By Zach Mitcham
The Madison County Journal
December 1, 2004
In the Meantime
A look at the retail revolution
We live at a time when as I learned this weekend you can actually buy a small, color TV for $37 or a lawnmower for $99. But go to a ball game, or the movies, or the hospital, and watch how prices suddenly change: The cost of a soft drink swells to six times more than usual; one aspirin tablet in a hospital room suddenly costs more than a combo meal at a drive-through.
As I grow older, I'm more intrigued by the stories behind pricing. These things shape our world on small and large scales. Economics is not some boring professor-speak. The science of supply and demand is relevant to every deal we ever make. And we all know we need to develop a certain degree of savvy on pricing or risk being played for fools.
For instance, if you don't know why a car that should be valued at $5,000 is being sold for $2,500, if you just take on faith that you're getting a good deal, then you risk being duped. Without skepticism, you sacrifice leverage to the seller, who may wave and smile as you drive away with a blown gasket.
Markets are often described as "forces of nature." It's true, the mass of individuals looking out for themselves creates a real force in a collective sense. This seemed very apparent to me as I joined the sea of people looking for a ticket to a Georgia game this year. The supply the scalpers met the demand the fans. Sometimes one has an edge over the other. For instance, factors like bad weather give the buyers power, and other factors, like a more hyped game, such as UGA vs. LSU in October, give scalpers the edge.
Everyone looks for that leverage to better himself. The bargaining edge can change quickly for individuals and groups, but the change may also be gradual.
And it may also be profound, affecting most everyone.
For instance, for some time now we've seen manufacturing jobs go overseas. We've seen the banner of "Buy American" crumble, because if you want merchandise from a big store you really can't hold to that ideal, not when so much now comes from China.
Ultimately, price matters most. Because it's a force of nature human nature. We want the best deal. Period.
All the other issues, the loss of jobs to overseas firms, the growing U.S. trade deficit to China and other countries, these concerns are, of course, secondary to our own well being. Fact is, this makes sense. You have to look out for your kids, your household.
But the big economic picture matters too. That's obvious whenever we fill up our cars and note skyrocketing gas prices.
And if we look, it's obvious that economic power in this country has shifted in a truly monumental way in recent years. And no, I'm not referring to our two-party system.
What I mean is that for decades manufacturers dictated prices to retailers, because retailers were diverse. There were many stores, and if one store chose not to deal with a manufacturer, then that manufacturer didn't suffer much of a hit. "You don't want our socks? O.K. fine, we know a hundred stores who do."
But as major retailers like Wal-Mart and Target have grown bigger and bigger, they have taken control of the price.
They are much-maligned for that power, but the reasons for their dominance are really a mixed bag of good and bad. They truly do put the squeeze on employees and competition with methods that make anyone with a conscience cringe. At the same time, they are remarkably efficient. For instance, Wal-Mart has used barcode technology better than anyone, giving them the edge in tracking sales trends and stocking their shelves accordingly.
But apart from whatever good or bad feelings people have about Wal-Mart, the fact that such stores are so dominant these days has profoundly altered our economy. Now major retailers can say, "We want socks at this price." And if the manufacturer balks, the retailer can reply, "Well, we sell 38 percent of socks in America? How would you like to lose our account?"
In response, manufacturers lower their prices. They have to. But they can't cut the quality of their product and expect to compete. So they look at their people. And they cut pay for employees. They cut benefits. They cut jobs. They cut and run to China, to Thailand, to places where labor can be hired for 50 cents an hour.
Labor unions in America are often blamed for the flight of manufacturing companies overseas. Of course, there have been plenty of examples of unions making unreasonable demands over the years.
But the manufacturing/retail shift of power far overshadows any effort by labor to tilt the balance. A union may try to add weight to its end of the supply-demand equation, but they ultimately have no real power nowadays, not when retailers have all the leverage and continually pay less and less for manufactured goods.
