Recovering Shopaholic

November 1, 2007

In the spirit of becoming a recovering shopaholic, I really needed to find out what drives my consumptive, materialistic, hedonistic, cosmopolitan buying habit.  Why do I – the present tense honestly indicates that these are still my preferred way of life – choose Starbucks over the so-called warung kopi?  Why do I immediately go to the Evian rack instead of the Aqua rack?  Why is the name Anya Hindmarch means so much to me but I won’t give the time of day to Sophie Martin?  If I were forced to explain my own buying habit to public, my immediate and logical – or should I say defensive – respond would be: taste is something quizzical that I can’t explain with just a few words.  It would be the same as asking a woman why she prefers wedges over pumps, or asking a man why he chooses to wear a t-shirt instead of a polo shirt.  Taste, I believe, is something to be enjoyed, not something to be explained.

But with a pure intention of finding out the naked truth behind my – and of course your – preferred lifestyle, and to give myself an edge in putting a halt to Starbucks, Zara, Miss Sixty, and Barneys which are continuously after the money in my purse, I do need an explanation behind my consumption habit.  So I went to the local bookstore, picked up The Undercover Economist by Tim Hartford, and to quote David Bodanis: “Reading this book is like spending an ordinary day wearing x-ray goggles.”  Just what I need.

Let’s say that we’re not blaming the expensive taste on the taste, but on the expensive price.  I like Starbucks because I like Starbucks, but why does a cup of cappuccino there cost a fortune while a cup of the same thing at your local warkop costs practically nothing?  If you look at the location, the common-sense answer would be because coffee bars such as Starbucks and Coffee Bean pay a significant amount of money on rents, hence hiking up the overhead costs, which of course, triggering the expensive price.  But is that really all there is to it?  Our dear friend Tim Hartford showed in his book that there’s more to that than just location. 

He explained bluntly through the theory of well-known economist David Ricardo.  In his story, Ricardo illustrated that there are two things which determine the rent of prime locations like meadowlands (or in the modern world: prime locations like the central business districts, and the strategic street corners where every coffee chains are after): the difference in agricultural productivity between meadows and marginal land, and the importance of agricultural productivity.  At USD 1 a bushel, five bushels of grain is USD 5 rent.  But at USD 200,000 a bushel, five bushels of grain is a USD 1 million rent.  Meadows command high rents only if the grain they help produce is also valuable.

Let me turn the time machine back to our world now.  If we blame the high price of branded coffee on rents, we should also take note that prime coffee bar locations will command high rents only if customers – that’s us – will pay high prices for coffee.  Rush hour customers, caffeine-bound yuppies, and just anyone with the given lifestyle are really so desperate for coffee that they literally become price-blind, or as Tim put it: “The willingness to pay top whack for convenient coffee sets the high rent, and not the other way around.”

Mmm, I stopped for a minute when I reach that page.  Does Zara really apply USD 30 on a piece of white t-shirts because we’re willing to pay for that?  And does Miss Sixty get away with price-tagging USD 100 on a pair of jeans because we don’t object and keep on buying?  Thus, another question is arising: why don’t we object?  Why are we willing to pay for it, despite our endless complaints of calling it “ridiculously expensive?” 

The answer is, as simply as, scarcity power.  Tim said: “If there’s a profitable deal to be done between somebody who has something unique and someone who has something which can be replaced, then the profits will go to the owner of the unique resource.”  This is how the relationship between scarcity and bargaining strength works.  Let’s say that you work in the central business district in Jakarta.  To make your life more practical, of course, you would want to live around the area, thus saving a lot of time on your trips to and from work every day.  The main problem is, there are only so few apartments in this prime locations, but there are so many people wanting them, making the rent price of these apartments skyrocketed, leaving most of those people – including you, maybe – disappointed.  But the last time I check, coffee is not scarce, jeans are sold everywhere, and looking for a white shirt is as easy as lifting up a finger, so why the high price? 

