Lower prices possible
PriceSmart Inc. (Barbados) is not about to get embroiled in the high and low price game.
In fact, management of the 13-year-old membership club says it already has the lowest prices it can give and is not worried what others may be offering.
Country Manager, Benjamin Woods put this into perspective by noting that the concept behind the club was to be able to leverage the amount of items it purchased, directly from manufacturers, at the lowest price possible that can in turn be passed on to the customer.
Therefore, he explained that while others might be able to offer one price this week and another next week, PriceSmart had given the guarantee to it’s membership by virtue of joining that they would be fair and constant in what they offered.
“Our goal is the dead net lowest possible price period. If you want to buy at that price, you need to have a membership to do it. We can walk around this club right now and we can start picking off items and you can look at the membership cost and you can look at the price and you can save that money back in the membership the first time you shop. So you have to have that ticket to get the value.
“You can’t have it both ways, and we are not going to play the high or the low game or the two-tier pricing on anything that we do, because to us that erodes the value of what the membership is all about. We are committed to making sure that our members get the lowest possible cost. It’s a mutual relationship. When they purchase a membership, they expect that they are going to receive the best possible price. It’s our job to ensure we give it to them,” said the top man, who flew in this week for business at the club.
In fact, Woods told Barbados TODAY the reason they were not worried about the prices elsewhere was because they had no way of knowing whether when others dropped prices or offered any significantly lower price, if that other business was making any profit.
The way the business operates, he explained was on “a very disciplined philosophy” when it comes to sourcing items, managing the cost structure to move those items to the club, paying requisite duties and taxes, with a low cost operation and still being able to offer the product at “the least among of money that we could sell that item for and still turn a respectable profit”.
It was all about leveraging, he stated. And to explain the concept of leveraging, Woods broke it down that for each of the regions PriceSmart operates in, there are buying teams who would be responsible for sourcing products directly from the manufacturers, thereby cutting out “the middle-man”, using the fact that they were shopping for large quantities to drive down the unit cost on each of the items, then being able to get those items to market, passing those items through as few procedures as possible, while still adhering to the law of the respective countries.
The concept, he explained, was what they called “less fingerprints”, and it resulted in lower costs to the members.
While they shopped in bulk, he further explained that this did not mean sourcing every brand or kind of a particular product that was available, but making sure they covered the range. For example, if they are selling microwaves, choosing the best three types, making sure there was a small, medium and large size and ordering a particular number of units from the manufacturer. If those items sold quickly, then they would use the fact that they were able to sell more than expected to negotiate a lower price per unit from the manufacturer, thereby being able to pass that on to the customer. (LB)