Software at discount is hardly a bargain - Free for All - Column

Discount Store News, Feb 5, 1996 by Pete Hisey

There's a good reason why I'm not making the big bucks as a retail consultant: I have virtually no ideas on how to re-engineer a business.

I might be able to tell you what category management is - but don't ask me how you should implement it. As vice goes, hey, I can't even return

But over the past decade or so covered the retail world, I've come up with something I like to call The Hisey Paradigm. For the past several years, working late into the night seven days a week, I've rephrased it, focused it, polished it to a brilliant shine and made it glow with the light of absolute, irrefutable truth.

It goes like this: to be successful, a discounter should sell Its

I know, I know, the mind reels. The brilliance of this insight has you ready to chuck your job and all your worldly possessions to sell artificial roses by the roadside to help me become accustomed to a life of luxury.

But if it's so obvious, just why on earth are Kmart, Venture, Caldor and some other regionals selling virtually their entire software selections at full-list price?

Just about everyone is selling Myst for $45 or less, and Kmart runs it out at $59.95. Retailers such as Egghead and Software Etc. can probably get away with selling at or near the list price because their deep selections and "we-have-it-first" philosophy appeals to the hardcore gamer, who must have the latest and greatest products now.

However, traditional discounters make a tacit promise to provide low prices everyday on everything they sell. That's why they're called discounters. Most software vendors don't even mention list price anymore so prevalent is the going or 'street" price on the mass market.

There's a corollary to The Hisey Paradigm. It goes like this: If you sell a $60 product for $20 more than the guy next door, the guy next door is going to be cutting the cake at your going-away party, helping you pack the U-Haul trailer and filling out your change-of-address card.

The day is long past when the computer software customer consists of Muffy and Buffy, a technology-savvy couple with two MBAs, a Beemer in the garage and little Justin.

Today's primary software customer profile is virtually identical to the discount shopper profile: busy moms on a tight budget and a tighter schedule. They are not going to appreciate being charged $15 or $20 over the going price for software for their kids.