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�For years, Michaels duped consumers into thinking they were receiving huge discounts, when in fact, they were simply paying the regular store price,� said Attorney General Schneiderman. �Through deceptive advertising practices, this company violated the law and took advantage of hardworking consumers trying to save money. In addition to the civil penalties, the company is paying for their actions by providing $1 million in school supplies for hundreds of school districts statewide.�
""Michaels Stores, Inc. has agreed to enter a $1.8 million settlement for engaging in deceptive advertising practices by misleading consumers into thinking they were receiving steep discounts over a two year period."
�For years, Michaels duped consumers into thinking they were receiving huge discounts, when in fact, they were simply paying the regular store price,� said Attorney General Schneiderman. �Through deceptive advertising practices, this company violated the law and took advantage of hardworking consumers trying to save money. In addition to the civil penalties, the company is paying for their actions by providing $1 million in school supplies for hundreds of school districts statewide.�
""Michaels Stores, Inc. has agreed to enter a $1.8 million settlement for engaging in deceptive advertising practices by misleading consumers into thinking they were receiving steep discounts over a two year period."
I wouldnt be surprised to see Joann's next. Their Black Friday sales are always not what they advertise.
And I'm glad the schools are reaping the benefit of it! And I hope this encourages people to shop local and support small stores or independent online retailers.
Many probably do but I know don't and many others stores who don't. When I have a sale at my store, I lose money. If it's 10% off...that's what I'm losing, in the hopes that you'll be a happy customers and it will have a long term payoff. I don't hyperinflate my prices so that the markdown is the original price.
I think the issue is that this has become a way of life for Mike's and the AG wasn't happy with their business practices of deceiving the customer as a norm.
If you read the article linked in the OP, you will see it has to do with their continual 50% off custom framing. Nothing about the other sales. I shop at Michaels, Joanns and Hobby Lobby in addition to online and my LSS. The regular prices are almost the same anywhere. It's the weekly sales of a certain % off and the coupons that determine where I will buy an item.
If you read the article linked in the OP, you will see it has to do with their continual 50% off custom framing. Nothing about the other sales. I shop at Michaels, Joanns and Hobby Lobby in addition to online and my LSS. The regular prices are almost the same anywhere. It's the weekly sales of a certain % off and the coupons that determine where I will buy an item.
And there is NO WAY that their Frame sales are legit either - I went with a 60% off coupon to purchase a frame and piece of glass for an 8 X 8 cross stitch piece - I picked out what I wanted (was not an expensive frame) and the price WITH the coupon before tax was $60.00! I said forget it - so much for wanting to keep my money local to boost the economy - I ordered a beautiful frame on line for $23.24 - that was the frame, glass, mounting board, the hardware and shipping!!!
I agree that the settlement is only about the never ending framing discounts and not the other merchandise. I have found from personal experience that it is very difficult to price compare on framing and by the time you pick everything out, you really are not likely to go through that whole process again somewhere else.
As far as weekly coupons that craft stores offer, I love them. I will never complain because I don't want them to stop offering them. Yes, granted not everything in the store will be eligible at the same time, so it requires me to become an informed shopper and have a little patience. This is no different than grocery store offering a sale on a particular item and hoping you will buy other items out impulse or convenience. If a store refuses to follow the rules printed, I have no problem asking to have a manager clarify. At that point, a more experienced employee usually steps in and takes care of the situation. If it ever came to a point where the manager of a store would not follow the printed disclaimers, I most likely would write a letter to the main office. OF course, it would be sent in a handmade card.
I don't understand why framing is so expensive either. A few years ago, I got a quote from Michael's, and I decided to just have them cut the mat to fit my print and a ready-made frame.
It seems like the time and resources for the lawsuit could be better spent. Caveat Emptor. If it costs too much, don't buy it.
Many probably do but I know don't and many others stores who don't. When I have a sale at my store, I lose money. If it's 10% off...that's what I'm losing, in the hopes that you'll be a happy customers and it will have a long term payoff. I don't hyperinflate my prices so that the markdown is the original price.
