Monday, June 20, 2005

A renegade retools retail?

Last month, Evan Cole opened H. D. Buttercup, a 100,000-square-foot retail experiment in Los Angeles. The store operates like one of those antiques "malls" that are scattered about the country. Home furnishings manufacturers place their merchandise in the store, and Buttercup keeps 30- to 50-percent of sales as commission. Buttercup provides the sales staff and collects the money.

Cole is in business without owning any inventory, which is a neat trick. The furnishings manufacturers get control over the sales floor -- what's for sale and how it's displayed. Sounds like a good deal for both parties.

There are some potential pitfalls ... the main one being that the manufacturers might display merchandise that nobody wants.

Selling on commission isn't really anything new, of course. It's common in art galleries. It will be interesting to see how it works in the furniture industry. It works best with high-price, high-margin retailing.

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