Everyone loves a good deal, right? What’s wrong with that? Alas, if you care about fostering real product innovation, if you care about building vibrant American enterprises which pay a true living wage to their workers, and if you care about preserving true consumer choice and competition–there’s a whole lot wrong with the American obsession with getting a “great deal.”
I’ve been walking around, feeling somewhat like a Lorax-like “Save the Trees” person, worrying about this idea. I didn’t even have words for my concerns. After all, cheap prices are an American birthright, no? And then I tripped on the great book Cheap, by Ellen Ruppel Shell. I started reading it yesterday. Her messages are so important that I won’t wait to finish the book to begin sharing them. She needs to be heard and understood by anyone who buys anything. Consumer purchases drive 65 percent of our economy. I consider the discussion of discount culture to be as important as fixing health care, in our economic recovery. And the discussion goes way beyond economics, to the very quality of life. Here are some excerpts straight from the first chapters of Cheap:
This first fact is just plain appalling. Read this and weep. “Factory outlets are America’s number-one tourist destination.” Really? Is getting 50 percent off of a Banana Republic shirt more compelling than Mount Rushmore? Oh the pain.
Design used as subterfuge, in creating a disposable society. “In the world of Cheap, “design” has become a stand-in for quality, Companies such as Target, H&M, and Zara offer consumers the look they love at a price they can live with–but at what true cost? The genius of IKEA and other cheap-chic purveyors is that they have made fashionable, desirable, and even lovable objects nearly devoid of craftsmanship. The environmental and social implications of this are insidious and alarming.”
We no longer associate real costs and real jobs with prices at retail. Americans habitually fret that we are paying too much. We think paying full price is a sucker’s game. “From Lisa Bolton, a professor at Wharton: ‘There is good reason for this confusion. Most of us have absolutely no idea of what goes into setting a price. Consumers don’t think about the costs behind what they buy. They link price to profit, and they grossly overestimate profit margins.’”
But we are paying less than ever. ” The fear of inflation-driven price hikes is so deeply ingrained in the national psyche that many of us believe we pay far more for goods and services than our parents or grandparents. We barely notice that prices of most consumer goods—even food and fuel—have been trending downward for decades. The rather astounding facts are these: Compared with the early 1970’s, in 2007 we spent 32 percent less on clothes, 18 percent less on food, 52 percent less on appliances, and 24 percent less on owning and maintaining a car.” (I used to sew a lot of my own clothes, until the early eighties. It just doesn’t make sense, economically, any more. Clothes are dirt cheap.)
“Technology-driven globalization has pushed real prices to rock bottom in almost every category, a trend that verged on the desperate in late 2008 when even tony retailers such as Saks and Nordstrom engaged in an orgy of price slashing so extreme that it threatened to tarnish the reputation of their own brands.”
I know, I know. About now you are thinking, free markets prevail. The strong survive. They are the ones who deserve to prosper. This notion is as old as the hills, and the “haggling rug merchants of Istanbul or the teeming bazaars of Marrakesh.” Are these venerable institutions so different from the big box retailers and online discounters?
Well, yes, the author maintains. “The ancient marketplace was built on a balance of power between buyer and seller that is all but gone today. A cascade of corporate scandals and screwups from Enron to Haliburton to Citibank to Bernie Madoff’s audacious Ponzi scheme has shaken whatever faith we once held in corporate responsibility, and this mistrust has dripped down to the retail level.” As consumers we exact our “revenge” or get “our due” by seeking the maximum possible discounts on … everything.
