Monday, May 30, 2016

Retail Roundup - Restoration Hardware: 25% Off Forever

Well this is different.  Restoration Hardware has introduced the Grey Card (playing on 50 shades thereof?)... for $100 a year you get 25% off everything 24/7/365.    Obviously, if you are about to buy a couch to $400 or more, join....  here is a story that makes the obvious points...

Is Restoration Hardware groping toward the superior retail model of customer-ownership?  I belong to REI, PCC, and a credit union, companies all customer owned.  They tend to last through the ups and downs and offer zero investment opportunity.  Stability over speculation.

Next I visited the Amazon Brick and Mortar Store down the way, and it too of course has a membership fee, $99 I think.  The big draw is free shipping.  The big expense for Amazon is "free" shipping, hat "last mile" being the most expensive in the entire logistical chain.  Hmmmm... is Amazon experimenting with Brick & Mortar to escape the cost of the last mile delivery?  Will they eventually become pick-up depots for you merchandise?  At that point, what is the point of Amazon?  Is this the beginning of the end for Amazon?  And yet another indication that the small retailer will come back.

Costco has a membership fee too.  I was pulled out of line last visit and told I buy enough to warrant being in their Executive Plan.  here are some benefits:  they were mostly usury related.  Sorry, none of that for me.  But as an aside, the state obliges Costco to collect the tax on the "before rebate" price of merchandise bought.  So if I get what, $20 worth of whatever for $15, the hegemon requires Costco collect tax on the $20, not $15, even though I only paid $15.  I know that any rebate is thus, since if you buy the computer, and send in for the rebate, they do not rebate the tax.  But really, making Costco collect taxes at that level of granularity?  What do they do with that tax money anyway?

Met a couple of buddies for hand dipped haddock fish and chips.  I've come to refuse anything not prepared in house, and these were, quite good.  The bill came, $30 for a beer and fish and chips.seems higher than the menu prices.  Studying the bill, I noted 19% service charge.  Fine with me, but I inquired of the waitress how come?  And is it optional?

The how come of course was because Seattle is moving to $15 minimum wage, and this restaurant is trying out a model where at 19% they will have the revenue to cover the (face it) illegal aliens washing dishes and other entry level tasks that USA kids used to do, but is now effectively outlawed.  I questioned her closely, she gets 10%, and the other 9% goes to the other workers, so in effect she was actually getting less now, although in most restaurants the waitstaff kicks in to the support staff for the night.

Is it optional?  No, if we don't pay, then they call the cops (I guess).  Either the service was terrible and all 19% is taken off, or it is due?  How long has this been going on?  A couple of months?  How have customers reacted?  Most shrug and live with it, some have been outraged and never came back.

The University of Washington owns a famous landmark Seattle Restaurant group called Ivars.  Initially UW claimed to be exempt from Seattle laws because it is state property, not city.  They relented.  In their restaurants they introduced no tipping, but jacked up prices 30%.    Their waitstaff used to 20-40 year pros.  It looks now all gone.  Now kids working for $15 an hour, no one a professional waitstaff.

The $15 an hour is not about living wage nor justice or anything else.  It is all about government union members whose contracts are all "minimum wage plus..."  As the minimum wage goes up, their wages jump exponentially, since their pension, etc contributions jump up to as well as their pay.  Next their supervisors will warrant a pay increase given the lack of respectable premium for their work over the lackeys.  Not the brightest crowd, their increase in wages will largely be taken back in the form of taxes, and their wealth-effect lifestyle will come back to haunt them at pension collection time.

Of course there is no money for this, it is all just tacked onto the next generation, but it does present some principals.  Start a family.  A family business in time can have people who produce but need not be paid the moneys subject to taxation etc.  The business is the lifestyle, so so many costs that are after tax for an employee, are before tax as lifestyle.  When your cost of living is effectively 1/2 of everyone else, you can go farther faster.

Amazon, Restoration Hardware, The Chain Pub and Grub, are all trying new things because they are in trouble.  Most of the problems are too big for any candidate to do anything about.  But noticing the trouble, you can position yourself to float above it, instead of try to swim through it.

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