ADVERTISED PRICING: The Off-Season
Controversey That Wasn't
By Michael Spinner
On the record, nothing happened this winter in the Lacrosse industry. But for the product development going on at a furious pace, generally it was a bore, on the record. Retailers cleaned and organized their storerooms while manufacturers made sales calls and booked 2003's orders, on the record. Off the record and behind the scenes, turmoil ruled this winter as retailers split in serious contention over policies employed by manufacturers that limit the advertised price of some lacrosse gear in 2003. On the record, this never happened. Off the record, it is the most important occurrence in the industry of lacrosse in years, helping and maybe saving some retailers while harming and perhaps ruining some others. Lacrosse consumers had no clue this was going on so E-Lacrosse attempts to set the record straight, albeit with entirely off-record comments, one manufacturer's memo, and much hearsay of the highest reliability.
It is the off-season lacrosse story of the year…off the record. It is an issue that divided the lacrosse retailing industry in half. Most importantly, the "Minimum Advertised Pricing" (MAP) Policy that at least one lacrosse equipment manufacturer has employed is something that the lacrosse consumer should know about…if only somebody would speak about it.
Let's back up a step and explain what MAP is. In fact, we'll use the words of one lacrosse equipment manufacturer CEO to help. In a letter dated September 6, 2002 that was sent to lacrosse equipment retailers across the nation, Warrior President and CEO Dave Morrow explained a new policy designed to "increase business for resellers and Warrior, alike, while maintaining our products' level of integrity and performance." It is called MAP and you can read the memo yourself below, but in a nutshell it forces retailers to advertise their prices for all Warrior products no more than one dollar below what Warrior feels is the minimum price a product should be advertised for.
The Morrow Memo The Attachment
For example, if Warrior feels that a new head should be advertised unstrung for $65, a retailer cannot advertise the sale of that item for less than $64 dollars, or their account will be placed on hold-according to the memo sent by Morrow. The allowed drop-off of one dollar is there, "to accommodate various resellers' pricing strategies." However, the memo clearly states, "although resellers are encouraged to advertise above the MAP."
Basically, if a lacrosse equipment retailer has the business know-how to operate with such little overhead that they can sell merchandise at a lower price than others, he can no longer advertise his Warrior products, even on his web site, at a lower price than what Warrior says he can advertise. So if "Big Bob's Tackle, Bait, and Lacrosse Sticks" shop in Podunk, Iowa (not a real store) used to advertise the Warrior Blade for $50, but Warrior feels that it should be advertised for $80, the least this item can be advertised for is $79-according to the memo from Morrow. Essentially, this MAP policy artificially raises the advertised prices for retailers who typically feature much lower prices. If you've been a shopper at BigBobs .com for a year or so, you've already seen the pricing changes. You might actually have even blamed Big Bob for raising his prices so drastically and quickly over the last few months. It's not Big Bob's fault. In fact, Big Bob is pissed.
Ads for the fictitious Big Bob's would now look something like this
"Price fixing" is taboo in American business, and would not be an accurate term to describe this policy, because at no point did Warrior force, or even ask, retailers to raise their actual prices. "Advertised price fixing" would be more accurate. Based on the information provided in the Warrior memo, one could still sell Warrior products at any price they wanted, but they can only advertise at the price Warrior allows…or one dollar less in the spirit of good competition and free market capitalism.
In other words, an advertisement containing Warrior products could potentially contain no prices whatsoever, and say "call for pricing", or "call for the best deals available", and a retailer is in compliance. If a retailer lists no prices at all, when a customer calls to order a Warrior product the retailer can still charge a rock-bottom price if they choose to.
There is no direct evidence that MAP raises prices-but it almost certainly decreases readily accessible consumer alternatives. The reality of the lacrosse equipment world is that an uninformed consumer can find themselves paying more than $200 for a complete stick with shaft, and adding gloves to the purchase can break the $300 barrier. However, with intrepid investigation, the same consumer can save close to $100 on this purchase since the lacrosse equipment market has sprung some retailers who have found a way to sell the same products at much lower prices. With MAP in place, those who can sell Warrior products at a discount price can no longer advertise this possibility. They might still be out there, for a time, but it's now the consumer's job to find them with no help other than word of mouth sources like friends, chat rooms and message boards and third party sites like LaxShopper.com.
