Friday, September 08, 2017

BadBusiness: Luxury Demands, Commodity Pocketbooks. (Part I of ?)

I ran across a pretty interesting article on Inc.com the other day that made me think.

The Really Comfortable Plane That Airlines Just Don't Want to Buy. Inc.com

The story is about the Bombardier C-Series commercial jet. The C-Series is, by all accounts, a marvel. It's got wider aisles, wider middle seats, more space between rows, and the airlines aren't interested.

Not because they're a bunch of sadists who like to see passengers cramp-up due to lack of circulation mid-flight, or because they're clueless (although the media would certainly like you to think they are). Nope, they don't want to buy this plane because they, rightfully, understand that the vast majority of American passengers won't pay even a small premium to fly on one.

And that's a big problem in American consumer culture right now.  We've been led to believe, by Madison Avenue, that we have champagne tastes when we're actually running on a Mad Dog 20/20 budget.

Yes, Americans demand nice "stuff", but they demand that "stuff" at bargain basement prices. This has led to two things:

1. True luxury goods becoming more and more scarce, especially in America
2. Faux-luxury taking its place.

For example:  If you travel to Las Vegas, as I do often, you see brand names selling wares that are decidedly not cheap.  The Europeans and Asian tourists flock to these stores (Prada, David Yurman, etc.) and buy one or two pieces before spending the rest of the evening playing Baccarat and quaffing Champagne by the bottle.  American tourists are hitting up the sales rack at Tommy, various "off-label" stores offering cheap knock-offs of designer goods while standing in line to play $5 blackjack, the shitty $5 "Sands" Roulette wheel and penny slots.  They then go to White Castle or some restaurant with a celebrity chef's name emblazoned on it to try a "seasonal" tasting menu that doesn't change year-round.

An American might walk into Prada, but will run out once he/she sees that the shoes have a price tag of over $1000. (Full disclosure: I'm not a fan of Prada, I don't find their designs all that practical or enticing)  And this is in 'see and be seen" Vegas, where 7 For All Mankind and Lucky Brand jeans are still a thing.

Go to a city like Houston and luxury goods in the Galleria are jumped on by tourists from (again) Europe, Asia and South America. (The Galleria in Houston being one of the most multi-lingual malls in America I'm betting) while locals head to one of the many "outlet malls" to fill up bags full of Tommy Hilfiger, Polo and US Polo Association.

But those aren't even the REAL Hilfiger, Polo, or Brooks Brother's items.  They're outlet mall knock-offs usually made in Vietnam.

The important thing is that they are cheap, and plentiful.  And if America likes anything it's cheap and plentiful goods.  See Wal-Mart for an example of that.

This race to the bottom of the price structure has led to two bad trends.  Trends that I'll discuss further in Part II of this series.