Many Retailers Faced Financial Losses in Transition to New Regulation
Jane Kitchen -- Kids Today, 8/30/2011 5:37:08 AM
Perhaps no one has been more affected by the new crib regulations than retailers, particularly independent specialty stores, many of whom found themselves confused and undereducated about what the new rules meant to them.
Seminars at both the National Independent Nursery Furniture Retailers Assn.'s annual meeting and at the ABC Spring Conference helped to get retailers up-to-speed, but as June 28 approached, many still had questions about whether their merchandise was compliant, if retrofit kits would be accepted (they are), and what the new legislature meant for floor models and discontinued merchandise.
An eleventh-hour push by NIN FRA, Baby News, USA Baby and the All Baby and Child Board to allow retailers a 180-day extension past the June 28 deadline was ultimately voted down by the CPSC, but not without much debate and some adversity within the industry.
"I don't know anybody that didn't get their store compliant," said Larry Muller, owner of Houston-based Baby and Kids 1st Furniture.
But Muller said he thinks the CPSC did the industry a disservice by making the retailers and manufacturers comply on the same date and rushing the process through.
"When retailers got into it, we found quality errors between some of the hardware and instruction packets," said Muller. "Right down to the 28th there were still changes being made. The process was rushed at the expense of being thorough. There has to be a deadline - we all realize that - but it was accelerated a little bit too much."
Muller said while his stores didn't have much inventory that didn't meet the new standards, having to get compliant did mean he cleared out some old stock. And Muller said he thinks complaints about flooding the market with low-priced non-compliant merchandise are unfounded.
"We did not see any deterioration in crib sales based on a glut of cribs going on the market," said Muller. He also said he's having a "fabulous" month in July so far with new crib sales.
But in Lincoln, Nebraska, Kids Stuff Superstore held a last-minute clearance sale on June 27, promoted via Facebook and Craigslist and with cribs selling at 60 - 80% off normal retail, said owner Aaron Pederson. The staff explained to customers why the cribs were selling so cheaply (models started at $99), and Pederson said he thinks the sale was a success - of sorts.
"The most difficult part is you're selling below cost," he said. "...But the great unknown is, what did we do to our marketplace? Where is our marketplace after all this settles down?"
Pederson worries that consumers might have bought cribs earlier than they needed to because of the hard-to-resist prices, and that he'll see a slowdown of sales in the next few months. "It's put huge financial constraints on everybody I think," he said. "We're replacing goods on the floor and in the warehouse after selling them at a loss.
It's sort of like a double-whammy." But Pederson thinks that the burden is not just on stores like his who found themselves needing to get rid of merchandise at the last minute, but on those who prepared early as well.
"The implementation has been difficult if you were completely clean three months ago or if you took your losses at the end," he said. "It's sort of a lose-lose. It doesn't matter what camp you're in."
Jim Vieira, owner of New Bedford, Mass.-based Baby Boudoir, said his business is particularly affected post- June 28, since he does a large business in closeout furniture.
"We always have a really good supply of cribs at $299 that used to be $450," he said. "I don't have any of that now...I have full-priced cribs, but primarily I'm an outlet store - that's my niche. Without having that, certainly I have all the current products, but I'm no longer a legitimate outlet. Eventually we'll go back to that, but we're in a slow season, up against not having the goods the customer is after, and the economy is not getting any better. As we move into the busier season, we'll see how things develop."
Vieira said the impact of this ruling is just one more thing that's hurting specialty stores, who are already suffering in an increasingly competitive marketplace where they are fighting for market share between big boxes, Internet chains, and an ever-expanding Buy Buy Baby.
"I'm hoping that it wasn't the straw that broke the camel's back for many," said Vieira. "We don't know that, and we won't know it for a while."
South Carolina-based retailer Phil Fairey of Baby Furniture Plus in Columbia and Greenville took his losses early. Based in the hometown of CPSC Chairman Inez Tenenbaum, Fairey wasn't taking any chances in holding on to non-compliant merchandise.
"We took care of our inventory way in advance and that's where all our loss was," said Fairey. "I'm very glad it's over. We ended up spending a lot of time and energy on this."
Fairey said as a store with fully compliant merchandise pre-June 28, he was getting price comparisons with people who were closing out.
"That's all stopped now," he said. "We dealt with it for six months, and we didn't want to deal with it a day longer."
In general, there seems to be a sigh of relief from most in the industry now that June 28 has come and gone.
"Retailers are saying ‘What's done is done, and I've got to get on to other things,'" said Muller. "It's kind of the pause that refreshes."
"In a way, there's a certain weight off your shoulders," said Pederson. "There's no tomorrow to move more inventory - you just have to move forward...The important thing is they're making safer products, and we totally support that."
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