News

Investor blog discusses retail markups

October 17, 2012

A recent blog on MarketWatch.com highlighted the range of retailer markups and the effects they have on wholesale costs.

At the low end of the spectrum is Costco, where the average markup is 10 percent. The low markup puts them in a competitive position against all others, including low-overhead online retailers, the blog reported. 

In the middle are retail giants Walmart, with an average 32 percent markup, and Target, with an average 46 percent markup. While these retailers are noticing pressure from online vendors, they're also fighting back by demanding help from suppliers. Combined with the fact that they sell a lot of items which are not practical to ship, they are less vulnerable to online competition, the blog reported.

The high range of markups include retailers such as Nordstroms at an average 67 percent and Niemen Marcus at an average 65 percent, according to the blog.

Bricks-and-mortar stores are never going away — rest assured, shoppers! — but how they’ll look and who will survive is anybody's guess. An entirely new type of shopping model might emerge, such as a low-overhead, low-markup "showroom." It’s also conceivable that conventional shopping malls will evolve into something resembling today’s outlet mall, where brands deal direct with consumers, for the simple reason that it's more efficient.

Read more about retail merchandising.