Consider the problems faced by commodity consumer goods retailers: In the past decade,“Big Box” stores have put scores of Main Street retailers out of business.
Competition from online dealers has shaved commodity retail store margins so close that it can take months for a business to recover from a downturn in sales or an uptick in expenses. An army of consumers armed with smart phones can instantly compare prices on virtually every commodity offered for sale and then harangue a retailer for a matching price. When a consumer has secured the lowest price, he or she can then scan the product’s QR code for additional bargains and manufacturer’s coupons. In commodity retailing, margins are tight; there’s not much room for error.
Antique shop profits are higher than commodity retailer’s profits
Not so with antique shops. Despite all the gloomy predictions for the antiques trade, this is the place to be. There will never be competition from “Big Box” retailers of antiques, because there will never be any.
Even the mega antique malls are populated by “Mom and Pop” dealers who rent space and benefit from the mall’s foot traffic. Antique dealers have considerably more control over their product costs and selling prices than commodity retailers do.
So, profit margins on antiques are significantly better than on most consumer goods. When commodity retailers buy, they can only “buy low” if they buy in quantities. Small Main Street commodity retailers are automatically at a competitive disadvantage compared to Big Box and chain stores.
Antique dealers buy items one-at-a-time; even when dealers buy entire estates they are buying a quantity of individual items rather than dozens (or hundreds) of the same item. Antiques and collectibles dealers pay what they want to pay for products, or they don’t buy them. For an antique picker, there’s always another deal around the corner.
Antique shops have less competition
What about online competition from other antique and collectible dealers? Online competition in the antique trade is nowhere near as intense as it is in commodity retailing.
In commodity retailing, selling online is all about price. A particular make and model of washing machine will be the same no matter where you buy it; only the price will vary. Not so with antiques, collectibles or art: The condition of each item will vary, so their prices will vary.
Objects must be considered on their own merit: Is it in original condition, in-the-box, does it need to be cleaned, is there damage? Online product descriptions are where antique dealers really have a chance to shine. Tell a story, make the item come alive and make a consumer want to own the item being offered for sale. Have you seen the product descriptions for online sellers of commodities? Those descriptions couldn’t sell life to a dying man.
What impact have smartphones had on antique shops? There’s been a lot of talk in the trade about consumers checking prices with smartphones, but retail dealers tell me that they haven’t seen a lot of “smart phone checking” in actual practice. From what I’ve heard, smartphone use is more common at auctions (and I suspect that most of the “smartphoners” are dealers). The smartphone issue has generated some lively discussion lately in online antiques forums. Smartphones are used to check historic auction sales prices of art and antiques. Some dealers – especially those who sell art – claim that the practice of posting auction results for art sales is ruining the secondary art market.
You know what I say to that? Phooey!
What difference does it make if a consumer knows how much a dealer paid for a painting? Why does the dealer owe the customer an apology for his markup? How much a dealer paid for an item is the cost of the merchandise, not the cost of the sale. The cost of the sale includes rent, salaries, advertising, transportation, cleaning, re-framing, repairing and all the time and gas the dealer spent while out picking inventory. One consumer doesn’t constitute the “market” for a particular item. The type of customer who would use “dealers cost” as a negotiating point is not a customer that dealers need.
There will be other consumers interested in the item; the key is to find them. Advertise! Blog about it! There are free and low-cost ways to advertise online. Use them! More interest in an item translates to a higher price, regardless of what the dealer’s cost was for the item. Dealers should not be intimidated by customers’ use of smart phones; instead, they should be checking the auction sales results to stay a step ahead of their customers.
Some dealers claim that the biggest threat to antique retailing is auctions themselves (as opposed to the posting of auction results). The auction “boogeyman” doesn’t exist, either. Are consumers able to buy antiques and collectibles for less at an auction? Yes, sometimes they do; but sometimes they pay a lot more.
Consumers will almost always out-bid dealers at auctions. That’s why auctions shouldn’t be a dealer’s sole buying strategy. But dealers can still buy right at auctions. Auctioneers frequently buy at each other’s auctions and re-sell their purchases at their own auctions. If auctioneers can turn a profit buying at auction and selling at auction, then certainly dealers can turn a profit buying at auction and selling at retail.
Owning an antique shop is an exciting business
If you’re an antique dealer (or are dreaming about being one), then congratulations: You’re in the right business. Become an expert in your products; know more than your customers (including how to use a smart phone). Learn to sell, one-on-one and in print. Learn to take good photos. Your website is as important as your bricks-and-mortar store, so don’t neglect it.
Most of all, understand that your products are different. You’re not selling commodities but unique items that can’t be purchased just anywhere. You’re selling history, nostalgia and fantasy. You can engage the imaginations of your customers in a way that no other retailers possibly can. It’s an exciting business to be in.
Previously published in Antique Trader Magazine