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Inflation: not just prices, but a growing tax on consumers' time
January 13, 2012
While there are official economic measures of inflation, they focus upon the rise of cost. Not considered -- especially in tough economic times, when increasing numbers of people are fighting to reduce those costs while on fixed or no income -- is the rising cost of time for consumers.
Increasingly, consumers are faced with a dizzying array of possible ways to earn discounts on purchases. Ostensibly, this is a good thing -- except that diffusing discounts among many possible options makes it harder for consumers to get a price as far below retail. Thus, either consumers have to make do with lesser discounts from full retail price, or find a growing tax on their time to keep their costs down.
Here, I summarize just some of the obstacles facing consumers (in particular, with regard to grocery stores, since everyone has to buy food):
Competitive shopping
If you want the best prices, you pretty much can't shop at only one place. Partly this is a matter of learning which products are generally cheapest at which stores. Beyond this is that you can't count on any one store to consistently have the best price; anyone on a tight budget finds themselves having to lay out all the week's shopping catalogs from nearby grocery stores to see which stores have the best prices this week. Many weeks, a shopper is likely to be confronted with the prospect of driving to several different stores for food, in addition to all the other challenges on this list.
Additionally, shopping competitively means not only shopping for things you need now, but items you will need later, but are on sale now (and not later). This most notably includes seasonal goods that you might use year-round, but must avoid falling into the trap of buying something "because of how much you save" on goods that you don't need / wouldn't have otherwise used.
Also, don't forget the price of gas -- not only are you spending more of your time, the more places you wind up going shopping in a given week, but you're burning money right out the exhaust pipe of your car. Better make sure that savings is worth the trip.
Elaborate sales
Increasingly, sales aren't "the item that's normally $4.99 is $3.49 this week." Instead, you must qualify for the privilege by jumping through predetermined hoops:
Buy $X: Spending $X may allow you to get $Y off, or it may give you a free item, or it may enable you to buy an item at a sale price you couldn't otherwise, or it may grant you a coupon or "store credit" toward your next visit. Alternatively, the $X may need to be spent on a specific type of good (e.g. frozen foods or Acme Brand breakfast cereals) to activate its result.
Buy X get Y free / bulk buys: If you don't mind buying far more than you could ever use in a single go, then you can generally get a better price per unit. This being a good deal depends on you actually being able to use everything you've bought (and that your use isn't gratuitous.. that you would have used this anyway). Increasingly, some of these deals are becoming larger in quantity for you to benefit from an improved price: meat deals may require you to buy 6-10lb or more at once, and "buy X get Y free" may be more like "buy 5 get 3 free" than merely "buy 1 get 1."
X-day only: Sales only good on a given day. Sometimes, a store may hold "daily deal" sales which require you to return to the store several times in a week to take advantage of all the sales. Some sales may be "weekend sales," but one store may have Fri-Sun sales, another Sat-Sun sales, another Friday-only sales... meaning you may well not be able to hit all the sales you want on a given day.
"While supplies last": The classic "loss leader" sale, where the price is (presumably) excellent but you should count on there being limited supplies; get there early, or not only miss out on the value but find yourself having made a trip which cost the store nothing and hasn't benefited you (modulo any other deals you may be trying to work).
Rain checks
An analog to "loss leaders," only the store actually honors the sale price even when the limited stock used to lure consumers sells out. By issuing a rain check, the store gets double mileage out of its loss leader, since you must then come back to the store again to use the rain check. (Alternatively, if you forget the rain check too long, the gambit becomes a true Black-Friday loss leader.)
Mail in rebates
You pay the full price up front, so the rebate is purely a gimmick if you forget to actually use the the rebate, or improperly fill out the form / don't correctly include the required documentation, or wait too long to file -- either out of pure forgetfulness or from delay because you were unwilling to too quickly obviate your ability to return the goods (since rebates often require original proof of purchase, which requires destroying the original packaging).
Coupons
In case all of these weren't enough hoops to jump through, there's the old standby: coupons. But even this isn't simple: there's the classic newspaper coupon bundle, coupons that show up in the postal mail, online coupons via email, online coupons you have to log into a website (for the store, for the manufacturer, and/or a 3rd party) to obtain, coupons obtained from a previous visit's checkout, and coupons available in store (in-store display or on the product itself). Good luck finding and keeping track of all the relevant coupons on goods you actually need, before their expiry date.
Club cards
Ostensibly -- especially at their beginning -- carrying a store's loyalty-scheme card served as a replacement for the need to carry coupons (at least, store coupons). Increasingly, this is untrue; carrying the card merely allows you access sale prices (in exchange for giving the store personal information and allowing them to track all your purchases). Put this together with the need for competitive shopping, and suddenly your wallet is stuffed with a panoply of cards (not counting any actual store credit cards).
Shrinking sizes
It's not enough to merely battle rising prices; inflation is often hidden in smaller package sizes. Only a few years ago, ice cream commonly came in half-gallon containers in the US; those containers shrank to 1.75qt, and now to 1.5qt for most brands. One-pound packages from saltines to bacon now appear in 12-14oz sizes. In this way, cost increases can be "hidden in plain sight" -- one more thing to account for, for the bargain shopper.
-----
This "hidden inflation" highlights another difference between rich and poor -- it's not merely that the rich can afford more and better goods. It's that the rich can simply buy what they want or need with little time and effort, and can spend their time on their primary job or at leisure. The poor, by default, find themselves with a second (or third, etc) job: increasing amounts of time struggling to save money.
