I went out Christmas shopping today. In the mall, every -- and I mean every -- store has signs 40%, 50%, 60% off. Wow, what deals! Or are they really?
Let's face it. Retailers are making healthy profits. They are not in the business of saving us money. They are in the business of taking money from us for their advantage. So, why are they giving us such "great deals?"
When I was younger, I worked part-time in a store. Nothing was discounted prior to Christmas. Well maybe a few items on Christmas Eve day to entice those last minute shoppers (which were often desperate husbands, to whom we could pretty much sell anything. We actually had some sport with that, trying to figure out what the wife's expression would be Christmas morning when she opened up the big package, only to find a ratchet set and drill -- yes we convinced men that the wife would love it! :)
Now, everybody goes shopping with the expectation of deep, deep discounts, all the time. Have we been such intelligent consumers that the retail industry just buckled under the pressure? Not so much.
Yes, there is increased competition. No question about that. But I actually believe that the answer lies elsewhere. The "original" retail prices have been severely inflated, and the "real" cost has come down significantly with all the off-shore manufacturing that is taking place.
The retailers are still making a bundle, and consumers are paying higher prices, that have the illusion of being discounted. We are probably paying more, not less, than in the proverbial "good-old days."
This attitude morphs into the business world as well. The old style of negotiation was the seller would go high, the buyer would go low, and inevitably they would meet in the middle -- an arduous, adversarial process but everyone usually got what they expected. Then buyers (not all but many) were hit with an epiphany of realization that this was just some silly game and that it was better to be more upfront, partner oriented and negotiate openly and transparently. This is how I always liked to negotiate -- I wasn't into the gamesmanship nor in making a supplier bleed for my benefit, because inevitably they are there to support the business and we need their support.
Unfortunately I see the tide reverting. Buyers are looking at sellers and stomping their feet and saying we need more from you. They don't differentiate between products or services. Everything is painted with the same brush. Buyers will often get some short term gain, but their business will inevitably suffer with this approach -- because there are so many value-add things that sellers offer, which will make your business better. But not if you put them in a choke-hold. I will tell you that I have predicted the comeuppance of some companies that I have dealt with in the past who thought it was appropriate to hit suppliers over the head with a 2x4. Karma is a bitch!
But why are we reverting. Today, in the mall, I felt I had the "AHA" moment. Buyers don't trust sellers anymore, because everywhere they turn outside of their work life, everyone is offering huge discounts. Which means, ergo, that at every other time of the year, when you shop and you pay retail price, you are obviously being ripped off. So buyers in corporations are probably figuring that their suppliers are holding back some secret stash and that they are not being honest with them when they say that this is the best they can do -- and still be viable.
I know a lot of these companies who are trying to do right by their clients. They are going into sell the cost savings which is being pushed on them from on-high because, well their leaders go to the malls too!
best possible product/service, at a total cost which ensures that the client gets what they need, plus the service that goes along with it. These sellers though are in a conundrum because it is unclear to them how they can appease the sometimes ludicrous asks of the buyers. And the buyers are making ludicrous asks, because their metrics are stilted towards the demon
I know it is not this simplistic, but we do live in a discount society. I fear however that we are going to go back in time when we stop being honest with our partners and begin the silliness of "you offer the high price, and I'll give you the low. And we all know it's a game but hey, if I can tell my boss that I got a severely discounted price, I'll get accolades and a bonus!"
As Kurt Vonnegut wrote in Slaughterhouse-5…and so it goes!
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