By  on August 5, 2009

Being cheap can be costly. That’s the conclusion of Ellen Ruppel Shell, author of the new book “Cheap: The High Cost of Discount Culture” (The Penguin Press), who argues that American consumers’ fixation on low price and bargains leads to poor quality merchandise, which harms both individuals and the environment, and discourages creativity and innovation.

“We rail against exploitation of low-paid workers in Asia as we drive 20 minutes to the Big Box to save three bucks on tube socks and a dollar on underpants,” writes Ruppel Shell, a correspondent for The Atlantic and a professor of journalism at Boston University. “We lecture our kids on social responsibility then buy them toys assembled by destitute child workers on some far-flung foreign shore.”

The fascination with buying discount instead of full price has elevated factory outlets to being the fastest-growing segments in the retail industry, and the nation’s leading tourist attractions, she said.

Ruppel Shell’s theme, particularly in a period of renewed consumer frugality, won’t gain traction with those who contend offshore manufacturing and economies resulting from globalization have made a wider range of stylish goods available to more people than ever.

“Paying retail today is a sucker’s game,” writes Ruppel Shell, who traveled in the U.S., China, India, Africa and Europe during her research and conducted more than 100 interviews. “Despite discounts galore, Americans habitually feel they are paying too much.”

WWD: Is it fair to say globalization, economies of scale and off-shore production help make products affordable to people who would not otherwise be able to afford them?
Ellen Ruppel Shell: Yes, but the question becomes, were we not to search out the lowest priced labor and resources around the globe to produce these goods, would more Americans have better paying jobs and be able to pay a bit more for their goods? This raises the question of whether it is necessary to acquire large quantities of goods — regardless of the circumstances under which those goods were made — which can include exploitation of labor, environmental degradation, an erosion of quality and even economic decline.

WWD: Isn’t Wal-Mart’s success [among others, including IKEA] an indication that consumers have found a combination of price and style there that strikes a chord?
E.R.S.: Wal-Mart has not been universally welcomed across the globe, for example, in Germany [Wal-Mart exited the country in 2006]. Wal-Mart grew its market through economies of scale and by offering, in some cases, the lowest prices, in others, merely the impression of low price. Its supply chain is highly innovative, and it manages to squeeze out efficiencies smaller companies cannot. The whole point of “Cheap” is that low price, and the appearance of low price, is highly seductive, but it does not always lead us to the wisest decision.

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