So as manufacturers are continually forced to cut expenses to meet retail price demands, we see more workers laid off, or denied health care coverage, or paid less.
Meanwhile, major retailers load their shelves with four out of five products shipped over from China. That "Buy American" slogan is now just a faint echo of the past, finally washed away by a river of lower retail prices from who cares where.
I'm really not trying to depress us all. And I'm not intending to throw blame right or left. No, I just feel these are economic realities worth noting. We remember the industrial revolution. I think we will also remember the "retail revolution" in years to come.
And I think it's good for people to remember that in the "race to the bottom" in retail prices, there is an accompanying "race to the bottom" in wages and benefits on the manufacturing side. This is true both here and abroad.
To act as if there is no deeper cost in this for the society as a whole, well, then you have to ask yourself, "who's being duped?"
Zach Mitcham is editor of The Madison County Journal.
By Kerri Testement
The Madison County Journal
December 1, 2004
Home for the holidays
Home for the holidays takes on a different meaning when your family lives half-way across the country and when you havent been home in a while.
Such was the case for myself last week, when my husband and I spent 16 hours driving on the interstate to Texas, my birthplace.
Although Ive spent most of my life living in the Lone Star State, I havent been returning to Texas as often as I should considering that most of my family lives there.
The holiday season is stressful enough, but add in a long-distance trip to a family divided in several cities make that a family split by divorce and its not too hard to see how bittersweet returning home may become.
I grew up in the suburbs of Houston, where most of my immediate family lived. Several years ago, my dad moved to Dallas and my grandparents on mothers side headed to Waco. My grandfather on my dads side lives in Corpus Christi. There are no less than 113 miles between the homes of my immediate family members in Texas.
But even visiting their houses isnt the same as when I was kid it doesnt feel like coming home, considering everyone has moved to new residences in recent years. The new cities, for that matter, also arent part of my childhood.
But those parts of Texas do have some familiar sites flat terrain with few or no hills, mesquite trees and the general sense that everything is bigger in Texas.
And since this was the first trip to Texas that Ive taken with my husband of one year, we had to make a few touristy stops. He also didnt miss the opportunity to blast the television theme song to Dallas on the car stereo (with the windows down) as we passed that citys downtown skyline.
We walked around the downtowns of Ft. Worth and Dallas (yes, they are two separate cities), visited a few local restaurants and stopped by the Sixth Floor Museum in Dallas during the anniversary week of JFKs death.
But my husband and myself didnt really get a sense of the enormity of the Dallas/Ft. Worth metroplex until we visited the Gaylord Texan, perhaps the most impressive resort destination under one very big roof.
The Gaylord Texan (yep, I snickered at the name, too) opened in April and is filled with Texas-themed stores, restaurants and Christmas decorations. With a river flowing through the resort, its the best place to get a sense of the state especially San Antonio without leaving the complex.
Returning to Texas for the holidays has also been a frequent favorite of President George W. Bush, who has visited his Crawford ranch near Waco more than 40 times since entering the Oval Office.
Pres. Bushs ranch in Crawford isnt too far away from my grandparents house and my grandfather grew up in the neighboring town of China Spring.
In the past, visitors could drive past his ranch on Prairie Chapel Road when the president was at home (but were warned not to stop or take photos), however, the Secret Service now blocks unauthorized vehicles from coming near the ranch.
It was perhaps around that time on Friday when we were attempting to see the presidents modest house that he made an unexpected visit in downtown Crawford (where the media, tourists and war protesters gather). Perhaps he was in one of those black SUVs we saw heading down the road. Despite his frequent visits to his home state, Bush hasnt been known to make such unannounced visits to downtown Crawford (and we missed it).
Texas is a big state and when a family is spread across its open spaces, its even harder to return home during the brief holidays. But even in smaller states, cities or neighborhoods, we probably dont visit our families as often as we should with or without the holidays.
Kerri Testement is a reporter for MainStreet Newspapers, Inc. Her e-mail address is email@example.com.