LaxShopper.com is a 3rd party consumer site that lists actual prices and reviews retailer service.
We, of course, looked to provide some first-hand insight into the MAP policy from a Warrior representative. And, e-lacrosse made every effort to do so over a three-month period as more than three dozen phone calls were made to the Warrior Corporate Headquarters in Warren, Michigan. The first round of calls was responded to with the direction to call Morrow himself. Months of calls to Morrow and being forwarded to "Dave's voice mail" (which had no greeting message-an interesting corporate strategy for a CEO) were not returned. When January finally rolled around, an attempted contact with Morrow was made at the Lacrosse Convention in Baltimore. He was nowhere to be found.
The only statement that any Warrior representative made aside from referring us to Dave Morrow was that the MAP policy was, off the record, going to become "an industry standard" and that all of the other equipment manufacturers were either considering or employing the policy.
In between calls to Morrow, we attempted to contact representatives from Brine and STX to find out if indeed MAP had become a business practice-with little avail. Between the two companies, not one representative or employee was willing to speak on the record about the MAP policy or whether their companies were employing it. Between the three major lacrosse manufacturers-Warrior, Brine, STX-only one representative had anything to say, but he refused to allow us to identify him by name, position, or company he represents. He did, however, provide helpful insight into the MAP policy and why it is being employed.
"Basically, the lacrosse market is going through a maturing process right now. The MAP policy has been a long time in the making," he said. "Most people don't understand that there is nobody making any money selling lacrosse equipment because there are too many companies low-balling each other to try for the quick sale. The MAP is very much like MSRP-a guide for pricing that every retailer has to follow so the quality of the product remains high, the service remains good, and the retailers make money. I cannot begin to tell you how many catalogs relative to other sports industries say, 'call for prices' on their products because of an MAP policy. Ultimately, this is not a big deal."
The representative said that the MAP policy simply levels the field by forcing every retailer to advertise prices in the same range so that there is not an artificial discount in prices by certain companies. He also said that if MAP becomes a lacrosse industry standard, consumers can expect more in the way of quality service.
"It is a business fact that the best products are generally identified by a higher price. That's the case in nearly every industry. The lacrosse market right now is more like a quick fix where companies with little overhead and no advertising needs can charge rock-bottom and make the quick sale. This affects quality of service for everybody because nobody is making money. MAP will allow companies to make some money and improve customer service so everybody is happy. Even if the consumer is paying a little more, the improvements in customer service across the board will be noticeable. If anything, this helps the consumer.
You wont see ads like this with rock bottom prices on Warrior gear in 2003
"At the same time, the 'little guy' who was previously able to sell equipment at a lower price will not be affected. All he has to do is advertise 'discounts', or 'call for the best prices available' and he can still sell at a lower price. In the end, everybody wins. Add to the mix that the technology in the lacrosse industry is not cheap and it is a bigger win for everybody because lacrosse manufacturers will be able to continue in the advancements we have seen in recent years." He added.
While the industry representative seemed optimistic that MAP is beneficial to the lacrosse equipment industry, not everybody seemed to agree-particularly certain retailers. However, in fear of retaliation from lacrosse equipment manufacturers, not one of the seven retailers we contacted was willing to speak on the record of their opinion on the MAP. Some said that MAP would be beneficial, others expressed objection, but none would identify themselves.
Opponents of the MAP policy said that the MAP policy benefits larger retailers but hurts the smaller and more efficient ones who have less overhead costs so they can charge lower prices.
"This is the worst thing since…well, I can't even think of anything worse than this. I consider this to be nothing short of tragic," said one retailer who spoke on condition of anonymity. "The MAP policy essentially eliminates the spirit of competition that allows some companies to sell lacrosse products at a lower price."
