Price fixing and commercial competency

Getting full retail price for your replica match shirts changes the profitability of your merchandise significantly.  When Celtic sell a shirt through their retail outlets, they buy that shirt from through the manufacturer’s distribution on similar terms to any other retailer.  An item with a full retail price of £60 will have a gross markup of around £10.

If the discount retailers have access to the merchandise, they need to cut into that margin to drive business to their stores (online or otherwise), so will make do with a £5 markup.  If you are a consumer, the difference between an item at £55 or the same item at £60 is very little, but if you are a club retail operation, that 100% increase in gross markup, could see your net margin increase by around 300%.

If you are a club and want to protect your margin – all clubs do, this is not a bad thing – an exclusive deal with one retailer is the road to travel.  This is legal.  If you permit only two retailers access to your merchandise, they will either compete or have to illegally collude to fix prices.

This morning’s news that Newco and two retailers face charges of illegal price fixing is more a sign of commercial competency than a club exploiting its own fan base.  They are inexperienced and perennial underachievers compared to Celtic’s commercial team.  I’m less exercised on the desire to get an extra £5 for your shirts, they all want this, for the reasons outlined above.