I think the issue is that this has become a way of life for Mike's and the AG wasn't happy with their business practices of deceiving the customer as a norm.
I don't mean to sound snotty; I've really been curious about this for awhile. Not you, but in general.
That said, do you really lose money, or decrease your profit by the percentage off offered? If retailers actually lost $ on a sale, I don't see how any could afford to stay in business.
Many probably do but I know don't and many others stores who don't. When I have a sale at my store, I lose money. If it's 10% off...that's what I'm losing, in the hopes that you'll be a happy customers and it will have a long term payoff. I don't hyperinflate my prices so that the markdown is the original price.
I think the issue is that this has become a way of life for Mike's and the AG wasn't happy with their business practices of deceiving the customer as a norm.
Yes, it's a matter of scale and consistency over time. When these amounts of money are involved the AG is more likely to take action.
Items for sale at a store cost more than what the owner spent to purchase them in the first place. If an owner pays $1 for an item, they have to sell it for more than that to break even. Calculate in the costs for shipping, bookkeeping, an employee to unpack, price and shelve it. Now add costs for rent, utilities, insurance, taxes, etc. So that $1 item will have to be marked up to cover those costs. If the owner needs to make a profit, then the price goes up again. Then, here comes a customer with a coupon that knocks the price back down. At some point the owner has to decide how low that price can go without giving it away or having to pay the customer to take it away. It's a vicious cycle!!!
Items for sale at a store cost more than what the owner spent to purchase them in the first place. If an owner pays $1 for an item, they have to sell it for more than that to break even. Calculate in the costs for shipping, bookkeeping, an employee to unpack, price and shelve it. Now add costs for rent, utilities, insurance, taxes, etc. So that $1 item will have to be marked up to cover those costs. If the owner needs to make a profit, then the price goes up again. Then, here comes a customer with a coupon that knocks the price back down. At some point the owner has to decide how low that price can go without giving it away or having to pay the customer to take it away. It's a vicious cycle!!!
The issue wasn't the mark-up. The issue was the deceptive practice.
I don't mean to sound snotty; I've really been curious about this for awhile. Not you, but in general.
That said, do you really lose money, or decrease your profit by the percentage off offered? If retailers actually lost $ on a sale, I don't see how any could afford to stay in business.
At grocery stores they call those items loss leaders. Here is a definition of that strategy of offering some items at a loss
What Does Loss Leader Strategy Mean?
A business strategy in which a business offers a product or service at a price that is not profitable for the sake of offering another product/service at a greater profit or to attract new customers. This is a common practice when a business first enters a market; a loss leader introduces new customers to a service or product in the hope of building a customer base and securing future recurring revenue.
Read more: Loss Leader Strategy Definition
So, businesses do actually occasionally offer items for prices that actually cost them $$$.
I wonder if they'll go after AC Moore next. They do the same thing.
I was in a framing shop the other day and the ladies who work there were talking about this subject. One of the framers had called Michael's to get their price on some frames. Turns out even with the 50% off, Michael's was more expensive than the framing shop and not by a little either. Plus, the Michael's around here only uses UVA protective glass so that tacks more onto the price. The framing shop gives the option of UVA and charges $20 extra for that. Not everything framed needs to be in UVA protective glass.
Those of you who shop Black Fridays sales should also be wary. Many of the products featured in those sales are sub par, purchased by those big box retailers only for that holiday weekend. They do not carry many of these models normally, but buy them only for the "bargain" shopper.
I have never shopped at M's for frames, but have CONTINUALLY found their regular priced stamp/scrapbooking merchandise to be highly inflated to the point where if I used a 30-40% coupon it would be the same price as one of the LSS's in my city. Their Slice cartridges are something like $65! I also went to pick up a Ranger product (adhesive foil) and it was literally twice the price of my LSS. (my LSS was out of it at the time and I needed to finish a project)
I go to that store to buy my husband's cross-stitch thread and that's it. I'm glad they got what they deserve.
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If I'm not mistaken, I recall a friend who works for Michaels saying that they don't actually do the framing in the store. It's done by a 3rd party vendor, hence the markup and seemingly inflated pricing. They both want to profit.
