Where the Shuswap meets the Okanagan
By Tate Bengtson
February 3, 2010
Recent studies of how the recession has changed our spending habits point to two seemingly contradictory tendencies. First, more people are being frugal with their money. Second, more people are choosing to shop locally, often at smaller stores. Now, common sense would tell us that being frugal means patronizing the biggest stores, which have the greatest purchasing power, and can offer us the lowest prices as a result. It would seem that these two trends are at odds with one another.
However, there is an explanation which shows these tendencies as complimentary rather than contradictory. As this explanation suggests, shopping locally and saving money actually go hand-in-hand. The most important part of this explanation is that the true value of a purchase is not the same as the sale value of a purchase. Let me say it again: the true value is not the same as the sale value. As a result, a new kind of consumer – the true-value consumer – is emerging as the major force in our post-recession economy.
It goes like this: When the recession hit, we started to ask ourselves hard questions about how we calculate value. We had to do this in order to survive. We had to ask ourselves the toughest question that any generation has had to ask itself since the Great Depression. When we asked those tough questions, we changed in a very profound way.
What we discovered about the relationship between sale value (“the sticker price”) and true value (“the real price”) was shocking. We discovered the there is often a stark difference between the sticker price and the real price. We saw this most explicitly on the stock market, where nearly worthless derivatives were bought and sold at values thousands of times greater than their true value. However, this collectively-held illusion that the sale value was identical with the true value was not isolated to the financial industry; when we drilled down to how we conducted our day-to-day shopping, nearly all of us bought into the illusion.
If there is one factor which will determine the shape of the post-recession economy, it is the recognition that the sticker price and the real price are not identical. This realization is transforming how we shop.
We realized that we were spending huge sums of money on costs that were never built into our sticker price comparisons, such as fuel expenses. The true-value consumer recognizes the real costs hidden behind the stickers. For the true-value consumer, it no longer makes sense to spend $3.50 on fuel in order to knock $1 off of the sticker price.
We realized that we had failed to place a premium on that most precious of gifts, our time. For the true-value consumer, a quick trip to the local market outweighs occasionally lower sticker prices once the hours spent navigating huge parking lots and trudging through long line-ups are factored into the equation.
We realized that money spent outside of the local economy does not return. The true-value consumer understands that it is the local economy that reduces unemployment and keeps service organizations going. In fact, studies suggest that for every $100 spent locally, $68 is re-invested back into our community in the form of donations and wages that keep our friends and neighbors employed.
We realized that, as local businesses closed – those very same local businesses which pay a higher property tax rate than residents for local infrastructure – our property taxes went up even as our property values sank. The true-value consumer, as it turns out, likes paying low taxes for high quality utilities and infrastructure. For the true-value consumer, a low tax rate for every resident is connected to the prosperity of local businesses, which pay a disproportionate share of those costs.
So here we are, on the cusp of a new era; the era of the true-value consumer. This era will be characterized by the following:
In short, the true-value consumer has figured out that the sticker price is not the final arbiter when it comes to cost comparisons. In fact, it is only one of several factors involved in determining the real price.
What we are seeing is the rise of the true-value consumer who has reconciled ideals with dollars. As it turns out, the relationship between our ideals and our dollars always existed. It just took a depression for us to see it.
Originally published in the Okanagan Advertiser, February 3 2010.