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Commerce Matters - Ladue News: Business & Wealth

Commerce Matters

Review of “Cheap: The High Cost of Discount Culture”

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Posted: Thursday, May 27, 2010 12:00 am | Updated: 11:05 pm, Tue Aug 9, 2011.

Who doesn’t like a bargain? Saving money on everything from a pair of designer jeans slashed to half price to driving miles for gas a few pennies cheaper gives consumers a thrill and the sense of accomplishment. But what is the real cost of those bargains? That’s the question posed by author Ellen Ruppel Shell in her book Cheap: The High Cost of Discount Culture. And according to Shell, we are all overpaying.

Cheap starts with our nation’s celebration of getting a good deal, like buying Manhattan for a few dollars worth of beads. But unlike land in those early days, everything else that was bartered or bought was usually in short supply and cost too much for the average American. Then mass production exploded and our population shifted from farms to cities. People needed goods, and convenience came into play. Still our parents and grandparents, the author says, were able to find pretty good value at a pretty good price. It’s this distinction that we’ve lost. Consumers now equate low price with value. And the return on that investment, the book explores, is a lifetime of disposable goods.

To exemplify this new disposable lifestyle, the author spotlights the furniture manufacturer Ikea, which she says designs to a price. The company sets a price for a table, has artisans design it, then squeezes suppliers to get their products at the lowest possible cost. Inevitably corners are cut in labor, in concern for environmental issues, and of course in quality. The end result is a stylish table for little money that will last just long enough for the next trendy table to be designed.

The author says this disposable mindset makes consumers ‘deal-prone.’ We shop for the lowest price no matter whether we are getting the best value. It doesn’t make sense, she admits, when we think about it rationally. But when we see something on sale for half off, we are more likely to buy it even if it doesn’t fit our needs. Deep down we know this. But more important, manufacturers and retailers know it and price accordingly. Now, more than 30 percent of all goods are sold at discount compared to 30 years ago because marketers know a deal will get our attention and could compel us to buy.

So what are we really getting in our search for the deepest discounts? From a social responsibility standpoint, the author pinpoints violations of human rights and the environment in the food industry, as well as child labor abuses in manufacturing. From a common sense position, the author argues we are not doing ourselves any favors by buying cheap then discarding poorly made or not needed goods.

The power to turning around our love of a great deal, the author writes, is in our own wallets. We must demand to know the true costs of what we want to buy and then muster the strength to walk away without a purchase. That may be easier said than done for a country still reeling from a recession and historically high unemployment. But according to the author, in the long run, “releasing our country’s ties from the low-price imperative could be priceless.”

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