Like Abbott and Costello Meeting Frankenstein

If you read “Bargain Fever: How to Shop in a Discounted World,” by Mark Ellwood, you will roll on the floor belly laughing until you read “The Age of Oversupply,” by Daniel Alpert. Then you’ll understand the cause of consumers’ addiction in Mark’s ‘discounted world.’ It will not only make you start weeping, it will also scare the hell out of you. Kind of like Abbott and Costello giggling about those goofy consumers on Black Friday, pushing and running over each other to get their “fix.” When lo and behold, they round a corner and who’s staring them in the face? That would be Frankenstein.

Indeed, “The Age of Oversupply” is a global Frankenstein of our own making. And ironically, if we hadn’t over-stored, web-sited, over-stuffed the world, and printed money by the trillions — yes, if we hadn’t built an age of over-supply — Mark would not have had anything to write about. Alas, he has essentially been able to turn a truly horrific and deleteriously vicious cycle into kind of a comedic landscape of a compulsive and obsessed culture of consumerism with dysfunctional shoppers in a collective addicted frenzy to hunt down the best and biggest discount “rush.” And most often, the drug of choice is simply the “deal” itself. It’s become pretty clear that people really don’t need yet another product or service in our over-supplied world. But they can’t help themselves. Mark calls the addictive drug, “buyagra.”

In my opinion, the notion that the discounted price is, in fact, the drug, (not the product, which they don’t need), is why $5 billion in revenues “walked” out the door at JC Penney in 2012, locked away in consumers’ pocketbooks. And it’s why it didn’t “walk” across town to Kohl’s, Target or Macy’s. The revenues exited the JC Penney stores and disappeared because JCP got rid of the “drugs” (discounts). The disappearing $5 billion is a story deserving its own blog.

Anyway, with a wry sense of humor, Ellwood spews forth with one hilarious story after another, and pretty much runs the gamut of consumers’ rabid and nutty searches for every possible form of discounting drug known to mankind (with an enlightening historical narrative along the way). And of course, we also get a good look at the “drug lords” (retailers), supplying the fix, creating an equally bizarre array of discounting schemes.

For example, there’s the pastor’s wife who marshals an army of stay-at-home moms to help run her coupon-brokering business, netting more than $1 million a year. Or the socialite-only sample sale ‘Fight Club’ where discounts are secretly offered to an elite group, and membership is rescinded if you tell anyone about it. Not to mention the gas station operator that silently uses dynamic pricing offering discounts at certain times of day. Or the fact that Chanel, upon attempting a “liquidation” of some of its handbags via Neiman Marcus’ Last Call outlet stores, discovered they ended up on eBay. This begs the question: is this process just a new form of business-to-business discounting? If eBay can’t get rid of it, where does it go? Perhaps it winds its way down to one of those luxury “swapping” sites, or flea markets, or one day, maybe in 7-Eleven or Dollar stores?

And yet, as one crazy anecdote after another unfolds through eight chapters and about 200 pages, the underlying horror of reality begins to emerge for those with even half a brain in the retail business and just a modicum of interest in discounting’s ultimate impact on the overall economy. So I suggest you read the book. And, if and when you can see through your chuckles to Mark’s irony and the emerging head of Frankenstein, then pick up “The Age of Oversupply” to understand why retailers began such deleterious discounting in the first place, and why they are doomed to continue it in perpetuity just to survive.

From a macro-perspective, author Daniel Alpert’s thesis can be summed up with key points outlined in his introduction, as follows: “Via extraordinary monetary-easing measures, the developed world’s central banks have turned trillions of dollars of financial investments into so much cash that it is metaphorically bulging out of the pockets of banks and other investors. Yet it is not getting lent and it is not getting invested in new capacity. Why?

“In a nutshell, the reason that the enormous ocean of liquidity is not being deployed is that there is so much global supply and excess capacity of labor, plants, equipment, and goods and services relative to present demand that there is little reason for private-sector investment in the development of additional capacity to produce additional supply.

“What we have on our hands is a supply-side nightmare scenario.”

Alpert goes on to speculate that all of this “throwing easy money” at the problem simply creates valueless “bubbles” that pop into recessions (as we’ve witnessed), with the “Great” one being a forewarning of the “Apocalyptic” one that is sure to come.

Looping back to the micro-perspective and retailing, the discounting of goods simply began because of, well, over-supply. By default, it became the weapon of choice to undercut the price of hundreds of equally compelling competitors’ products. And perversely of course, retailers have now “hooked” consumers into their addiction, and thus, the race to the bottom perpetuates itself.

Furthermore, if you are savvy enough to understand the dynamics and futility of this conundrum, and the full-on global impact of “The Age of Oversupply,” you will also realize this is a death dance that will end badly, very badly. In fact, global economic collapse,“badly.”

And, in my opinion,(and perhaps the good news), since the world is now so financially and economically integrated, such a collapse would drive the ultimate \”backs-against-the-wall\” moment, thus, forcing some worldwide collaboration to create a new global monetary and financial structure based less on the profit and material growth motives of capitalism (which no longer works, even in its “managed” form, and essentially drove us to our current quagmire), but, more on some mechanism that will incentivize sustainable improvement of human living conditions based on some balance of nature. This may sound a little esoteric. However, I would cite the Patagonia apparel brand as a very real example of a business that eschews growth in favor of sustainability to the point where they would rather repair an item for one’s further use than selling a new one. And, every other aspect of their business focuses on reigning in reckless consumption and accommodating a healthy environment.

Anyway,  I do believe if some form of this kind of transformation does not happen, we will surely devour the planet or destroy our species while doing so.

As always, have a nice day 🙂