"Some of us can charge much lower than others because we rely on cheaper methods to of doing business. Others have to inflate prices because they own large stores in areas such as Long Island, Connecticut, and Upstate New York. Overhead such as rent, staff salaries and benefits, and advertising for those stores is extremely expensive and forces these companies to raise their prices. We can sell our products cheaper because we found a way to conduct business in a more efficient manner-and now we're being punished for it," another retailer said off-the-record. "It's typical of the bigger guy putting pressure on the big-wigs and winning out. I only wonder if the smaller retailers had bought a Major League Lacrosse franchise if Warrior would have heard our side of the story. As it is, Dave Morrow has not returned one phone call to answer my questions about MAP and I can't name one retailer in my position who has heard back from him.
"Basically, the big boys went home to mommy and daddy and complained that the bully was beating them up. American industry was built on one guy figuring out a way to do things better than the other and somebody else improving on that. That way there is always an improvement in business practices. The MAP pushes us back in the direction of monopoly." He added.
Surprisingly, even retailers in favor of MAP would not speak on the record. One retailer who wished to remain anonymous said that the benefits of the MAP policy could be explained by simple comparison.
"Who makes better products, Saks Fifth Avenue or Wall-Mart?" he asked. "The answer is obvious. There is a perception that a higher price is indicative of a better product and that perception drives business. Every major industry has some variation of the MAP policy because they do not want to see the latest, highest quality merchandise on sale a week after it is released. The perception is that the higher price is the better product. The way we have it now, a lot of these companies who can sell lacrosse equipment at a lower price essentially act like a Wall-Mart with the latest products. It degrades the newest lacrosse equipment and hurts the industry.
"I can say for a fact that Warrior's MAP policy did not affect my prices and I don't think it led to changes at most major lacrosse retailers. For those who were affected, all they have to do is put 'call for prices' in their catalog and on their web-sites and they don't have to change what they charge. This is really not a big deal." He added.
Is MAP a threat to competition within the lacrosse industry? Does it cater to the big guy and threaten the smaller retailer? Is it really "not a big deal"? There is simply no way to really know because nobody is willing to speak on the record, if at all.
Warrior CEO and Founder Dave Morrow
Given the lack of answers available we are all left with the following questions. If the MAP debate were a simple matter of a company changing an advertised price from a numerical figure to "call for prices," why wouldn't the company want to go on record to explain? And-why would not one retailer speak on the record? Some admitted that they were so afraid of the wrath of the manufacturer that they could not risk punishment. Would the manufacturer have black-listed a retailer who spoke out against this policy? Is the MAP so incredibly harmful that an industry-wide oath of silence is being self-imposed? Would an entire industry devoted to the very consumer who reads this column in huge numbers (over 75,000 in January - editor's notation) choose not to be forthright, on the record, if the MAP issue were really "not a big deal"?
We tried in earnest to write a news story on the issues surrounding the MAP policy and ended up being forced to write one about fear and loathing in the lax industry instead. The silence by manufacturers and retailers alike on an open policy like this is perhaps indicative of larger problems for an industry where trust is integral to the chain of relationships between manufacturers, retailers and consumers.
Off the record, this battle within the industry may have just begun. On the record, it never happened.
In the interest of fair reporting, Warrior is not an E-Lacrosse Sponsor. STX and Brine are. E-Lacrosse is an online retailer. Our pricing is determined and orders are fulfilled by Lax World, probably the largest retailer with many physical locations and a penchant for customer service. None of these facts were considered in the preparation or editing of this article, but we feel a responsibility to the reader for disclosure of our affiliations.
February 24, 2003
The latest Spin on E-Lacrosse: Past Columns
Spinner on 360 and Joining E-Lacrosse
Title IX After 30 Years
Are Camps Out Of Control?
Go West, Young Fan.
Promoting the Pros: A Major League Circus
Grades and Sports: Powell's Not The Problem.
Thoughts on September 11, 2002
Women's Lacrosse: Farewell to the Stall
2002 Yale Fall Tournament
A Good Year For "Timmy Mac"
Is Petro Gambling With the 2003 Schedule
The Landon Cheating Scandal
Red Storm Rising
2002 Review & 2003 Punditries and Predictions
Is Football the New Enemy?
Fear and Loathing in Lacrosse Retail