Cheap: High Cost of the Discount Culture
The Effects of the Discount Culture on American Workers
The discount culture has created many concerns that giant retail stores are conducting business unfairly and taking advantage of American workers. For example Wal-Mart, thanks to its size and power, can purchase goods at a deep discount and because of its business model and employment policies can sell more cheaply than most other outlets. The effect of this is to lower prices at other nearby stores. However, despite this advantage Wal-Mart does not lower prices on everything, and in fact actually has higher prices than average on about one-third of the stock it carries (Ruppel 153). Discounters lower the price of the average shopping outing by lowering the prices on the things consumers by most frequently. Low-priced high volume items are positioned in the store in high visibility areas not only to encourage the customer to purchase them, but to give the impression that everything else in the store is cheap.
Discussion
Ellen Ruppel Shell, in her book Cheap: The high Cost of the Discount Culture, talks about the high cost of discount shopping to the American consumer in Chapter 7 of her book "Discounting and its Discounts." Shell explores the detrimental effect lower priced retail stores have on the economic well-being of individuals and business in general. Shell contends that prices of essential goods that are critical for daily life, that is one in which changes in price result in no relatively modest demand are inelastic, whereas goods and services that are readily available, interchangeable with other goods and services, and not critical for daily life are elastic, that is the price will vary with the demand. Shell's contention is that discount stores use this disparity to manipulate the buying habits of the general public.
Background
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