Gene Hoffman

Not Everyone Going Smaller Box Route

January 31, 2012

FROM RETAILWIRE:
It's not news that many big box operators are opening smaller formats. While not getting as much attention, some retailers are going the opposite route and opening bigger box stores. Do you see other chains opening bigger stores such as Menards or will it be rare in a market where formats are shrinking?      [more...]

Menards may be a pioneer in a possible new big-box store trend, but I find skepticism running through my fingers.

Menards is family owned and determines its own strategic procedures. That's a big advantage for Menards as they can act swiftly and do unique things. And one thing that is unique about Menards is their penchant for pricing so many products at low prices that are advertised with a (delayed) purchase rebate. That gives Menards the temporary use of huge amounts of the customers' money to enhance their operating results. It appears to be Retail Float.

As Adrian suggests, other retailers might want to look into this practice that drives repeat business via these preferential in-store credits. However, when I buy an item at Menards, advertised for "$100 after a $50 rebate" that I don't get until weeks later, I soon realize that I temporarily paid $150 not $100. Menards has had the use of my $50 rebate as I wait for it to arrive in snail mail weeks later. But convoluted as this practice might be, it is working for Menards.

If more retailers used this practice I think it would soon bother a great many consumers (perhaps those other than Menards' loyal following) not wishing to wait for their delayed discount while it is being used in the interim by the retailer. As I conclude, my fingers now warn me that I possibly could be wrong.