Our “Flea” Market Economy

No, this is not a misprint.  I think we are now living in a Flea Market Economy.  The idea for this post came from a friend of mine, Chicago Johnny Vegas (his stage name) who during a conversation this morning mentioned that there is no such thing as the “Free Market” economy any more.  His comment struck a chord with me.  He’s right.  We now live in the world’s largest “Flea” market.  American is for sale for the best discount and cheapest price.  This is our new mantra and it is now the way of the economy.  Everything we do is driven by cost and profit.  The only way to survive now is to make whatever financial arrangements you can for the lowest possible price.

It was at the later part of the last century, not that long ago, that we sold out to the corporate interests.  Small businesses all over the country are closing their doors because they cannot compete with the ‘big box’ stores like Wal-Mart.  My friend Paul owns a boutique guitar store in the small town of Cave Creek, AZ.  For the past 30 years Paul has made a great living selling very high quality instruments to musicians and collectors.  Every so often he would have a novice musician stop in for a visit or to purchase a pre-owned instrument.  Paul was one of the largest dealers for several manufacturers for the past 15 years: In fact he was the top dealer nationally for a couple of them.  Over the past few years Paul’s business has all but evaporated because of the Guitar Mega stores and the internet.  His revenues are down over 80% since 2002.

Paul is not alone in this devastating down-turn.  Thousands of businesses are closing as a result of the Mega-Store mentality.  The idea of one stop shopping is not evil or even new, but the results are evident in every small town in the country.  Even some of the larger cities are experiencing the same affects of this change in customer habits.  Sure we all want the best possible price and we are all looking for that ‘great deal’ but we forget that the few dollars that we save now will put some small business on the brink of collapse or even out of business.

I don’t mean to suggest that we should all pay more just to deal with a small boutique or mom and pop store, but we really need to consider the value that these small vendors provide.  In Paul’s case he has forgotten more about guitars than most ‘Mega-Store” sales clerks will ever know.  Paul constantly receives calls from people that bought instruments from one of these ‘Mega-Stores’ requesting that he provide some sort of adjustments or repairs on the brand new instruments.  They call asking for the lowest price available, or if he is willing to beat these ‘Mega-Store’ prices.  What we fail to remember is that with a small business like Paul’s we receive additional services that are unquantifiable.  Before Paul sells an instrument, it is thoroughly checked and set-up to perfection before it hits the shelves.  Access to these higher end instruments is controlled closely to ensure that they are only handled by serious players, and not beaten into pulp but uninformed bangers.  In addition there is the post sale care that these smaller vendors provide.  When we have questions or need some coaching on usage, these small businesses are there to represent the manufacturer and their store with first class service.  Try getting something adjusted or fixed by one of these ‘Mega-Stores’ or worse yet try to get warranty coverage from one.  They are not set up to handle the ‘Post Sale’ support.  They are designed to move large quantities of products.

Purchase something on the internet.  Sure there are some amazing deals available, but the service and support suffer.  There is no local point of contact only an 800 number to call and several hours of dialing 1 for service, 2 for support, 3 for customer service, 4 for billing, 5 for sales, 6 for clerical help, 7 for the internet address, 8 for pepperoni, and 9 for English.  After finally reaching someone, you are told that this is no longer covered by the warranty, or that department is closed, or that person is on vacation please leave a message, or…  Local stores have one number and best of all… THEY ARE LOCAL.  You can actually drive up to the store and speak with someone face-to-face.  Your chances for satisfaction rise exponentially doing business with a real person.

I have done business on the internet for quite a while now.  I have seen items that were a great deal actually exceed the cost of local purchases especially when you consider the cost of the item, handling, and shipping you could have gone to a local vendor and paid less overall.  Sure there is the convenience and simplicity, but what if there is a problem with that item.  How convenient is it to repack, visit the local super-shipping store, wait for the return and hope that the one that you receive is not in the same or worse condition.  I recently met a man that purchased what he was advertised as a first quality ‘brand named’ product only to receive a cheap knock-off.  When he tried to return it the seller claimed that buyer was trying to defraud him.  Caveat Emptor!

