I keep a file on my laptop named “Research Whitepapers.” In it I keep academic research about retailing in general and the antiques business in particular. There have been a lot of studies done on the former, but few on the latter.
I recently re-read a paper from 1999, titled “Micro retailers, though often neglected, need help” authored by Weller, Patton, and Chandler of Eastern Illinois University [https://bit.ly/2QVj2XV]. Micro retailers are so small, they assert, that their needs are often overlooked by the Small Business Administration and industry leaders. They wrote: “Antique shop owners exemplify the micro-businesses of today, who lack the resources necessary to hire a cadre of experts to help with production, marketing, and financial decision making.”
Weller et al. presented their paper at the 1999 spring conference of the Marketing Management Association as “Marketing Tactics of Antique Dealers: Implications for Business Practices of Entrepreneurs” [https://bit.ly/2QSgolL]. The research sought to compare the marketing tactics of antique shop owners with those of antique mall owners.
I appreciate the efforts of the research team, but they missed the mark on several fundamental issues. Below I review a few of the conclusions that I took issue with. My format will be to list a research point and then list shop owners’ responses and the mall owners’ responses. I add my own opinion as a “reality check.”
Basic research assumptions (based on dealer interviews) were:
Antique Shop owners are in business primarily to support their collecting hobby.
Antique Mall owners are in business purely for the sake of profit; and have no particular love for antiques.
Reality check: Right out of the gate, researchers misunderstood (or failed to clarify) the role of the “antique mall owner.” Primarily, a mall owner is a landlord rather than an antique dealer. To question antique mall owners about pricing strategy is completely misguided. A mall owner doesn’t care how much items sell for; his profit comes from booth rentals, commissions, and fees. Booth operators (as well as shop owners) are antique dealers and may or may not be using a booth to support a collecting hobby. Shop owners certainly want to make a profit; most support themselves and their families with their antiques business. Booth operators, not mall owners, should have been the subject of this inquiry, because their answers would have more accurately reflected the tactics and attitudes of those in the antiques business.
In the survey, shop and mall owners were asked to share their thoughts on several subjects, and their responses were listed in a table titled “Attitudes Toward Marketing Tactics by Type of Ownership.”
Here are the highlights:
Antique Shop dealers generally believed that cost (wholesale) is the most important element in a final selling price. Interviews revealed that “the antique shop owners felt they must recapture the cost they had “invested” in a particular item ... shop owners did not understand ... the concept of sunk costs. Even though they had more freedom to negotiate a price (than mall owners) they were restricted by their inadequate understanding of ... cash flows.”
Antique Mall owners were primarily motivated by inventory turnover when they adjusted a price. They, in essence, worked on commission and earned some of their revenue based on the sales that were made.
Reality check: Sunk costs (the concept that once money is spent it’s gone, and you’ll never get it back) doesn’t apply to inventory; it applies to expenses and capital improvements. Regarding pricing, the amount a shop owner pays for an item has absolutely nothing to do with what he sells it for. By such thinking, a Starbucks latte should cost less than a buck and a text message should cost about a penny per 100,000 texts. Most customers have no idea what a given antique should cost; variables such as age, condition, quality, and rarity all impact price.
Collectors know the market value of the items they collect, as will other dealers, but that is why we negotiate. Retail prices of antiques should be kept high enough to create perceived value; they can always come down but can rarely go up. Mall owners and their dealers usually agree on a discount amount, but it is the dealer who sets the selling price, not the mall owner. For a more in-depth discussion of pricing, see my April 2013 Behind the Gavel column “Anchoring, Bundling and Bracketing: Proper inventory pricing has nothing to do with ‘fair value’” [https://bit.ly/2Dnq2ds].
2. The importance of price tags
Antique Shop: Shop owners generally felt that price tags were important, but not essential for doing business.
Antique Mall: Mall owners felt that price tags were essential for doing business for two reasons: 1. So the dealer who owned an item received credit for a sale, and 2. Because tag switching and customers “relocating” items were commonplace.
Reality check: Of course, a good tagging system is crucial for an antique mall, and less important for a shop. In truth, some shop owners deliberately omit tags so customers will have to ask about items they are interested in, giving the dealer a chance to engage a customer. But, creative tagging offers a great selling opportunity for both mall booth operators and shop owners. For further discussion of creative tagging, see my January 2012 Behind the Gavel column “How crafting better tags on your antiques inventory will help you exceed customers’ expectations” [https://bit.ly/2xzB9dQ].
3. Having an assortment similar to competitors
Antique Shop: “Interviews with the antique shop owners revealed that their stores were an outgrowth of their love for antiques ... inventory was developed as a result of their expertise in a particular type of antique. The antique shop owners, unintentionally, create a differentiated inventory because of their special interests. Yet, they have not considered the desires of the market. Rather, they must hope that the market is also interested in what they are interested in.”
Antique Mall: “Mall owners, on the other hand, were interested in developing assortments that were appealing to a wide range of customers. Consequently, the mall owners used the unique interests of the dealers to build an assortment that was broad ranging and thus, unintentionally perhaps, developed assortments that were similar to their competitors.”
Reality check: All antique dealers curate their inventory. But, to suggest that they buy what they like and hope that someone else likes it enough to buy it is pure nonsense. The supply of classes of antiques and collectibles ebbs and flows, and dealers must be flexible about what they buy in order to keep their stores stocked. The dealers I know carefully consider “the desires of their market” before making an inventory purchase. Personally, I don’t buy anything for resale unless I have a pretty good idea which type of customer might buy it.
Antiques retailers more similar than different
The study concluded with a re-statement of the basic premise, which was “antique mall owners and the owners of antique shops exhibited significantly different overall perceptions of the marketing tactics that were the subject of this investigation.”
Reality check: Antique dealers – whether shop owners, mall booth operators, online sellers, or show specialists – are more similar than they are different. They enjoy picking in all its variety, buying, selling, researching, and dealing with customers. They don’t expect to get rich, but all want to make a comfortable living. They are in the business because they love it. In defense of the researchers, it’s impossible to capture the essence of the antiques business with surveys and interviews; one must roll up their sleeves and figuratively “get dirty.”