aprilhenry (aprilhenry) wrote,

The Big Box Swindle

Stacy Mitchell has a new book out called the Big Box Swindle. The book argues that while consumers take it for granted that big box stores offer lower prices, this idea is more perception than reality. Here are some excerpts from an interview she did.

"When I started working on this chapter of the book, I expected to find many studies comparing prices at chains and independents. But there are in fact very few. And those that have been done come to some intriguing conclusions. Consumer Reports, for instance, conducted a nationwide survey last fall and reported that the best place to buy appliances was not Best Buy, Home Depot, Costco, Target, or even Wal-Mart. The lowest prices are at independent appliance dealers. Similar studies of hardware stores and pharmacies have likewise found that independents often match or even beat chain store pricing.

"This flies in the face of conventional wisdom. How is it that independents in some sectors are able to beat the chains? Part of the answer is that many independents belong to buying co-ops, enabling them to attain the volume and distribution efficiencies that the chains enjoy.

"The other part of the answer is that the chains employ a number of sophisticated strategies to create the impression that their prices are lower than they are. For instance, they often come into new markets with very low prices and then, once people have switched to shopping in their stores and local competitors have closed, the prices begin to inch up. Most shoppers never notice. Studies in Maine and Nebraska have found that Wal-Mart charges 15 percent more at outlets where it faces little or no competition.

"Book buyers have been subject to this bait-and-switch tactic, too. In 1999, after Barnes & Noble and Borders had captured a substantial share of the market, the two chains quietly put an end to the across-the-board 10 - 20 percent discounts they had been offering on books. Today, both of my local bookstores, Longfellow Books and Books Etc., offer frequent buyer discounts that make them a better deal than shopping at the nearby Borders. But I bet many of my neighbors still think Borders has better prices and more discounts.
Just makes me want to support my local bookstore, Annie Blooms, even more.

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