Deflation? Please. Many of us are facing this double inflation, and we all have to eat.
While there are official economic measures of inflation, they focus upon the rise of cost. Not considered -- especially in tough economic times, when increasing numbers of people are fighting to reduce those costs while on fixed or no income -- is the rising cost of time for consumers.
Increasingly, consumers are faced with a dizzying array of possible ways to earn discounts on purchases. Ostensibly, this is a good thing -- except that diffusing discounts among many possible options makes it harder for consumers to get a price as far below retail. Thus, either consumers have to make do with lesser discounts from full retail price, or find a growing tax on their time to keep their costs down.
Here, I summarize just some of the obstacles facing consumers (in particular, with regard to grocery stores, since everyone has to buy food):
Competitive shopping
If you want the best prices, you pretty much can't shop at only one place. Partly this is a matter of learning which products are generally cheapest at which stores. Beyond this is that you can't count on any one store to consistently have the best price; anyone on a tight budget finds themselves having to lay out all the week's shopping catalogs from nearby grocery stores to see which stores have the best prices this week. Many weeks, a shopper is likely to be confronted with the prospect of driving to several different stores for food, in addition to all the other challenges on this list.
Additionally, shopping competitively means not only shopping for things you need now, but items you will need later, but are on sale now (and not later). This most notably includes seasonal goods that you might use year-round, but must avoid falling into the trap of buying something "because of how much you save" on goods that you don't need / wouldn't have otherwise used.
Also, don't forget the price of gas -- not only are you spending more of your time, the more places you wind up going shopping in a given week, but you're burning money right out the exhaust pipe of your car. Better make sure that savings is worth the trip.
Elaborate sales
Increasingly, sales aren't "the item that's normally $4.99 is $3.49 this week." Instead, you must qualify for the privilege by jumping through predetermined hoops:
Buy $X: Spending $X may allow you to get $Y off, or it may give you a free item, or it may enable you to buy an item at a sale price you couldn't otherwise, or it may grant you a coupon or "store credit" toward your next visit. Alternatively, the $X may need to be spent on a specific type of good (e.g. frozen foods or Acme Brand breakfast cereals) to activate its result.
Buy X get Y free / bulk buys: If you don't mind buying far more than you could ever use in a single go, then you can generally get a better price per unit. This being a good deal depends on you actually being able to use everything you've bought (and that your use isn't gratuitous.. that you would have used this anyway). Increasingly, some of these deals are becoming larger in quantity for you to benefit from an improved price: meat deals may require you to buy 6-10lb or more at once, and "buy X get Y free" may be more like "buy 5 get 3 free" than merely "buy 1 get 1."
X-day only: Sales only good on a given day. Sometimes, a store may hold "daily deal" sales which require you to return to the store several times in a week to take advantage of all the sales. Some sales may be "weekend sales," but one store may have Fri-Sun sales, another Sat-Sun sales, another Friday-only sales... meaning you may well not be able to hit all the sales you want on a given day.
"While supplies last": The classic "loss leader" sale, where the price is (presumably) excellent but you should count on there being limited supplies; get there early, or not only miss out on the value but find yourself having made a trip which cost the store nothing and hasn't benefited you (modulo any other deals you may be trying to work).
Rain checks
An analog to "loss leaders," only the store actually honors the sale price even when the limited stock used to lure consumers sells out. By issuing a rain check, the store gets double mileage out of its loss leader, since you must then come back to the store again to use the rain check. (Alternatively, if you forget the rain check too long, the gambit becomes a true Black-Friday loss leader.)
Mail in rebates
You pay the full price up front, so the rebate is purely a gimmick if you forget to actually use the the rebate, or improperly fill out the form / don't correctly include the required documentation, or wait too long to file -- either out of pure forgetfulness or from delay because you were unwilling to too quickly obviate your ability to return the goods (since rebates often require original proof of purchase, which requires destroying the original packaging).
Coupons
In case all of these weren't enough hoops to jump through, there's the old standby: coupons. But even this isn't simple: there's the classic newspaper coupon bundle, coupons that show up in the postal mail, online coupons via email, online coupons you have to log into a website (for the store, for the manufacturer, and/or a 3rd party) to obtain, coupons obtained from a previous visit's checkout, and coupons available in store (in-store display or on the product itself). Good luck finding and keeping track of all the relevant coupons on goods you actually need, before their expiry date.
Club cards
Ostensibly -- especially at their beginning -- carrying a store's loyalty-scheme card served as a replacement for the need to carry coupons (at least, store coupons). Increasingly, this is untrue; carrying the card merely allows you access sale prices (in exchange for giving the store personal information and allowing them to track all your purchases). Put this together with the need for competitive shopping, and suddenly your wallet is stuffed with a panoply of cards (not counting any actual store credit cards).
Shrinking sizes
It's not enough to merely battle rising prices; inflation is often hidden in smaller package sizes. Only a few years ago, ice cream commonly came in half-gallon containers in the US; those containers shrank to 1.75qt, and now to 1.5qt for most brands. One-pound packages from saltines to bacon now appear in 12-14oz sizes. In this way, cost increases can be "hidden in plain sight" -- one more thing to account for, for the bargain shopper.
-----
This "hidden inflation" highlights another difference between rich and poor -- it's not merely that the rich can afford more and better goods. It's that the rich can simply buy what they want or need with little time and effort, and can spend their time on their primary job or at leisure. The poor, by default, find themselves with a second (or third, etc) job: increasing amounts of time struggling to save money.
Deflation? Please. Many of us are facing this double inflation, and we all have to eat.
