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Are Low Prices Always A Good Thing?

@FromaHarrop

Reprinted with permission from Creators.

If you like exploring the great outdoors, as I do, you probably enjoy shopping (or at least looking) in those high-end stores serving campers, hikers and the like. There, the wilderness fantasy rides high: Neat displays of specialized tents, headlamps and fleece jackets. Often a stone-and-wood decor smelling of cedar. And salespeople who know all about trail shoes.

Selling upscale garb and gear for outdoor adventures has long been the province of these well-appointed stores serving a loyal clientele. Some major-league disruption, however, has come their way.

Walmart recently bought a Michigan-based retailer (with the crunchy name of Moosejaw) to “curate” an online shopping site for premium outdoor clothes and equipment. It had lined up such fancy items as Deuter backpacks and Katadyn water filtration systems to appear on Walmart.com.

But then, the traditional stores rebelled. Led by the Grassroots Outdoor Alliance, they threatened to pull products appearing on Walmart.com from their shelves.

Guess what happened next. About a third of the brands — including Leki, Deuter and Black Diamond Equipment — took their merchandise off Walmart’s site.

The retailers make a good case. They do the work and bear the expense of spinning the outdoors dream, thus adding value to the wares. It seemed unfair to let an online discounter such as Walmart.com swoop in and grab the sale. The stores were already suffering under the advances of Amazon.

Specialty shops — be they for cameras, clothing or sporting goods — face similar challenges. Customers come in, take a hunk of a clerk’s time and try things. Some of them then go online to buy the desired item for $2.89 less.

So here’s a question for America’s consumers. Are low prices always in our best interests? And what is the end game should giant online retailers become the only place to shop? The loss of bricks-and-mortar stores means the loss of local jobs and tax revenues. Big Tech’s assault on the retailing dollar raises other concerns, as well.

A debate is brewing over whether massive players, such as Amazon, are concentrating monopoly power that our antitrust laws should contain. Lina Khan, a legal scholar now advising the Federal Trade Commission, has compared Amazon’s Jeff Bezos to Standard Oil’s John D. Rockefeller of 1905. As she sees it, Bezos now, like Rockefeller then, crushes competitors through control of the industry’s infrastructure.

Rockefeller, for example, colluded with the railroads to put other oilmen at a huge disadvantage in shipping their product. In a similar vein, Khan writes, “the thousands of retailers and independent businesses that must ride Amazon’s rails to reach market are increasingly dependent on their biggest competitor.”

Khan concedes that it’s hard for consumers to dislike a company that offers fast delivery, shoots great entertainment to their screens and does it all at attractive prices. Heaven knows, if buying lots of stuff through Amazon is some sort of consumer sin, yours truly is headed for the hot place.

But if the only consumer value is price, there’s this problem: Once the octopus knocks out the competition, it is free to jack up its prices. Amazon’s low prices have long been seen as a strategy to purge retailing rivals.

Amazon argues back that it still faces stiff competition in entertainment, consumer electronics and technology services. “Retail is our largest business today,” Amazon said in a statement, “and we represent less than 1 percent of global retail.”

Well, what can we say? Is there room in this town for both the online bulldozers and the cozy merchants hanging kayaks from their ceilings and piling trail maps near their cafes? The answer so far may be yes, but for the established stores, it’s been a two-hands-and-a-rope climb. Good luck to them.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.

 

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