Sunday, June 07, 2009

A lesson in Economics

The very same goods & services cost differently in different markets, cities, states etc. No one would think twice about seeing the same house cost vastly different in Memphis than San Francisco. So why exactly is it ok to complain or annoyingly point out that a bottle of wine cost differently elsewhere? It drives me mad!! This woman yesterday complained that she bought the same bottle of sangria in New Orleans for $5 cheaper. I got news for ya lady. YOU AREN'T IN NEW ORLEANS!!!! First of all, Tennessee has one of the highest, if not the highest, alcohol tax in the country. Second of all, different stores buy different amounts of the same product. The more the store buys of something, the less it costs them & therefore the less it retails for. Third, bottled sangria? SERIOUSLY? You're going to complain about some god awful rot gut? I wish I knew where she worked so I could go in & point out how differently I paid elsewhere for the same goods or services she offers. I'm sure I'm alienating people by writing this post but its my blog & I just feel the need to vent.


Dave said...

Michael: I think you are being overly harsh. Yes, prices can and do vary from region to region. I believe most people understand that when the reason for the deviation seems rationale (e.g., folks want to live in San Francisco and the housing market is tight). What folks have a harder time understanding are differences that are hard to explain understand. A $5 difference on rot gut sangria is a HUGE percentage difference. When we moved here from Texas, I was shocked that the everyday wine we paid $10 for suddenly cost $13 - a 30% increase even though only a few bucks. The sin tax explains part of that. Tennessee's antiquated distribution system and restrictions on retailers explains another part of it. But, even then, it makes it hard to swallow.

Samantha Dugan said...

As a fellow retailer, man do I hear you and I don't think you are being overly harsh at all! First of all there are different prices for reason that you stated, my store cannot compete with Costco because we cannot buy 100's of cases, if the consumer does not think there are huge discounts on volume they are flat out wrong! Other factors like direct imports in some markets may have to go through a distributor in another..adds a chunk onto the price.

What bugs me most though, why do people feel the need to say things like that woman did?! If you are pissed or feel like you are being screwed, walk out and don't buy it, (and with the Sangria..are you kidding?) but to stand there and make a store worker listen to your indignant rant...well, it's not only usless, it makes you look like a douche.

No one in the wine business is making tons of money people, well aside from like Jess Jackson and Fred Franzia, (the latter probably maes a sangria) I once had a woman tell me, that she knew for a fact that there was a 200% mark up on wine...I lost my cool and told her she was stoned. The mark ups are small and the competition is fierce, so no, you are not being "taken"....argh, can you tell I feel you Michael?!

Michael Hughes said...

Dave-I appreciate your comment. However, hearing people say this on a regular basis is difficult to take. I can't control tariffs & taxes. I can't control that its cheaper to ship into a Texas port or Louisiana port than it is to ship it to Tennessee. I would never think to go into Interim & complain about the price of their burger & compare it to Huey's prices. Yes I know that's kind of different because they use different meats but the concept is the same. Larger stores in this city & in others compete on a different level because of buying power (as Samantha pointed out so perfectly). Texas has the soul sucking large Mega Corporations such as Glazer's & Southern & National rep'ing & selling wine to stores & restaurants. They have ENORMOUS buying power because they have the money. Our family run wholesalers in town here just can't afford to buy 10,000 cases of anything & therefore can't afford to wholesale it for as cheap as a big corp can. Yes I agree there are some antiquated laws in TN. First of which is the banning of in-store tastings. But I don't know if I would trade what we have if that means we would have to deal with another sleazy large company. I work my ass off finding great labels to offer my customers. Nothing makes me happier than putting a great bottle in someone's hands regardless of the price. You want to spend $10? Great. You want to spend $100? Great. It doesn't matter to me. What matters is that they're happy. For a customer to point blank accuse me of ripping them off is offensive. Absolutely offensive. I would never do that, ever. We charge fair prices as I'm sure the rest of the retailers do.

Sam-Thanks for the support sister! I know you get it too.

Dave said...

And, that's the difference, Michael - you do provide great customer service and that's why I trade at Joe's. If it were all about price, I would just buy everything across the street at Southwind attached to Costco. But there are other factors - customer service, being one - that justifies differences in prices (same reason I shop at Nordstrom rather than Wal-Mart. Wal-Mart's got the lowest price but you pay through poor customer service - e.g., long lines).

I guess I fell for that old tagline "An educated consumer is our best customer." If you educate folks about why there are differences in costs, most people are reasonable and will understand. Not saying they won't grumble a bit but believe most will come around. I have. It is because of learning about these different costs structures and limitations on merchants since moving to Memphis that I understand - though, am not necessarily happy about - the higher costs here.

There will be jerks who are offensive. Not sure what you can do about those folks - other than be rude and ensure they don't return. But I am not sure that is the best route to take. (and, to be fair, your original posting says nothing about being accused of ripping her off; it is styled as a complaint about pricing.)

Michael Hughes said...

Good point Dave. I didn't fully explain the situation in my original post. It was more a combination of complaints that I have heard recently. While this lady didn't blatantly accuse me of ripping her off, a recent customer did. While I might want to tell that person to not speak to me that way & never to return, I don't because that's not the way I do things. I usually go to the back room & vent but thats another story. I do my best to explain how pricing structures work but mostly people just don't want to hear it. At least thats what its seems like to me. But there are other ways to get that customer to come around & adapt. Recently I had a woman come in who had just moved here from Boston. I asked her if I could help her pick out a few things & she just said "well maybe, all the wines I used to get in Boston are a few bucks higher here, jeez". I politely explained tax/pricing structures here & was met with a blank glazed over stare. Not because she didn't want to listen, necessarily, I just think she wasn't expecting some things to cost more in a town like Memphis. She was probably expecting everything to be cheaper here (& a lot of things are such as big expenses such as housing). So I instead suggested that maybe if she were open to experimenting we might find some bottles that she had never tried before that she might really love. She ended up walking out with a case of wine & happy as a clam. Hopefully I made a new customer just then.