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I don't mean to sound snotty; I've really been curious about this for awhile. Not you, but in general.
That said, do you really lose money, or decrease your profit by the percentage off offered? If retailers actually lost $ on a sale, I don't see how any could afford to stay in business.
Generally, wholesale prices are around 50% off the retail price, so there is no way a 10% off sale is causing a company to lose money. Make less profit, certainly. Unless a store is selling their items for 50% of the retail price, then offering 10% off isn't going to break them.
Something else that's fishy....when there is a sale, Mike's will have almost empty shelves and they say they sold out...yet the day after, the products fill the shelves!
It seems like I rarely get to make use of the 50% coupons anyway since most of the time I find that the items I want to buy are marked "on sale" for 25% or maybe 40%, so my coupon can't be used. Not to mention the fact that sometimes the item is marked on "clearance" but is more expensive than if I could purchase it at full price with my 50% coupon - I hate it when that happens.
It's gotten to the point where I won't even go to the store without looking at the flyers or website to figure out if the 50% coupon will even come in handy.
Many probably do but I know don't and many others stores who don't. When I have a sale at my store, I lose money. If it's 10% off...that's what I'm losing, in the hopes that you'll be a happy customers and it will have a long term payoff. I don't hyperinflate my prices so that the markdown is the original price.
I think the issue is that this has become a way of life for Mike's and the AG wasn't happy with their business practices of deceiving the customer as a norm.
So true. Saw an item there today for $34.99. MSRP $29.99. Yes, with a coupon it is less but I don't like it. Luckily I searched here and learned a $3 method to do the same thing. Yea Splitcoasters!
I don't mean to sound snotty; I've really been curious about this for awhile. Not you, but in general.
That said, do you really lose money, or decrease your profit by the percentage off offered? If retailers actually lost $ on a sale, I don't see how any could afford to stay in business.
I don't think you sound snotty, just curious.
I worked for a successful retail chain, not crafts. Most items were marked up from wholesale 50%, lesser amount of the inventory 60-70%. If your store retired (made after ALL costs) 5%, that was excellent. Stores at 2% or under were usually closed. One year I retired 8%. I personally worked on salary 60+ hours a week. They made money, not me. The last year there, I switched to the outlet division. Other stores took the hit for the markdowns on the stuff they couldn't sell, then sent it to me. I sold stuff for less than half the actual original cost for our company, but all the loss was absorbed elsewhere. My store was profitable selling thing at a loss!
Now, we were so big, a mom-n-pop store did not get the same price we got. They could buy 100 items at $15, we bought 15,000 of the same for $12. We had 20% profit over them right there. We had package deals with the phone company, muzak, cleaning people, you name it. All of which a local store pays full value. And then bank and credit card fees. They pay 25c a swipe, 6-15% fees, we'd have no swiping fees and pay 1-8%. No fees at bank because of high cash flow, too.
So LSS pay more for their costs than chains. The margins are very thin.
If I'm not mistaken, I recall a friend who works for Michaels saying that they don't actually do the framing in the store. It's done by a 3rd party vendor, hence the markup and seemingly inflated pricing. They both want to profit.
You are in Canada so maybe that is how it is there. But here in the US Michaels DOES do their own framing at each store. There are some things that are sent out (like where you can bring in a photo and have it made into a painting).....but regular framing IS done in the store.
Their framing does seem disceptive. I honestly don't know why some people actually order custom framing when it's NOT on sale....boggles my mind!
But the reg. merchandise in the store that is on sale IS actually marked down. Where there is confusion and what some customers call "deception" is usually when customers don't read the sale signs. For instance, Michaels often has stickers on sale....not ALL stickers but certain BRANDS. So the sign may say 50% off Jolee's stickers..........people get all mad when they try buying ANY sticker and it's not on sale. Customers think they are being tricked......no, you just have to read and see what is actually on sale.
They still offered 40% off framing in the Sunday Ad. so does the settlement mean anything?
