It’s that time of year again when shopping stores around town start to put out Christmas decorations to entice customers. Retailers want to make sure those who like to start buying gifts early get what they want at a good price. Stickers with the word “sale” start to appear at the stores windows, but what does it mean?
A store is a business like any other – it relies on profits in order to pay for overheads including manufacturing, materials, shipping, insurance, retail shops, staff, commissions, and so on. Naturally profits have to be high to cover the various costs associated with running a retail business.
Many people when they see the word “sale” immediately assume that purchasing then they will be saving lots of money, not contemplating that the original mark-up may be very high and it doesn’t make sense to spend-money to save-money!
One of the Gold Smart team was walking along Queen Street this morning and came across an unusual sight. At first he thought there was someone famous inside Michael Hill Jeweller due to the number of people gathered outside, however soon noticed that what was happening was an AUCTION. That’s right! An auction for jewellery was happening in the middle of the street. He talked with one of the organisers to see what was happening and the staff member confirmed the street auction.
The Michael Hill staff were yelling, “$320…who gives more?” and people appeared excited about the “good deals” they thought they were making. Asking the staff for a little more information, she mentioned their store is currently selling gold and silver at half price, and that now is a great time to buy. Our colleague was thinking, 50% off what, retail prices?
Interestingly, the value of a jewellery in New Zealand is not sold or marketed on the inherent metal value (unlike many other countries around the World), but the aesthetic design, branding, manufacturing and sense of value to society. When people buy jewellery they normally pay much more than the metal price. Some items can go over 1,000% above the actual gold and/or silver value. This is especially true with certain brands and how well known they may be.
The price carries the workmanship, the brand, the design, overheads and you will be paying much more than the actual material costs. Jewellery may be considered like a work of art for it’s aesthetic value. Those aware of gold and silver metal value will be naturally more aware of the true worth of such items and will avoid spending too much money.
Next time you hear someone screaming they have a half price gold and silver jewellery sale – be aware. You might be getting a deal compared to normal retail mark-ups, however in most cases you will still end up spending much more than perhaps you should. If you want to know what something is worth, take it back to the shop the next day and see what they will pay you for it!