Posted Byrwaters on May 09, 1998 at 19:38:18:
if anyone could help me with a trend that a close competitor of mine has started. i am in the retail sporting goods business and have been for 17 years.have had lots of competition come and go. but this one store i think is doing well but is a franchise. i know what margins i have to make to stay profitable. so i stick to my guns on most of my prices, and we have alway been closely priced. in the last couple of months he has started dropping all of his prices by about 7 percent. he has to be losing 5 percent off of the bottom line of net profit by doing that. does not make sense to me, because we just got into the meat of out selling season.
do you think i should ignore his prices and stay profitable, or should i go down and match him, and see what he is up too.remember i have been in this store for 18 years and he has been in town for 6 years. also remember i donot have to pay a franchise fee in the range of 2or3 percent of sales, as he has to . we both gross a little over 1.4 million a year in sales a year.
please help getting very frustrated.
thanks rbw