Anne
I am wondering the same thing. Since this actual case happened in NY do you think changes are just going to be there or all over?? I would think Michaels would HAVE to change things everywhere or they would just be open to more suits from other states.
I worked for a successful retail chain, not crafts. Most items were marked up from wholesale 50%, lesser amount of the inventory 60-70%. If your store retired (made after ALL costs) 5%, that was excellent. Stores at 2% or under were usually closed. One year I retired 8%. I personally worked on salary 60+ hours a week. They made money, not me. The last year there, I switched to the outlet division. Other stores took the hit for the markdowns on the stuff they couldn't sell, then sent it to me. I sold stuff for less than half the actual original cost for our company, but all the loss was absorbed elsewhere. My store was profitable selling thing at a loss!
Now, we were so big, a mom-n-pop store did not get the same price we got. They could buy 100 items at $15, we bought 15,000 of the same for $12. We had 20% profit over them right there. We had package deals with the phone company, muzak, cleaning people, you name it. All of which a local store pays full value. And then bank and credit card fees. They pay 25c a swipe, 6-15% fees, we'd have no swiping fees and pay 1-8%. No fees at bank because of high cash flow, too.
So LSS pay more for their costs than chains. The margins are very thin.
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I don't mean to sound snotty; I've really been curious about this for awhile. Not you, but in general.
That said, do you really lose money, or decrease your profit by the percentage off offered? If retailers actually lost $ on a sale, I don't see how any could afford to stay in business.
It's not snotty at all. It depends on the item. Sometimes I just am decreasing the profit margin but sometimes I do lose money, especially since I offer free shipping with a $50 order. If someone orders all heavy paper and it was marked down on sale and costs me a huge chunk of change to ship, then I've lost money. I remember one order last year that went to Canada. It was a HUGE box of stuff, all on sale and when I went to FedEx it cost me something like $70 to ship. That was way more than my profit with all those items on sale.
But when you factor in that MSRP doesn't include the freight paid to get to the retailer, right off the top there is a loss.
Pendant23 is right. The bigger stores get better deals, because they buy bigger quantities. That's understandable but is also why I pretty much do not stock anything that can be purchased in a box store - because I can't compete with a 40% off coupon.
Luckily a lot pf people appreciate the consistent customer service, super fast shipping time and selection that I offer and that keeps them coming back over and over even if I don't have lots of sales and coupons.
If I'm not mistaken, I recall a friend who works for Michaels saying that they don't actually do the framing in the store. It's done by a 3rd party vendor, hence the markup and seemingly inflated pricing. They both want to profit.
No, I have been in many framing rooms at Michaels. There may be cases of a few stores that are so tiny that they do send out, but I have watched them frame pictures in store. If your friend claimed that they did that, it's not the norm.
I don't mean to sound snotty; I've really been curious about this for awhile. Not you, but in general.
That said, do you really lose money, or decrease your profit by the percentage off offered? If retailers actually lost $ on a sale, I don't see how any could afford to stay in business.
A lot of retailers offer certain items where they end up losing money, but the goal is the regain the money lost elsewhere. For example. Most stores either breakeven or lose money when they sell computers. They want customers to buy certain products to go with the computer to make up for the money that they lost.
Glad to see that someone actually went after them for it. Now they need to go after the rest of the stores that do this. It's not just in the craft industry, either. I would imagine they could go after Kohl's for the same thing.
Pendant23 is right. The bigger stores get better deals, because they buy bigger quantities. That's understandable but is also why I pretty much do not stock anything that can be purchased in a box store - because I can't compete with a 40% off coupon.
Luckily a lot pf people appreciate the consistent customer service, super fast shipping time and selection that I offer and that keeps them coming back over and over even if I don't have lots of sales and coupons.
Just saw your post and visited your store. You are so right... you have stamps and other things I've never seen anywhere else. Placed an order that included the yo-yo stamp. I've been looking for a yo-yo stamp for FOREVER. Thank you. Looking forward to receiving my order and hopefully ordering from you again.
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Michael's gets in trouble for duping customers with fake sales
