(Why it's not just about price) The $39 suit story
From Matrix blog
By Jonathan Miller, Tuesday, March 10, 2009.
Editor's note: The following item is republished with permission from the Matrix blog. Click here to view the original item.
In late January I was interested in purchasing a suit. A regional department store was having a 50% off sale on men's clothing so I thought I'd go take a look. I found a suit I liked, which retailed for $795 less 50%. Once I had it fitted, I took the suit to the register where it was scanned and I was told the price was $39.
"What?" I was confused.
The store clerk proceed to explain a myriad of 50% off of 40% off of 70% off of 20% of the retail price less an additional 10% and on and on. The employee seemed a little embarrassed but was adamant the price was correct even though it was less than my alterations.
And then I turned and looked around the store. A Saturday afternoon with this kind of discount:
If this scenario occurred two years ago, it would have been like a scene from the movie "300" with carnage and piles of bodies clamoring for the last suit on the rack.
And that's what is wrong with the economy right now - it's not all about price. It's also about confidence.
I asked the clerk to hold the suit while I went and bought four more as well as other accessories for similar discounts. I ended up spending what I intended to in the beginning, but got about 20 times the merchandise.
As I walked out of the store, I felt miserable, convinced more than ever the wheels were coming off our economic wagon and that this type of discounting was not free -- we would end up paying for it in other ways.
I have been including this experience into (aka weaving them into the fabric of - sorry) most of my speeches as of late because I think it captures the essence of what's going on at the moment.
But I still like the suits.
Originally posted at Matrix, Copyright (c) Jonathan Miller.
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Submitted by Joseph Bridges on March 10, 2009 - 5:49am.
Very interesting story Jonathan. This is an interesting example of value and what people hold items to be worth.
While it isn't just the price your story nicely demonstrates that when a price hits the "right price" smart buyers (like yourself) will consume more.
In housing savvy investors are buying up the quality merchandise just some of it isn't priced that right yet.
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Submitted by Rick Hardman on March 10, 2009 - 12:44pm.
Jonathan,
AMAZING! I can hardly believe that story, yet at the same time I can easily see it. That is a sad story of our trouble economic times.
To relate this to our industry of real estate, many people are smart enough to understand that there are many real bargains in the houses for sale in nj, they simply are not in a spot to qualify for a loan these days. I suspect that during this tough economic time you will see people just trying to hold on and repair their credit, having learned a lesson from a missed opportunity to buy the home of their dreams at a steal because they were not better prepared for just such an opportunity.
Back to the example of the suit. They may realize that the suit would only cost $39 (I doubt it in that specific example) but that is $39 more dollars than they can spend when they do not know how they will get food on the table next week or the gas bill paid today.
Submitted by Jonathan Phan on March 10, 2009 - 1:05pm.
Nice story Jonathan.
Jonathan Phan
http://www.jonathansellshomes.com/
Submitted by Jodi Suguitan on March 11, 2009 - 5:50am.
Good analogy of how confidence plays a role in the market. It sounds like that store did a terrible job marketing themselves and promoting their sale. You didn't even realize the extent of their sales until you got to the register.
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Submitted by Eliese Pivarnik on March 11, 2009 - 11:48am.
Did they have any in a 44L? My husband could use a new suit.
All joking aside, the suit is like foreclosures. Once those are gone, people will look at higher priced merchandise.
Our market has very few foreclosures, but there is still a disconnect between what sellers think their property (the suit) is worth and what buyers (like yourself going back for 3 more when the price was right) are willing to pay.
Steamboat Springs Real Estate Blog
Submitted by Omarion J on April 16, 2009 - 1:43am.
If you want to buy a house, a car or any other big-ticket item, a lender will look up your “grade” as soon as you come knocking. That grade is your credit score. In these times of economic downturns, credit repair advice repair is everywhere. Eventually some of us want to own homes, so if your credit rating isn't exactly good, then attempting to repair your credit would be a good idea. Well, getting payday loans now and again to make higher than minimum payments isn't a bad step to take. You might also make some alterations in your personal budget to make more payments and get out from under the cloud of debt. It could save you from worrying about payday loans later on if you repair your credit.