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[Bigron]

.....this strange retail pricing stratagem. Our local Poundland has spades and forks marked as "£5, or 2 for £5".
The staff declared it crazy, too!

Ron.

[STEMO]

BOGOF

[Bigron]

No need to be rude.

Ron.

[Lizzie Zoom]

BOGOF

Yes, that is right.

It is all driven by volume; how many units the retail company has purchased, probably many tens of thousands across their empire, at a unit price that allows for such a seemingly crazy offer that you, and everyone else, starts talking about and the retailer hopes will drive thousands of customers into their stores!

It is great marketing that 'tells' the customer this retailer gives them 'fantastic offers', with two units being 'given away' for the price of one, so what other promotions are on offer in store?  In fact they retailer has negotiated a unit price from the supplier that still gives them a great profit over the tens of thousands that will be sold when each is sold for just £2.50.  The all important customers are happy and so is the retailer as other products are sold on the back of the extra footfall. That gives any retail company the yearly growth the business must generate to remain competitive and viable.

Smoke and mirrors Ron, smoke and mirrors!!

With Poundland and the like it is still a big increase on "everything being £1"!!  That is one reason why Poundworld and many 99p stores have gone to the wall.

[Bigron]

Understood, Lizzie: I only wanted a spade but when told I could have two spades or a fork instead, I was delighted - not bad quality, either.
Probably won't last the 50 years that my old one lasted, but I may not, either!

Ron.
x

[Lizzie Zoom]

Understood, Lizzie: I only wanted a spade but when told I could have two spades or a fork instead, I was delighted - not bad quality, either.
Probably won't last the 50 years that my old one lasted, but I may not, either!

Ron.
x

But at £2.50 each who cares eh Ron?!

[Andy B]

As you were in Poundland, why weren't the spades a pound ..... 

[Mister Rog]

BOGOF

Yes, that is right.

It is all driven by volume; how many units the retail company has purchased, probably many tens of thousands across their empire, at a unit price that allows for such a seemingly crazy offer that you, and everyone else, starts talking about and the retailer hopes will drive thousands of customers into their stores!

It is great marketing that 'tells' the customer this retailer gives them 'fantastic offers', with two units being 'given away' for the price of one, so what other promotions are on offer in store?  In fact they retailer has negotiated a unit price from the supplier that still gives them a great profit over the tens of thousands that will be sold when each is sold for just £2.50.  The all important customers are happy and so is the retailer as other products are sold on the back of the extra footfall. That gives any retail company the yearly growth the business must generate to remain competitive and viable.

Smoke and mirrors Ron, smoke and mirrors!!

With Poundland and the like it is still a big increase on "everything being £1"!!  That is one reason why Poundworld and many 99p stores have gone to the wall.

Well said and explained Lizzie  But of course this is all driven by the marketing people, and they do not always get things right.

I'm in the wine trade. I recently saw wine in Lidl at £2.99 a bottle

Minus VAT = £2.49

Minus Excise duty = £0.32

Trust me at .32p per bottle nobody is making any money, not even the empty bottle manufacturer

I recently met a senior manager from Lidl. He had no idea that excise duty was £2.17 per bottle. I just wonder

[TheBoy]

You notice these sorts of marketing techniques are far less common outside the UK (or UK holiday maker destinations).  The British public is incredible thick, probably the thickest in the 1st world by some margin, hence your see less DFS or ECP style sales abroad.

[Bigron]

So the government takes the lion's share, as usjual, Mister Rog.

Ron.

[Varche]

You notice these sorts of marketing techniques are far less common outside the UK (or UK holiday maker destinations).  The British public is incredible thick, probably the thickest in the 1st world by some margin, hence your see less DFS or ECP style sales abroad.

I think it is just a question of time before that sort of marketing makes it to the likes of Spain for example. We still have corner shops selling stuff at the same price as the big city i.e. rrp. The large supermarkets do offers but not the crazy ones I see in UK supermatkets.

On my infrequent trips to UK , I love going to a poundworld type  shop with my dad and innocently picking something up and asking him how much it is andthen saying really. Simple pleasures.

[Mister Rog]

So the government takes the lion's share, as usjual, Mister Rog.

Ron.

Yep! The odd thing is that the excise duty is the same regardless of the cost of the wine.

Excise duty on a bottle of wine at a vineyard price of €1     = £2.17
Excise duty on a bottle of wine at a vineyard price of €500 = £2.17

VAT is calculated on the actual cost of the wine plus the excise duty.

€500 ! I hear you say ! Yes. The most expensive wine in the world is probably Domaine de la Romanée Conti, which will cost you around £10,000 PER BOTTLE ! ( depending upon vintage of course    )  Not available in Lidl, Aldi, or Tesco  People who buy this are of course either Chinese businessmen or nuts, or both

[Varche]

We buy very nice cava for 1 euro 65 cents. The bottles empty are heavy due to needing to be strong for  gaseous contents. I have never got my head around the economics of it.

There again Spain , I think is the biggest EUropean producer of wine and sells millions of litres to France in tankers at 65 cents ( i read) . They then mix it with French wine and sell it on as French legitimately.

[Sir Tigger KC]

I remember as a child in the 1970's my parents getting a bottle of wine for special occasions and it was always a Spanish wine called Don Cortez IIRC. 

Looking back I think they felt really posh having wine on the table! 

Although I bet it was like vinegar! 

[Mister Rog]

We buy very nice cava for 1 euro 65 cents. The bottles empty are heavy due to needing to be strong for  gaseous contents. I have never got my head around the economics of it.

There again Spain , I think is the biggest EUropean producer of wine and sells millions of litres to France in tankers at 65 cents ( i read) . They then mix it with French wine and sell it on as French legitimately.

A bottle of wine, excise duty

UK     = £2.17
Spain = 0

The French get really pissed off at Spain dumping wine in France. I know a dutchman with a large French vineyard, but the cheap wine he sells in Holland comes from Spain.

I import wine from France, all completely legal and done properly. I worked out that even if the actual wine was free from the vineyard, I still could not sell it for less than £4.50 a bottle. Transport, excise duty, storage & handling, VAT. And I have made no profit on that. Supermarkets can do it due to their size, plus they are happy to not make any or much profit in order to get customers into the shops. Also all of their wine comes from big producers, big enough to produce the huge quantities required.