Are the lowest prices really the cheapest?

no-job-no-money-now-whatIs the cheapest the best bargain?

The World Wide Web has revolutionised the way we live, love, work, and in particular, shop. Everywhere, people are shopping online. Even I do. Sometimes. But only if I can’t get what I need locally.

I am guessing by now you have seen the ad for a youth-focused fashion site that highlights the disadvantages of conventional retail. This commercial cites inept shop assistants, crowds and lack of parking. Some of these are true – as a North Orange resident going all the way into town, battling traffic and finding a park can seem like an ordeal, crowds can be an issue (albeit only really before Easter, Xmas, or other big retail event).

However I have usually found our local shop assistants to be fine. Indeed, I have been one myself, I thought I earned my keep. However, the main factor, not cited in this ad, of the growth of online shopping is the price discounts that await the online shopper.

In another post I have written you will recall my love of running. As a marathon runner I go through about 3-4 pairs of shoes a year at $200-250/pair. This is typical amongst the running community. This means my passion costs me $600-$1000/yr in shoes alone. Pretty steep, particularly for a full-time student. If you go online, however, you can find the same shoes, GPS watches, clothes and compression tights online for half the price you will pay in an Australian retail outlet. The website will often be based in China, the USA, UK or EU. So you go online, and save $300-500/yr.

But what is the result of this saving?

Answer – nil to backwards growth in the retail sector.

Year after year, local retailers remain disappointed with holiday-related sales as people buy online. Some larger stores now focus heavily on cheap imported low quality merchandise to entice shoppers back. Other stores have accepted this and place their entire inventory online, denying local workers the chance to earn either a living or some supplementary income, and gain valuable team and customer-related experience.

To make matters worse, sending your money to a warehouse overseas to get the latest Brooks Pureflow runners means money that is leaving the Australian, State and local economies, never to return. We cannot expect to have a strong local retail sector, if we spend our money elsewhere. To think anything different is just simply idiotic.

This also applies to manufactured goods. If everything that was made in the developing world were removed from our houses and shelves, I dare say very little would be left. The developing world can do the job just as well as the developed world in terms of quality, along with far lower wages, lax safety and environmental controls, and undemocratic industrial relations, creating a cheaper bottom line.

The price we pay for imported cars that are 20% cheaper in real terms than they were 10 years ago, shrinking prices of whitegoods, $200 tablets and $6 T-shirts is a manufacturing sector that is all but dead. Latest news from GMH is clear evidence of this, as is the impending closure of Orange’s iconic Electrolux factory after over 70 years production.

electroluxWe simply cannot expect to have local jobs at local wages and conditions without supporting our local product via purchasing it.These double issues of ‘cheapest cost now’ reflects the instant-self gratification that Australian society seems to seek. We may save a few dollars now but where will be the face-to-face customer service and manufacturing jobs for the coming generations? Not everyone wants to be a miner, and not all school leavers will have the smarts to become a IT-savvy systems analyst focusing on synergy. When the consumer invests money in the Local economy by purchasing, it will reap dividends in the years to come.

Category: Opinion


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Article by: Richard Eggleston