Oh ya, one more thought.....
If a guy goes into CPU in 1997 and buys a mid priced PC, a printer, monitor, cables, paper, ink cartridges. He spends $4200
Today, the guy goes in and buys exactly the same stuff plus an extended warrenty, training, and Quicken. Spends $3500.
So in this example SSS says things are bad at that store but...they're not. Things are good from what you need to be successful. Now your costs have to reflect that new ASP and you work hard to preserve margin %. But reduced ASP means reduced margin dollars (at the same percent)your business model has to reflect that reality. Whats happened at CPU has nothing to do with SSS (although as you pointed out it could mask the problem)it has to do with the company spending money based on older margin dollar calculations. So reduced ASPs mean reduced margin dollars compounded by CPUs inability to keep their margins up because of increased competition and poor store value perceptions by customers. (Bad service so why pay more, so CPU loses pricing power).
Thanks for spurring the dialog, I hadn't really thought it through until I had to write it....
Mark |