Our decision to make price the most important decision point has dramatically changed other aspects of our lives.  Things like quality have much less importance because along with the expected discount in price comes a lowered expectation for quality.  We accept the fact that there are some tradeoffs associated with discounting the price.  We pay less so we settle for a few more flaws than a full priced item.  Here’s where the ‘Flea Market Economy’ part comes into play.  When we receive lower than expected service or trade personal contact for a lower price, we accept it because we know the value proposition.  That is that when you pay a lot, you expect a lot.  When you purchase a Mercedes-Benz or BMW, you expect that their service is commensurate with the price paid.  If you purchase a $1500 car, you don’t expect a warranty or any kind of service.  That’s part of the value proposition.  You get what you pay for.  How many 1990’s automobiles will be considered classics in 50 years?  How many will still be running in 25 years?  Certainly there will be a precious few that were stored in a barn directly after purchase, and there will be a few special models that will be of value, but the days of the 1955, 1956, 1957, and 1958 Fords, Chevy’s and Mo Pars are gone forever.  Can you imagine paying over $100,000.00 for a 1970’s vintage Pinto or a 1970’s vintage Chevy Vega, much less the 1970’s vintage Chrysler “K” car?  The days of real quality are gone and almost forgotten.  This is true in almost every facet of our compromising, price driven lives.

This carries over to every aspect of our aspect of our financially lives.  We give less to our employers because the pay less, or have cut our benefits to increase their profits but not our wages so their quality and productivity suffer.  We give less to our charities, because we get less from our employers.  We give less to our families because we are too tired or stressed from work, where we give less because… and on, and on.

We are so used to this ‘Flea Market Economy’ that we have lowered our expectation of our elected representatives.  We give to them in kind.  We give less so we expect them to follow the same principles.  The companies that we work for lie cheat and steal for profit, so how can we condemn these people for doing the same exact thing.  They make ‘pie crust’ promises.  (Pie Crust promises are easily made and easily broken.)  We don’t hold them accountable.  Our problem is that we are all so shell-shocked that we don’t stop to think or the long range implications of our actions.  We believe, and rightfully so, that if we stand up to our employer or friends or families, or churches, or government and demand excellence we will lose them completely.  Like I said, rightfully so; I know several people that have addressed deficiencies with their employer’s and been terminated at the next opportunity for some bull-shit reason.  Sure there are risks but we must start somewhere…  No I’m not suggesting that you charge into your boss’s office and dump on him, but there are things that we can do personally to change this direction.  We can start taking pride in our work again.

My suggestion to all of us is to start taking the time to think through a decision before you run to the ‘Mega-Store’ for a purchase.  Sure you can save some money there.  Yes they fill a much needed niche in the market, but think of the value that they provide overall.  Who are you really helping, some corporate entity that doesn’t give a tinkers’ damn about you or some small business owner that’s trying to feed his / her family.  Think about the far-reaching effects of your ‘Mega-Store’ purchase: who got the money for manufacturing and stocking?  Who wins: China or America?  Where do these profits go: into the pockets of the stockholders, or back into the business like the small business owners do?

When you make your next purchase carefully consider the value of this purchase.  Think about who wins and who loses.  Consider the number of times you have to replace that lower cost item to cover the cost of an item that costs a small fraction more and lasts three times as long.  Think about where you purchase this item.  Who is standing behind it; some ‘Mega-Store’ customer service center in Pakistan or a real live local vendor who’s trying to make a living for his / her family?  Yes there are many high quality products produced over-seas.  Yes they are a great value sometimes.  Just consider the vendor as part of the equations and start thinking about the value they provide as part of this overall price.

Buying smart takes only a little more effort than buying cheap.  Let’s change this “Flea Market Economy” mindset!