A local mens clothing chain (it may be a national chain) has been advertising lately that if you buy one of their suits at the regular price, you can get two more suits of the same or lower price free. How can they do this? Surely there is not that much mark-up in one suit. And they can’t be hoping to make it back on repeat business since most people who get three new suits won’t be in the market for new suits for quite a while.
First guess: very few of their suits are at the “regular” price.
If 90% of their suits are already “on sale” and only (perhaps) the really marked up ones are at regular price, most people are going to find a suit they want that’s already got some discount. “Sorry, we can’t give you the 3 for 1 deal on this suit, but look, it’s already 40% off, so it’s a great deal”
If they only leave suits that don’t normally sell at “regular” price, then this could just be a clearance sale that advertises a whole lot better.
Second guess: their margins really are that high.
If you’re talking about Joseph A Banks, I think it’s because they’re trying to move items and have been for months now. I’m wondering if its a last-ditch effort before bankruptcy/closing many stores/something else major.
It could also be backed by their wholesaler or even the manufacturer. If the store called the wholesaler and said “Hey, we’ve had about 100 or so suits that have been sitting on the racks for almost two years now. Can we discount them or return them back to you?” and the other person said “Yeah, I suppose we could take them back and put them in a discount store, wait, how about this, run a special, buy 1 get 2 free, we’ll split the advertising costs with you.”
It could go the other way as well, where the wholesaler/manf. had a surplus of older suits for some reason or another and approached the store with the deal.
I think your assumption regarding the markup on suits is probably off. I’ll wait for someone with actual facts to post about suits, but I can tell you that dress shirts are manufactured in Miami and sold to local wholesalers for less than $2 a piece. If a dress shirts that will later retail for $50 is sold wholesale for $2, then I can imagine a suit being sold for less than $50 wholesale.
I used to work for a woman’s clothing store. The owner got the “bright” idea that we would mark up things about 150%, rather than our usual 100%, highlight the “regular” price, and then put the new marked down price in ball point pen. The original prices had been rubber stamped on the tags, so it looked like we’d gone through the whole store and marked down every item. At any rate, our prices ended up being about the same, it was just a marketing gimmick. And I suspect that this is either a marketing gimmick or a desperation move. I also suspect that most men will only want to buy one suit at a time, if they don’t normally wear one. My husband doesn’t have a suit that fits him (or one that’s actually in style, for that matter) because he wears jeans or khakis and polo or Tshirts in his daily basis. He’s not going to buy a suit unless and until he really needs one, either, because any suit he bought might not fit him when he needed it. He’s certainly not going to buy THREE suits at a time.
This might be a good deal for a young professional who’s just graduated and needs to build his working wardrobe very quickly on the cheap.
This might be it. In that woman’s clothing shop I was talking about, the buyer (who was also the owner) overbought one year…and we had a lot of rather fashionable clothes that we had to move NOW before she could buy the new fashions. We also wanted to move those clothes before they became hideously outdated. Men’s fashions don’t change as quickly as women’s fashions do, but if they have too much inventory that’s not turning over fast enough that’s going to be very bad.
Joseph A. Bank has been having these sales for quite some time now, more than just a few months. The thing is, their “regular” prices are extremely high to begin with, so the “sale” gimmicks put them into the same price range as their competitors. You’d have to be crazy to go into their store and buy just one suit at their “regular” price . . . even if you need only one.
What they lose on each sale they make up in volume.
Yeah, this is a once-every-six-month sale that they do regularly. They have a high markup, this gets folks into the store for the first time, in hopes that they’ll become regulars.
Does anyone know if JAB charges for alterations? My mother could pin and cuff a pair of pants in 10 minutes. If they’re charging $20 or so for basic alterations, they could be making a good deal back on labor.
Also, then they can sell you shoes and belts and handkerchiefs and ties at ludicrous markups as well. Nope, sorry, those aren’t on sale…
Well, it could be a loss leader, but I doubt it. That company has been around a pretty long time for that. What it does do is get you in the store. While there’s probably a fairly slim margin on the suit itself, it gives them a chance to up sell.
While you’re trying on the suit, they’re grabbing shirts, ties, shoes, etc that look beautiful with this suit. By the time you’re out the door, you’ve spent far more than you intended. But-- you’ll like the way you look, they guarantee it. 
This sounds like Crescent Jewelers. They always have a sale going for at least 25% off. Every once in a while, the sale goes up to 50%. OK, fine, but that’s really only 25% more than their usual sale price.
Or Empire Carpets. They have a “Buy one room, get 2 rooms free” deal right now. Their old special was 60% off, which is pretty much the same deal as the new one. They make the profit on the side: they charge full price for the labor and the padding, so 60% off on the carpet is a pittance.
Also, there are times when companies just need to get inventory out the door in any way possible. Floor/shelf space is valuable - the company is paying rent and needs to make sure they stock items that sell well. The company might be better off throwing unpopular stuff in a dumpster just to free up the space for better product. If the company’s already considering dumpsters, then a high-discount sale will at least get them a few extra dollars.
Say I go in to buy a suit. Well, my shirts are all kind of dingy now, and my ties are all out of date. And yes, my belt is rather scruffy. So I buy all that stuff too.
But wait!! THERE’S MORE!!
Now I have 3 suits. While the blue shirt does look good with the black suit, you really can’t wear it with that blue suit, and no way can you wear it with the pinstriped suit. So now it’s 3 or more shirts. Same with the tie, and probably at least 2 belts.
So while they are only charging you for 1 suit (with a high markup to begin with), they are charging you full price for 3-6 shirts, maybe 4 ties, 2 belts, oh, and don’ttheseextrapantslookspiffywiththatsuitcoat? and if they are lucky, some shoes and socks to go with it.
Your buy one-get 2 free (I just looked up Jos A Banks online and picked kind of standard stuff)
1 suit - $600 (and get 2 free)
1 pair of pants - $150
4 shirts - $130 (on sale, 2 fr $64)
3 ties - $180 - yep $60 each
2 belts - $130 - really? $65 for a plain brown or black belt?
Grand total = $1,190 before any taxes or alteration fees.
Keep in mind, that suit not only has to pay for the raw materials and fabrication of the suit, but it also has to pay for the lighting and all utilities for the store, the salary of the sales staff, advertising, and a bizillion other things. In order t make a profit, the markup on the suit has to be fairly high. Throwing a couple of more suits into the deal only adds the raw materials, fabrication, and shipping costs of the extra suits.
They couldn’t afford to sell you suits at 1/3rd the price. You probably wouldn’t buy three suits, and then they wouldn’t cover all of their other costs. But they can afford to sell you three for the price of one, because that keeps the money per customer at a higher level, which helps pay for the electricity, staff salaries, advertising, etc.
They charge for alterations. And they’re not cheap. And they damn sure are not fast. I don’t remember the price but they even charge for cuffing unfinished pants. In the old days, you never had to pay for that because you always had to have it done. Of course, in the old days you didn’t have to pay to check a bag on a flight, either. I don’t know if other stores charge for that now.
I have bought a lot of clothes at Jos. A. Bank, including three suits at a time. I have been a customer for at least six years. Their whole business model is to hype up their sales. There is always a sale, but their ads make it sound like a stupendous event. Never buy anything at regular price at Jos. A. Bank.