When Coca-Cola offered the first retail coupon in the 1880s, customers were thrilled. But today, one in four American shoppers will buy something only if it's on sale, and almost half of all merchandise carries a promotional price. The relentless pursuit of deals has totally disrupted the relationship between buyers and sellers. In this playful, well-researched book, journalist Mark Ellwood investigates what happens to markets when everything's negotiable.
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Mark Ellwood is a journalist whose reporting on retail has appeared in the Financial Times, Bloomberg BusinessWeek, W, GQ, The New York Times Style magazine, and Travel + Leisure, among other publications. He is also a TV producer and presenter. He lives in New York City.Excerpt. © Reprinted by permission. All rights reserved.:
My name’s Mark, but I’m surprised my parents didn’t call me Markdown. Bargains have loomed large throughout my life. Growing up in London, I remember my mother’s coupon stash. It was stored in an old Turkish delight box, clear plastic and brittle, that sat on the kitchen counter, just level with a child’s eyes. Always stuffed with ripped-out coupons, their ragged edges meant that the lid could never quite close; the box gave off a sugary whiff of rosewater that made deals, quite literally, delicious. My mother is from Scotland; were bargain-hunting an Olympic sport, her countrymen would win gold, silver, and bronze (and probably melt them down for their value). Tartan tightfistedness is the butt of constant British jokes. Insulating windows with double panes is a booming business in Scotland, they say, because it stops the children from hearing the ice cream truck when it comes around.
In my mother’s case, the determination to root out price adjustments is arguably her favorite hobby. She regularly returns items so she can, instead, rebuy them on sale. The staff at the refund counter at Marks & Spencer, the British department store, greet her by name with the warmth of an old friend. That same urge for a deal first emerged in me when I was a teenager, trawling for music in local record stores (RIP, HMV). I would drive from suburb to suburb on a single-minded search: to find the rare new releases that had been marked down to spike their chart placements. Nothing was as thrilling on a Saturday afternoon as finding a 7-inch single, half price at 99p. The fact that I’d spent more on gas to get to the store than I’d saved on The Cars didn’t ever cross my mind.
Sales kept me solvent throughout university, when I was shipped in as a temp to staff the biannual extravaganzas at the tony British department store Harrods. It was a stressful gig, mostly because then-owner Mohamed Al-Fayed would prowl the shop floor sniffing out infractions of the staff policy (sitting, removal of jackets, or talking to colleagues) and firing miscreants on the spot. I kept my mouth shut, and my job, through several Januarys and Julys.
Soon after college, I moved to New York City, where I’ve spent the majority of my adult life. After arriving, I passed most Saturdays ambling around the aisles of Century 21, the discount megastore housed in an old bank just a few feet from what’s now Ground Zero. I devised a system to sift through the haphazard racks of designer bargains (hint: Buy anything you see and like in every size, take that haul home, and just return the rejects). If I wasn’t scoring deals at Century 21, I was lurking in the Strand bookstore. It’s had a spiffy makeover since, but in the 1990s the Strand was still a dark, dusty place that smelled of old things, both books and New Yorkers. The racks in the basement were its treasure trove: full of publishers’ review copies, illicitly offloaded by critics. I could buy brand-new hardcovers at half price.
Yet it was ducking into the boutique branch of Bloomingdale’s in New York’s Soho recently that made me professionally curious about all things cut-price. The store is just minutes from my apartment, and I wanted to buy some deck shoes. I was ready to snap up a snazzy pair in white when the perky sales assistant wandered over to chat. Unprompted, when I asked the price, she offered a spot out-of-towners’ discount. Some of the chain’s stores slash 10 percent off for tourists, she told me. Thank goodness I’ve held on to the occasional plummy British vowel. It was a gleeful moment, an unexpected deal that clinched the sale. The thrill was ruined a week later when I found the same pair of deck shoes nearby downtown at one of those stores where the sign in the window screams: CRAZY SALE—ALL SHOES 50% OFF. Just seven days later, at this new, just-started blowout sale, they were half price. Ten percent seemed like an insult. I kicked myself—with those shoes. But I still bought a pair in another color because the deal was too good to resist.
It was a landmark moment. My experience with those shoes left me wrong-footed. Clearly, bargains were now no longer restricted to niche stores, clearance periods, or grubby basements. Buying without a discount almost felt foolish, rather than fair. Frankly, I wondered, why would anyone ever pay full price again?
