Take a photo of a barcode or cover
A review by qtpieash3
Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell
4.0
A really interesting, insightful read that explores the negative effects cheap goods and discount stores has on us individually as a whole economy.
Markdowns were particularly interesting - nowadays, these costs are often passed back to the manufacturer who lose it from their bottom line. Historically, though, the store would eat the cost of discounting merchandise and chalk it up to poor purchasing decisions/merchandising, missing on a trend, etc. In 1955 the dollar value of total markdowns as a percentage of dept. store sales was 5.2%. It grew to 6.1% in 1965, 8.9% in 1975, and 18% in 1984. No more recent data was included, but I imagine - and the author insinuates - that's continued to climb. This stifles innovation and the manufacturer/designer level, if capital needs to be set aside to cover a retailers sale/discounting decisions down the road. Due to the concentration in the retail industry - and especially apparel - they (retailers) can use their considerable heft to force compliance. It's also forced many smaller, independent suppliers out of the market. To understand how prevalen the problem has become, consider that in the mid-1990s, only 20% of department store merchandise sold at full price. And that in 2001, the dollar percentage of marked-down goods across all sectors was 33%.
There was an eye-opening chaper on IKEA that argues that the cheap quality leads to environmental waste and the following quote from an MIT-trained urban development expert: "IKEA is the least sustainable retailer on the planet". There was an alarming chapter on food and an enlightening discussion of outlet malls. Ruppel Shell (a journalist for "The Atlantic" did her homework and wrote a fact-filled account of America's obsession with cheap and discounts; she explored the dark underbelly of these industries and reminds readers that yes, you get what you pay for most times. Even if you're not paying in cash and even if it's not right now, it's too good to be true. Being a frugal person myself, this has given me a lot to think about. I think we all know this deep down, but the author drags the issue to the light to force the conversation. A great read that I'd recommend to non-fiction lovers.
And now, a few of my fave factoids from the book:
- Mr. Woolworth, of the former Woolworth empire, had his office in the Woolwort building in lower Manhattean, then the tallest building in the world. His office was an exact replica of Napoleon's office at Compiegne. But where Napoleon settled for wood, Woolworth demanded marble.
- Sylvan Goldman introduced the concept of the shopping cart in 1937 to allow shoppers to browse more leisurely instead of heading to the checkout when their arms were full. Initially, customers at his Humpty Dumpty supermarket chain in OKC weren't impressed - men found the device effeminiate and women found them insulting as they were very similar to baby carriages. Goldman hired "burly men and attractive women" to roll the shopping carts around his stores, acting as customers. Obviously, it worked.
- Price has an impact on the brain. In one interesting study, one group of subjects was given a painkiller at full price while the second group was offered the same painkiller, but at a 25% discount. The second group experienced a less powerful effect on the brain and researchers concluded that "cheap price seemed to reduce the secretion of opioids in the brain".
- In 1993, the top 5 retail organizations held 48% of the apparel market and by 2000, the top 10 retail chains sold 72% of American clothing.
- Imported goods are more likely than domestic goods to be marked down, due chielfly to the lead times required and longer shipping times.
- Rebate redemption rates are estimated at 5 - 10%.
- Each year, more than 200M copies of the IKEA catalog are distributed. This is more than the Bible.
Markdowns were particularly interesting - nowadays, these costs are often passed back to the manufacturer who lose it from their bottom line. Historically, though, the store would eat the cost of discounting merchandise and chalk it up to poor purchasing decisions/merchandising, missing on a trend, etc. In 1955 the dollar value of total markdowns as a percentage of dept. store sales was 5.2%. It grew to 6.1% in 1965, 8.9% in 1975, and 18% in 1984. No more recent data was included, but I imagine - and the author insinuates - that's continued to climb. This stifles innovation and the manufacturer/designer level, if capital needs to be set aside to cover a retailers sale/discounting decisions down the road. Due to the concentration in the retail industry - and especially apparel - they (retailers) can use their considerable heft to force compliance. It's also forced many smaller, independent suppliers out of the market. To understand how prevalen the problem has become, consider that in the mid-1990s, only 20% of department store merchandise sold at full price. And that in 2001, the dollar percentage of marked-down goods across all sectors was 33%.
There was an eye-opening chaper on IKEA that argues that the cheap quality leads to environmental waste and the following quote from an MIT-trained urban development expert: "IKEA is the least sustainable retailer on the planet". There was an alarming chapter on food and an enlightening discussion of outlet malls. Ruppel Shell (a journalist for "The Atlantic" did her homework and wrote a fact-filled account of America's obsession with cheap and discounts; she explored the dark underbelly of these industries and reminds readers that yes, you get what you pay for most times. Even if you're not paying in cash and even if it's not right now, it's too good to be true. Being a frugal person myself, this has given me a lot to think about. I think we all know this deep down, but the author drags the issue to the light to force the conversation. A great read that I'd recommend to non-fiction lovers.
And now, a few of my fave factoids from the book:
- Mr. Woolworth, of the former Woolworth empire, had his office in the Woolwort building in lower Manhattean, then the tallest building in the world. His office was an exact replica of Napoleon's office at Compiegne. But where Napoleon settled for wood, Woolworth demanded marble.
- Sylvan Goldman introduced the concept of the shopping cart in 1937 to allow shoppers to browse more leisurely instead of heading to the checkout when their arms were full. Initially, customers at his Humpty Dumpty supermarket chain in OKC weren't impressed - men found the device effeminiate and women found them insulting as they were very similar to baby carriages. Goldman hired "burly men and attractive women" to roll the shopping carts around his stores, acting as customers. Obviously, it worked.
- Price has an impact on the brain. In one interesting study, one group of subjects was given a painkiller at full price while the second group was offered the same painkiller, but at a 25% discount. The second group experienced a less powerful effect on the brain and researchers concluded that "cheap price seemed to reduce the secretion of opioids in the brain".
- In 1993, the top 5 retail organizations held 48% of the apparel market and by 2000, the top 10 retail chains sold 72% of American clothing.
- Imported goods are more likely than domestic goods to be marked down, due chielfly to the lead times required and longer shipping times.
- Rebate redemption rates are estimated at 5 - 10%.
- Each year, more than 200M copies of the IKEA catalog are distributed. This is more than the Bible.