For a limited time only, if at least 300 people read this post, you’ll all get 50% off! Pile this deal on top of about a thousand others you’ll see today. There are coupons, Groupons, sales, specials, Black Fridays, Cyber Mondays, doorbusters and web-busters. Each one tempts us with fantastic savings off the normal prices. And a lot of people are buying. But are they buying things they really want, or do they just want the deal itself?
Over the past weekend I was tempted by every possible trapping of a materialistic life. Big, lustrous TV’s at 40% off, cavernous hard drives, sleek power tools and shiny, new cookware. Each time one popped up with that big red discount next to it, I felt my heart-rate rise and I had to fight off a Pavlovian impulse to grab it while I could. But here’s the thing, I didn’t really NEED any of it! Sure, they’re nice things, but if I really needed them I would have already been actively shopping for them.
I’m proud to say that I resisted (almost) all of the temptations. I got out relatively clean (with 3 seasons of Mad Men on DVD and a new chef’s knife), but after fighting off a big Cyber-Monday barrage today, I’m wondering just how much stuff have people bought lately purely for the thrill of the deal? Are we eating in restaurants that we didn’t really choose? Are we watching TVs that we didn’t really pick out based on their merits? Are we stacking our shelves with DVDs of things that we would just be Netflixing anyway? Probably.
So here are two economic angles on this deal-mania.
1. Is it a self-created economic stimulus?
Maybe. It certainly sounds like there’s been a lot more buying thanks to these deals, regardless of whether its stuff we intended to buy or not. On the flipside, with price cuts that deep, there might just be more product moving thanks to the same dollars. It’s going to take an economist to examine whether the increased turnover of inventory is causing those dollars to cycle through the system more frequently and boost the overall economy. (Any economists want to step up and volunteer?)
2. Is it temporary deflation?
Just as value is only what someone is willing to pay, prices are only what someone HAS to pay, rather than what’s written on the MSRP sheet. If we can do 10% of our shopping at 50% off, isn’t that equivalent to 5% deflation? Or does that only apply if its the things we would be buying at full price in the first place? Deflation is a tricky, slippery slope. If you decrease your prices, it’s harder to raise them again without angering the customers. But if you run a sale, they love you, and when the sale’s over your “prices” haven’t budget at all.
I’ll leave you with this: these Deal Wars will continue as long as the consumers keep buying and there’s any type of margin left. As consumers, we’ll need to learn a new level of restraint or we’ll bury ourselves under a pile of trophy goods.
What do you think? Have you fallen into the mega-deal melee? I'd love to get your thoughts and comments. Please share them using the form below.