LEE VALLEY - VERITAS

[Roughcut]

Why would Lee Valley/Veritas need to make an application or get permission to open a tool shop in UK? :?

Someone might have an exclusive distribution agreement for Veritas in the UK

Yeah I suppose.
But I can think of several well established tool suppliers that sell Veritas tools, so don't think it's that exclusive.

 

[marcros]

they all buy from the same importer though.

 

[Bluekingfisher]

I believe that importer is Bri Mark?

 

[marcros]

yep

 

[Random Orbital Bob]

Veritas would need to balance the revenue they already receive through Brimarc with any possible additional revenue they would receive by going direct. It's a complex decision because although the capital investment is easy enough to calculate plus the operating costs of a store, they cant possibly know in advance how much of their current distribution revenue would be cannibalised by going direct.

I agree its a shame because they are a very well respected company in Canada and the US and I do genuinely believe they could operate a thriving business here.

On the pricing issue, I'm convinced it is part of the reasons many of you have touched on ie a combination of the cost of doing business varies enormously from country to country coupled with the market expectation of price. I've worked for US firms most of my career before going solo and when part of a global firm, we once had the accountants do a study to analyse the cost of doing business in all our global operations. The list ranked Tokyo as the most expensive and London next. The thing which tipped Japan over the top was the exorbitant price of real estate and therefore premises rental costs. In the UK it was the combination of real estate with high payroll costs. No surprises for guessing the US was by far the least expensive place to operate a business due to the economies of scale, coupled with surplus land which the largest homogeneous market place in the world has offered for a long time now.

However, there is another slightly more sinister factor at work, which Jacob did touch upon. We also had a global price list for the same firm I worked for. That price list was in mythical dollars (we called them Atlantis dollars) and each operating country had an uplift (or downlift) from the Atlantis price list. The amount of uplift was related simply to what the sales management in that territory believed the market would bear for the product. In the US, the uplift was negative ie they charged less than Atlantis list price, in the UK it was 1.5 x higher than Atlantis list. In Japan, 1.4.

So the price is absolutely part of the culture of the country in which you do business. If customers expect to pay high prices because that's part of how they perceive quality and the operation can get away with it then they will. Its just that simple. Competition is critically important to prevent that monopoly mentality so if you can buy them direct from Canada from LV or their outlets in the US then that consistent behaviour will eventually start to hurt Axy et al and they will be forced to cut their profit margins to compete. It is simply the way business functions. The unacceptable face of capitalism I guess.

Personally, if the difference is big I do tend to do the import thing myself because I also cant stomach having the mickey taken out of me. If the difference is small, I'll tend to go with the local more convenient option. So cost of doing business is part of it, greed is also in there.

 

[marcros]

the other big question is why they need to open over here? A store is great, but for me, if it is the wrong side of Leeds from work or home, it is easier to get things sent by courier, post etc than to get them. It is nice to handle some items before purchasing, but personally i find it difficult to appraise a product in its new state- i look for reviews from people that have used them for a few months in anger, not unwrapped it live on camera and used it for the first time there and then.

Most people are wanting cheaper prices and/or access to the full range of products. Lee Valley are providing both by shipping from the USA (or Canada). We are not even having to wait a long time for delivery- it is as quick as many UK deliveries, or a day or so behind the best UK deliveries. This is how this thread started, a positive note on how good the service was.

The power of the internet allows us to purchase from around the globe and pick and choose the best deals- not just between the two local shops, or the best within travelling distance, the best price advertised in a magazine. throughout the world...

 

[Phil Pascoe]

A little different to "luxury" tool market, but on a more day to day basis a friend of mine who was an electrician used to deal with one supplier that was not known to be the cheapest. When I asked why, he said that he was well aware that he could get individual items cheaper elsewhere but all he wanted was to get what he wanted when he wanted it without being robbed. (Of course, most of these costs would immediately be passed on , anyway!) As for Bob's "Atlantis List" - breweries used to operate them - that was one reason why beer was traditionally cheaper (e.g.) in northern working men's clubs than in the south. Affluent areas of the south had A.L. + price lists, the poorer north started with A.L. - price lists. Any price haggling in the south only brought the price down to what it should have been in the first place. One area subsidised another. (As happens with new car prices internationally, undoubtedly. )

 

[Cheshirechappie]

I hear what Bob says about 'Atlantis dollars', but I have some doubts about whether that applies in this case (I agree that it does in other cases - there was a well-publicised example over new car prices a few years ago, and I'm fairly sure it applies to such things as electronic goods, consumer durables and luxury items.) The market for high-end woodworking handtools is VERY niche, and the labour content of making the tools properly is considerable, so the 'factory gate' price is not Far Eastern cheap to start with.

