Let’s say I am at the New York International Gift Show, one we went to both in summer and winter. I see some really interesting products and want to try carrying them, but I’ve never had anything like this before so i don’t know how it will sell. This is always the chance you take when you own a store.

In the US for example, if I buy the merchandise and sell only a few pieces but it looks like there is little interest then i can mark it down, sell it off, dust myself off, and try again. I sell a few at regular price, a few discounted, and the last few at my cost, and then they are gone. I can use that money to turn around and buy new stuff.

In France if I don’t have the flexibility to mark things down to sell them off when I see they are not moving then I am stuck with the stuff until the sales. I may not be able to buy more merchandise until I recoup the money I spent on the stuff that isn’t selling. Carrefour, however, can warehouse the stuff, buy more merchandise because they have deep pockets, keep up this cycle,develop a large backstock for the sales, and then at sale time pull out all the stuff that didn’t sell, some of it you haven’t seen in a while because, it was stored away and now it looks almost new again.

Perhaps Sam was just hypothesizing a reason and there are other reasons. What I have just described is not being obsessed with the bottom line, but rather pretty standard practice for small store owners. Having a small store/ business is hard but here in France there is another layer of complexity on top of it, which discourages creativity and innovation. Maybe in the US it is too “laissez faire”, ironic choice of words, but here it seems to be too restrictive. When I go walking around i am going to try to ask some shop owners if they were allowed to have sales more frequently if they think that is a good idea or not.

And not everything in France is about the bottom line. Nor should it be. It’s not the 51st state. Vive la différence!

Think of it this way.

I am a small store. I go to wholesale shows and buy a bunch of merchandise. Some of it sells well and some doesn’t move at all. This is normal and it happens all the time. Dead stock refers to stock that is over 60 days old, basically your stock you turn over nearly every 60 days or so, at least a major overhaul of it.

What do I do with the stuff that hasn’t sold yet. Big companies can take it off the shelf, store it until the sale season, and buy a bunch of new merchandise. Small businesses often can’t afford to do that. If I have unsold stuff I may not be able to buy much more until the stuff I have sells. So I am stuck having the stuff on my shelves that hasn’t sold for 60 days another couple of months until the sales, further hurting my business because if it didn’t sell when it was new it probably won’t sell now AND I will look like I have a bunch of crap that nobody wants. A shop owner here told us that is why there is so much selling off the books. If you go to a store and you see something you like and it has been there for a while you should ask the owner if they would sell it to you for cash cheaper, and many times they do. So it hurts France too because it encourages people to make these kind of transactions.

So the small business owner actually is hurt more because they can’t just cut their losses on the stuff that didn’t sell and mark it way down to get rid of it so they can free up some money to purchase new stuff. Either way the big guys are at an advantage.

So to me this is another example of France stifling innovation with economic arguments that really don’t bear relation to reality. People are afraid to open a store and get stuck with stuff they cannot sell or even put on sale before sale season so they don’t open. So people generally don’t have an entrepenurial spirit, aspire to be fonctionnairres, etc.

Anyway, maybe this didn’t make much sense as i am typing before going to class and trying not to think of the unfinished homework etc. I agree with the sentiment that small business should be helped to not be squashed by big businesses but i don’t think this does that. How about low interest loans to small businesses, incentives to buy the building where your shop is, city sponsored advertising campaigns, partnerships with local universities that bring business owners together with business students or business professors, etc.

In the end small businesses generally can’t compete on price so they have to stand out for other reasons, customer service, unique experience when going there, more personal contact with owners, etc. I think this attitude toward sales is not the solution.