my fyre blog: Confessions: The Furniture Industry Is A Secret Cabal

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Confessions: The Furniture Industry Is A Secret Cabal

via Consumerist by Ben Popken on 9/26/07

"Most people do not realize that home furniture has a 200% to 400% markup on it. Some has less, but that is where the majority falls. In fact my friend was a furniture industry insider and at the Highpoint show, a furniture company told him to mark up the price of a wall unit by 400%. One wall unit he came back home with for $1800 had a retail price of $6500. So when these big stores advertise in the local papers with 50% off MSRP sales, they could still be doubling their money. Not only that, many stores advertise their sale prices are 50% off MSRP, yet if you dig a little deeper, you might find that they never sold the pieces at MSRP to begin with, so they are really just dropping their price maybe 5 to 10%. Some stores don't drop their price at all, because they were already at MAP. This means that store really is not having a sale!"

You'll find that manufacturers set their so called "MSRP" price, and then usually in secret between them and the home furniture stores, there is another price called MAP, which stands for Minimum Advertised Price. This MAP price is the bottom threshold selling price allowed by the manufacturer. One mattress store manager even showed me the MAP price on all his mattresses. His sales people get 15 to 20% commission for selling at MSRP, and they only get 7-10% if they sell at MAP. Naturally you'll find a lot of resistance from salespeople to sell at MAP. In my opinion, the term MSRP should be illegal to associate with furniture. Street Price is a better number to use.
Most manufacturers dictate to the stores that they cannot sell the furniture for less than MAP or they can lose their franchise. Often times there is a penalty, sometimes up to $15,000 written into the contract. Many stores like to cut to the chase and just sell at the MAP price. Most of the online furniture discounters in the Carolinas tend to sell at MAP price. If you call them to talk price, always ask them to go lower, until you hear them mention that they are already at the MAP price and cannot go lower.

If you are talking to Online Retailer A and you have quotes from Online Retailer B, ask Retailer A to beat that quote. Verify the price across other sites as well. By selling at the MAP price, a furniture store still makes a decent profit, and you get a nice "discount" off some useless MSRP number that really means nothing anyway. That's how the game is played. It's kind of stupid, there's a lot of charades and smoke screens, mixed in with misinformation, but that's the game.

We went into a mattress store and simply stated which model of Stearns & Foster mattress we wanted, and talked the sales person down to the MAP price. I always ask them "what is the MAP price for this mattress?" This startles a lot of salespeople, who are not accustomed to us "morons walking in off the street with our knowledge and internet prices". Sometimes it involves going to a few home furniture stores to learn for real what the MAP price is. Some home furniture stores like to lie and quote you an MAP price this is higher than the actual MAP price for your furniture. Some may lie to you and say there is no such thing as MAP. Unfortunately there is no Kelly Blue Book or NADA book for us to lookup home furniture prices or furniture store "dealer cost", so you cannot determine how much MAP is, you have to shop around and try to get a consensus, based on what salespeople are willing to tell you. Please don't email me asking where you can look it up, it's nonexistent. They don't have to tell you the MAP. You also don't have to open your wallet.

- Anonymous

Lessons:

The value of good research
The need to comparison shop
With price-negotiable goods, try asking straight-out for "MAP"
Remember that your ability to walk away is your strongest negotiation tactic, never forfeit it by getting emotionally attached to a purchase

(Photo: Paul Keleher)