Just Deal with It
I started to notice deals everywhere. The nagging impulse to search for a code before checking out online. The stamping of a coffee card—where ten espressos will trigger a free drink—is like 10 percent off. Sneaking out of work a little early, or arriving a little late, because of a special one-day sale. Browsing at a brick-and-mortar store for a new TV before bettering the price with a dot-com deal. Shrugging at a50% OFF sign, unimpressed, and instead waiting for that discount to tumble to 70 percent. Groupon, coupon-cutting, or asking, ever so gently, “Is that the best you can do?” Bargain hunting was inescapable and exciting, at least to my Scottish side.
In some cases, the spread of sales seemed sensible. Coffee shops co-opted the idea of a bar’s happy hour to jolt sales in the slower afternoon period, as Manhattan’s ’wichcraft did by selling drinks 50 percent off between 3 and 6 p.m. on weekdays. Few would criticize the restaurant in LA that offered a 5 percent discount to every diner who was willing to check his or her cell phone at the door, either. As the economy has slowed, most canny Americans sloughed off any shame over coupons; in a survey, more than a quarter admitted that they’d even used them on a date. So pervasive has the small slip of paper’s—or chit’s—pop culture profile become that underemployed megamom Kate Gosselin’s next gig after her reality show imploded was blogging for a couponing website as its celebrity spokesperson (though her abrasiveness quickly cost her that job, too). Think of how Geico built its entire brand not on a Cockney-accented gecko but on a simple slogan: “Save 15 percent or less in fifteen minutes.” Similarly, rival Progressive’s perky spokesbot Flo long seemed unable to open her mouth without chirping “Discount!”*
The symptoms of such salesmania continued to spread. Take, for example, retailers starting markdowns the day before Black Friday, coining a new name for Thanksgiving—that’s Gray Thursday, please. Even this wasn’t always enough, as I heard stories of families delaying Christmas expressly to snap up gifts more cheaply. More than just a response to straitened economic times, there was a palpable pride in cut-price shopping that overrode any stiffened sense of tradition. One woman told me, all aglow, that she weighted boxes with sugar, then wrapped them, stunt-present style, until the real treats arrived a day later and 50 percent off. Another single mom opted to leave her young sons a note from Santa, apologizing that he couldn’t make it to their house the night before and saying he’d asked her to take them shopping on his behalf. These women may have gloated over such reindeer games, but their clique has been rapidly expanding: December 26 is trending to be the third-biggest selling day each year, after Black Friday and the Saturday before Christmas.
Other statistics I unearthed were even more staggering. The number of Americans who would purchase clothes only on sale went up from 16 to 23 percent in the four years after 2007; that’s nearly a quarter of the population. Even 1 percenters weren’t immune to the call of the sale; among Americans earning $150,000 or more, that number doubled, from 10 to 20 percent.* In 2006, only one in three shoppers found a “70% OFF” sign credible; six years later, almost two thirds of people would buy in and believe such a markdown. Most tellingly, though, I found that retailers sold 40 to 45 percent of their inventory at some kind of promotional price in 2011. Ten years earlier, they had sold just 15 to 20 percent of stock that way. In just a decade, sales of sales more than doubled.
No wonder businesses have started to rely on bargains to spoofish—sometimes even dangerous—extremes. It’s become a frantic game of markdown one-upmanship. Was it kosher for New Jersey’s Seton Hall University to offer top-GPA types up to two-thirds off annual tuition, a discount of around $21,000?
When an Ohio animal shelter offered an 85 percent reduction on its cat adoption fee, there was only one catch: It clawed out a discount from $70 per cat to $20 for two cats with the proviso that its price cut applied only to the obese kitties, like 23-pound Zeke.
Black Friday might as well refer to the bruises that result from the scrum-like scrambles that have defined it in recent times. In one year alone, there was pepper spraying, Tasering, and shooting of customers, none of it by the police. One of the fiercest examples of shopper-on- shopper violence was, ironically, between a herd of mothers and daughters hopped-up on marked-down yoga gear.
What does it all mean, other than suggesting that gridiron gear is a suitable shopping outfit during sale time? This accelerating avalanche of bargains marks a seismic shift in the way we shop. It has fundamentally changed our relationship with stores. Markdowns have become a daily concept, no longer the exception but the norm. Full price is a quaint, retro notion rapidly losing any meaning. Living in Let’s Make a Deal, people don’t only want a deep discount, they expect it, and won’t settle for anything less. There’s never been a better time to be a buyer: empowered, informed, entitled. We won’t return to a meek acceptance of retail’s rules again. Wielding the pricing gun for the first time, shoppers call the shots. So what caused this pandemic, a bargain fever that turned ordinary Americans into the mall-walking dead?
