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Cheap: The High Cost of Discount Culture

Description

An Atlantic correspondent uncovers the true cost-in economic, political, and psychic terms-of our penchant for making and buying things as cheaply as possible

From the shuttered factories of the rust belt to the look-alike strip malls of the sun belt-and almost everywhere in between-America has been transformed by its relentless fixation on low price. This pervasive yet little examined obsession is arguably the most powerful and devastating market force of our time-the engine of globalization, outsourcing, planned obsolescence, and economic instability in an increasingly unsettled world.

Low price is so alluring that we may have forgotten how thoroughly we once distrusted it. Ellen Ruppel Shell traces the birth of the bargain as we know it from the Industrial Revolution to the assembly line and beyond, homing in on a number of colorful characters, such as Gene Verkauf (his name is Yiddish for "to sell"), founder of E. J. Korvette, the discount chain that helped wean customers off traditional notions of value. The rise of the chain store in post-Depression America led to the extolling of convenience over quality, and big-box retailers completed the reeducation of the American consumer by making them prize low price in the way they once prized durability and craftsmanship.

The effects of this insidious perceptual shift are vast: a blighted landscape, escalating debt (both personal and national), stagnating incomes, fraying communities, and a host of other socioeconomic ills. That's a long list of charges, and it runs counter to orthodox economics which argues that low price powers productivity by stimulating a brisk free market. But Shell marshals evidence from a wide range of fields-history, sociology, marketing, psychology, even economics itself-to upend the conventional wisdom. Cheap also unveils the fascinating and unsettling illogic that underpins our bargain-hunting reflex and explains how our deep-rooted need for bargains colors every aspect of our psyches and social lives. In this myth-shattering, closely reasoned, and exhaustively reported investigation, Shell exposes the astronomically high cost of cheap.

Reviews

Rating: 4 / 5
Date: 2010-08-22
Summary: "We focus too much on cheap and not enough on value"

First a caveat. This book is written with an agenda that is decidedly progressive, pro-union and anti-business. By simply reviewing the author's credentials and resume, as listed on the jacket, I knew the basic outline of the book when I pulled it off the shelf - cheap is bad and our emphasis on cheap is ruining the environment, our quality of life and the middle class and the solution to these problems is by giving more power to the government and unions. I agree with the premise that cheap can be bad, especially when that is the only measure of a product or item. I totally disagree with her conclusions as to the solution.

That being said, this is a fun read about an interesting subject - the tendency of people to place an undue focus on the price as the sole measure of an item, disregarding other aspects about the item being purchased. As a result of this focus people end up buying a lot of crap that doesn't last long and that ends up costing us more in the long run, especially when life cycle costs are weighed in.

The book can be effectively divided into two parts, with the first part covering three areas, a history of discounting and some of the major business figures involved in developing the discount culture, an explanation of how we make decisions using economic and prospect theory and a detailed look into how cheap is achieved in the real world. I really enjoyed this part of the book, especially the history of discounting and the stories of Woolworth's, Sam Walton and Eugene Ferkauf. Ms. Shell skewers IKEA with an up close look at how the company's practices have the exact opposite effect as it's image. A mean, cheap comes at a cost, most of it human and environmental. While I'm not the biggest fan of their cheap furniture, her exposure of their practices did negatively effect my opinion of Ikea.

The second part of the book offers possible solutions to the problems caused by cheap. As stated earlier, and as I would expect from a mainstream journalist, the solutions involves more government, more intrusion into people's lives and businesses and more involvement of unions. Why she thinks the government can help when they are the cause of most of the problems was hard to understand, but I would expect nothing less from a correspondent for the Atlantic Monthly and New York Times.

If your interested in learning how people are seduced by the prospect of getting a discount and buying things cheap, how we make decisions (they aren't often rational) and how companies achieve cheap then I recommend this book. I found it especially informative when coupled with Priceless: The Myth of Fair Value (and How to Take Advantage of It). If you're in business, particularly a retail business, both these books are recommended.

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Rating: 3 / 5
Date: 2010-08-03
Summary: "Mixed bag"

Ellen Ruppel Shell covers a lot of ground in Cheap. She begins with a brief history of discounting and retail sales, and goes on to examine nasty side effects such as sweatshops, declining wages, and even obesity. Though these topics and some others such as the history of Walmart have been covered extensively in other books and the media, she does provide a comprehensive and consolidated intro to these issues.

The most interesting chapters in the book are those that go behind the scenes of companies that discount, such as Ikea. Through interviews with company executives and some investigation, she shows how cheap is made appealing even while the companies do not always live up to their claims. Her ideas for rectifying the negative by-products of our discount culture mostly boil down to individual consume choices, but she also profiles Wegmans (I love Wegmans!) and Costco as companies that are profitable while still treating their employees and customers fairly.

Though the writing style is a bit dry, the content of Cheap is interesting enough to appeal to the enlightened consumer.

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Rating: 5 / 5
Date: 2010-06-28
Summary: "Cheap is pretty rich"

I'll admit I'm only halfway through the book, but I am really enjoying it. I had no idea it would contain so much history about retail. Not only is it helping me put a lot of my shopping habits in perspective, it is helping me develop ways to market and price my own merchandise. This is a bookshelf must for businesspersons and shopaholics alike.

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Rating: 5 / 5
Date: 2010-06-28
Summary: "Smart snapshot into the world of discount shopping"

Science journalist Ellen Ruppel Shell offers many insights in this terse, but engaging overview of the discount industry, starting with the image of shoppers browsing mindlessly through discount store aisles filled with shoddy merchandise. Her mix of history, economics and psychology delivers a disturbing portrait of the discount industry from the industrial era to the present day. Some of her examples and arguments are repetitive or simplistic, but after reading this book, you'll think twice about every price tag or special promotion. Shell, who acknowledges that she's a bargain hunter, too, never gets preachy. Instead, she prompts you to examine the hidden financial, political, environmental and global costs of discount culture. Many so-called bargains are not good value, and shoppers pay extra tolls in wasted time and resources. getAbstract recommends this book to shoppers, economists and executives in the retailing and manufacturing industries.

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Rating: 5 / 5
Date: 2010-05-12
Summary: "Very Thought Provoking."

This book covered a vast subject with thoroughness and clarity. In today's economy, it's important to take a deeper and closer look at how our purchasing power affects our world. This book is an excellent place to start.