If as seems the case from reading the thread, there are two stages the tools have to go through if bought from a UK retailer - the importer and distributor, and the retailer. Both have business costs to cover, and a mark-up to add for profit (I doubt that mark-up is outrageous, but it has to be there if the business is to sustain itself). The importer presumably also has to bear the import duties. There are also two sets of shipping costs - factory to importer, and importer to retailer. All that must reflect in the final price paid by the customer.

Alternatively, buying direct, the cutomer pays the factory gate price, plus one profit margin, shipping costs and whatever import duties and VAT are levied at this end. That cuts out the mark-ups of two middle-men. The downside is that you can't inspect and handle the item before you buy.

 

[PAC1]

But who owns Bri marc. There is no need for two profit margins

 

[Peter Sefton]

I hear what Bob says about 'Atlantis dollars', but I have some doubts about whether that applies in this case (I agree that it does in other cases - there was a well-publicised example over new car prices a few years ago, and I'm fairly sure it applies to such things as electronic goods, consumer durables and luxury items.) The market for high-end woodworking handtools is VERY niche, and the labour content of making the tools properly is considerable, so the 'factory gate' price is not Far Eastern cheap to start with.

If as seems the case from reading the thread, there are two stages the tools have to go through if bought from a UK retailer - the importer and distributor, and the retailer. Both have business costs to cover, and a mark-up to add for profit (I doubt that mark-up is outrageous, but it has to be there if the business is to sustain itself). The importer presumably also has to bear the import duties. There are also two sets of shipping costs - factory to importer, and importer to retailer. All that must reflect in the final price paid by the customer.

Alternatively, buying direct, the cutomer pays the factory gate price, plus one profit margin, shipping costs and whatever import duties and VAT are levied at this end. That cuts out the mark-ups of two middle-men. The downside is that you can't inspect and handle the item before you buy.

I think this sums up the case very well, if LV did have a UK shop or the dozens of UK shops the current system offers. Then the cost would still be higher than buying direct as LV, as (LV UK) would have to employ staff, run premise and carry stock with the cash flow issues and interest charges that carries along with advertising, website maintenance and all the other costs running a business requires.
The Americans also have a manufacturer's suggested retail price (MSRP) or the Resale price maintenance (RPM). They are very surprised by our EU system where we can sell for what ever we like as they realise that it requires all levels of the supply chain to make a profit and survive to help the customers. If someone continues to undercharge for the supply of goods they will ultimately either go bust or not be able to offer a high level of customer support.
I am sure that Brimarc have worked very long and hard to build the LV brand within the Uk and supported the customers well over the years and this all costs.
If there is only one supplier then the prices would not be kept in check as the sole supplier will charge whatever the market will stand.
We all like to save money and we all like to earn a living it's trying to get the balance right with the level of customer service we require when things go wrong.

 

[PAC1]

Peter
1. Brimarc are not paying Lee Valley catalogue prices to import
2. They do not import one tool at a time
3. The exchange rate has improved 20% in the last year or so, the prices in the UK have not reduc
4. I bought a £300 plane for £160 plus £25 courier and £50 import duty including a £12 handling fee. I still saved 20%.
I accept people are in business to make a profit and generally I support the good tool shops but the current situation is not a fair allocation

 

[Cheshirechappie]

Peter
1. Brimarc are not paying Lee Valley catalogue prices to import
2. They do not import one tool at a time
3. The exchange rate has improved 20% in the last year or so, the prices in the UK have not reduc
4. I bought a £300 plane for £160 plus £25 courier and £50 import duty including a £12 handling fee. I still saved 20%.
I accept people are in business to make a profit and generally I support the good tool shops but the current situation is not a fair allocation

I very much doubt there is any deliberate intent to stitch anybody up, but as the customer, you have the Ultimate Choice. You can:

1) Buy somebody else's plane or whatever at a price you are prepared to pay.
2) Buy a Lee Valley plane or whatever direct from Canada and pay shipping and import duties.
3) Buy from a UK retailer if you wish - some may regard the need or desire for that particular tool outweighs the additional cost (in the same way that some people own BMWs rather than Fords).

Your choice.

By the way, I think whilst owned by the same holding company, APTC and Brimarc are seperate trading organisations, so any transaction between the two would be regarded the same under UK accounting and tax laws as between Brimarc and any other UK retailer.