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11-13-2013, 01:12 PM #1
The error in this analysis is you are looking at merchant's gross sales vis a vis their profit. A merchant may buy or make a shirt for $2 then sell it for $6, but the $6 cannot realistically be factored off. The merchant still has other expenses that need to come out of the $4 markup. Rent, wages., utilities,. etc.
Once you get into 3 or 4 stacks, how much of the merchant's profit is eaten up? My guess is ALL OF IT. How are they supposed to pay their staff? Rent? Suppliers?
It is a disaster just waiting to happen and the game of musical chairs will in fact end at some point. It is this practice unfortunately that is incredibly short sighted for a quick buck and could end up creating irrevocable damage to the industry as a whole.
So, as I say to merchants looking to stack...." I hope that extra $5-10K goes a REALLY LONG WAY, because it will most likely be the LAST money you will be seeing for a while."