Why do many department stores seek a mark-up of about 30% when some discount houses operate on 20% markup?
There can be a number of reasons for this. Let us look at two major types of reasons.
First, a department store may be able to command higher prices due to consumer tastes. Consumers may feel that a "name" department store is superior to a discount house. Therefore, they may be willing to pay the higher mark-up for the sake of the greater perceived quality.
Second, the department store may incur higher costs and therefore may need to sell at a higher mark-up. Department stores may spend more money on advertising. They may spend more money making their stores look appealing. They may pay their sales staff more and/or hire more staff so as to have better services. All of these would cause them to need to mark the prices of their goods up higher than a discounter would.
The higher mark-up, then, may be due to demand from consumers or it may be due to issues of the costs incurred by the supplier.