Contemporary life resembles a 3-D SkyMall catalog. This is the era of TV shows built entirely around our acquisition of too much stuff:The Price Is Right is a ratings footnote compared to bona fide prime time hits like Hoarders or Storage Wars. While one chronicles the dark side of our compulsion to acquire, the other turns it into sport. The same more-is-more impulse drives supersizing, whether foot-long hot dogs or Big Gulp drinks. It doesn’t affect just fast food, but fast fashion, too, which birthed the phenomenon of hauling: teen girls binge-buying cheap clothing at the mall, then rushing home to upload YouTube clips showcasing their bulimic spree. They’re more interested in the tally than the taille. America may have always celebrated conspicuous consumption, but something is different now. Choice has morphed into excess.
Indeed, products are proliferating at Star Trek speed. Supermarkets after World War II stocked an average of 3,750 items; by the end of the twentieth century that number had increased more than tenfold, to 45,000. In 1994, the total of UPCs for consumer products—in other words, things that could be sold at a store by scanning them—was just over five hundred thousand. Less than ten years later, it had reached almost seven hundred thousand. In 1980, there were six major blue jean brands in America; thirty years on, that number was eight hundred and climbing. We have enough excess possessions to birth not just a TV show about self-storage but also a booming industry. In 2012, there were 2.3 billion square feet of storage space in this country, and more added since. One in ten US households was renting some kind of unit, an increase of 65 percent since the late 1990s. Retail space increased at an average net rate of 4 percent over the same period, regardless of economic downturns or surges.
None of this would be problematic but for a sticky detail. The American population’s average annual growth rate since 1980 has hovered around 1 percent; in 2011, it dropped to its lowest ever to 0.7 percent. These two contradictory forces create an era of oversupply and under-demand. This is the reason another fitting name for bargain fever could be Too Much Stuff Syndrome.*
In a new retail equation, ultimate power has shifted to the shopper for the first time. The tsunami of bargains presages the beginning of a third phase in retail—call it shopping 3.0. The first, spanning the century after the Industrial Revolution, foregrounded producer power: demand outstripped supply while distribution was complex and pricey. Shoppers outside major cities like New York or Chicago were hostage to manufacturers, and weathered both take-it-or-leave-it pricing and less choice.
The second phase, lasting approximately forty years, emerged from the ashes of World War II. Eisenhower’s interstate highways made transport easier while suburbs boomed. It was the retailers’ turn to dominate, and they did, a golden era of marketing when a great ad could turn any new product into a household name. Take Alka-Seltzer, which plink-plonk fizzed its way into every bathroom cabinet in the country. In the TV show Bewitched, what other job could shorthand how debonair and modern a man Darrin was but advertising executive? The shopping center was a cultural bellweather, a place of both yearning and spending, from concerts by Tiffany to seniors on walking loops, and bored mall rats. There was a chummy familiarity, almost a trust, between sellers and shoppers. Sure, there were deals, but their quantity was restricted; the bargains were limited to the minimum needed to keep ordinary Americans as placid as lotus-eaters. We took what we were given, and we were grateful for it.
The turn of the millennium marked the start of phase three, shopping 3.0. This new chapter has been Sadie Hawkins Day at the mall, a role reversal where overstocked stores must wait anxiously on the edge of the retail dance floor as potential customers prowl the room. Discounts have become the default, powered by the new (old) mantra, “Is that the best you can do?” Shoppers banding together to collude and wheedle a bulk deal from a seller, literally leveraging buying power, is the basis of the millennial phenomenon, Groupon.
The Internet has helped torpedo the power of mass advertising, so beloved a tactic in that second phase. It has also made prices transparent, via comparison engines that act much like warp-speed digital personal shoppers, and birthed businesses such as eBay. Such operations taught ordinary Americans that price tickets were not put there by the great printer in the sky, and reminded them of the thrill of negotiating a bargain. As a plus for newbies, online buyers can haggle remotely, via automation, and therefore embarrassment free, avoiding the markdown stare-down. Sellers—whether a hotel, a shoe shop, or a supermarket—are forced to slash numbers to stand out from the widening roster of competitors that crop up with each new Google search.
Under this new paradigm, shopping has become a daily Dutch auction, where retailers must drop their prices until a picky shopper raises his or her paddle and opens their wallet. Equal parts empowered and economically pinched, consumers can now demand markdowns, more like retail hackers than buyers. One business, Shopper Gauge, has even emerged to help stores better cater to such finicky customers. It uses security footage as the basis of a new kind of analysis to track whether someone who lingered in front of a given item ever bothered to buy ...
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