What an interesting thread. It's like a multidimensional universe converging. Retailers and clients, competitors, product sales vs. service sales, etc....
Until I had worked in retail management I had the same simplified view of the cost + overhead model. It's much more complicated than that. What we don't see behind the scenes is the competition from the wholesales, manufacturers and distributors for that valuable shelf/page/web placement. Nor do we see the incentives offered to move product through increasing discounts at volume thresholds, rebates for the retailer or longer payment terms. Profit points are often sacrificed to just move more of a given item. You would be surprised at where profits are made and that it's not evenly distributed through the product line or even the year. Think of loss leaders in a grocery store and where they are placed as a prime example of how it works in one aspect.
The point being, for us customers we need not worry ourselves over how they're making their money but focus on their comparative benefits to us. Much alike to how our client's purchase our services, it's based on the value proposition for each individual. I'm not sure how much actual market research Tobe or Luke have done to inform them of this but from my experience the really big boys have and do in order to tweak their presence to target "their customer". For instance, bricks and mortar retailers know why their customers walk into their stores. The layout, merchandising, cleanliness, and all the rest doesn't happen by chance. It's geared to the segment of the market that values it and will pay extra for it. Anyone else walks away and, the retailer may just open up another shop targeted to those segments under different names.
From my own value proposition, I look for quality products at competitive prices, availability, knowledgeable, honest staff, timeliness, excellent after sales service and warranty support. What I don't value is hair splitting, hidden caveats and failed follow through. It was these latter points that led me to drop Sherrill as a go to.
That it's taken this long for Sherrill to start to right the ship is going to make it more expensive to win back customers. Had they been quicker to address the shortcomings instead of defending or excusing them would've made a huge difference in, at least, my attitude toward returning. Once bitten, twice shy......
