March 16, 2009

Scratching Your Head Before Passover

What to do? The invoices for some of the Passover goods are at least 10% higher than they were just a year ago. Many of my customers lost their jobs, at least two have their homes in foreclosure. My prices will most definitely come under closer scrutiny than usual. This was the dilemma faced by several retailers as they set up their Passover aisles. Some already complained to me that they work on extremely low margins and they sometimes wonder if it is worth the effort. Of course, they can’t be serious because if they took a vacation on Passover, the customers might take a vacation the rest of the year from that store. One retailer told me that he would try to make up the difference “by adding a few pennies to the higher priced items.” He was presumably referring to the gourmet items or even perhaps the Shmura Matzoh. But no, shoppers are aware of the price differentials on the Matzoh.

In addition to the pricing dilemma, the retailers also must play the game with a significant merchandising program. They can’t afford to sit out the promotions and discounts game if everyone else is doing it. If you still don’t feel sorry for them and wonder why Passover foods should be more expensive, spend a day in the store and see just how labor intensive Passover is. Watch them restock shelves, cover over certain aisles, line many shelves and countertops and clean almost every nook and cranny. But still they scratch their head, rationalizing that even if margins are smaller, they are in it for the long haul.

In one store I was in, a price sticker was covered over with three additional layers. When I asked the owner why, he flatly said “that’s how many times we’ve changed our minds.” Sure, it might look like the retailers are raking it in, but when you watch them scratch their heads, you realize that it’s not that simple.