abd) Illinois Institute of Technology

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