Allow me to replace the word coffee with Starbucks, jeans with Miss Sixty, and white shirt with Zara, and you’ll start to get a clearer picture.  There’s not many quality coffee like Starbucks, stylish jeans like Miss Sixty, and chic white shirt like Zara, thus giving them the scarcity power and high value above the others.  But then again, the wondering part of you might be dying to ask this question by now: is Starbucks really the only quality coffee in the world?  Is Miss Sixty the solitary stylish pair of jeans on the face of the planet?  The answer is of course no.  And with the existence of free trade competitions, won’t Starbucks, Miss Sixty, and Zara try to lower their price to keep customers from buying products from them instead of from their competitors?

This is where the concept of the so-called “marginal products” comes to mind.  In the eyes of die-hard, brand-minded shopaholic like me, the values of Starbucks, Miss Sixty, and Zara are way above their competitors, hence making the competitors marginal.  With the already branded state of mind that I have, these certain products will be the only ones I care about every time I’m ready to splurge some money.  The brilliant minds behind the success of these top products realize the hard fact that once they have built a strong customer base, they can get away with most any prices.  How did they do it?  How did they make me – and maybe a million other customers – don’t feel like they’re ripping us off? 

Before I answer that, allow me to present you with another question: what do Starbucks, Miss Sixty, and Zara have in common?  If you ask somebody like Nicholas Kochan, the editor of The World’s Greatest Brand, he would probably answer: they’re all heavily promoted, all owned or sold by large companies, and each has a carefully developed set of “values” which appeals to a specific audience.  They’re all powerful brands.  And all powerful brands have loyal – if not fanatic – customers who would enjoy everything that the brand has to offer at any cost.  But how do they arrive at that point?  How do they develop such a brand that has an emotional connection with its targeted customers?

The answer is, again, very simple.  Starbucks, as any other strong brands like Nike and Coca Cola, continues to spend a lot of money on maintaining brand awareness to its customers and …   Wait, what time is it?  Oh shit, I’m late to my shopping date with a friend.  I’m sorry if I seem to end this discussion abruptly, but a 20 percent discount at Zara is waiting.  Well, no matter how many economics books that I’ve read, being a recovering shopaholic is never easy 😉

 

 

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15 Responses to “Recovering Shopaholic”

  1. dinda Says:

    finally! i dont have to log in to friendster before commenting! 😀

  2. inatassa Says:

    hahaha, yup, moving the blog here is also about the so-called “reaching to the masses”

  3. Erlina Says:

    Hi, Ika Natassa. Your blog is cute & adorable. Never know that SOE Bank has an employee with such talent. Anyway, a shopaholic always be a shopaholic. Live with that.But, I always think that there’s a line between a shopaholic and “I-must-get-the-best-material” shopper. What do you think?

  4. Ika Natassa Says:

    agreed. shopaholic usually shops for everything, cheap and expensive, but uncontrollably. but there’s also the other kind of shopaholics, the ones who only can’t help themselves when it comes to branded items. if i may say, there’s actually a very logical reason why shopaholics choose branded items. it’s not just for the sake of never abandoning their sense of style, but sometimes simply because the so-called branded items are of high quality and last a long while. try wearing a pair of vincci (don’t get me wrong, i love the style, but they just doesn’t last long, 6 months at most) with a pair of prada 😉

  5. irina Says:

    so… u should read all series of shopaholic adventure from sophie kinsella…i bet u u gonna like it….^0^

  6. Erlina Says:

    Love to read your opinion about buying (or is it just another justification to buy another manolos ?ha3x). I really wish that someone like you could share my office space here. We could poison each other especially during the end-of-year sale season. You could understand why a woman need another Miu Miu Bag or Hermes scarf instead of pension plan …

  7. Ika Natassa Says:

    where do you work, maybe you should move here, anyway, hermes is a pension plan itself for what it’s worth, right 😉

  8. Erlina Says:

    Ika Natassa, according to the logo behind you in your picture, I think we’re in same ship and also at the same field, credit.
    Please, please move here …
    I think you should write another book, not about shopaholic, but about real woman who need to indulge herself with luxury … Not to show off to anyone like some social climber. Just to fulfill her needs. I believe you’ve mastered about the topic. 🙂
    Anyway, please email me anytime at amasvaritas@yahoo.com. Love to hear any news from you soon …

  9. Ika Natassa Says:

    which cbc? i drag living in jakarta. the second book is already at the hands of my editor, it should hit the store anytime soon

  10. syanthy Says:

    really smart entry if i may say.

    i have been evaluating the same while i keep spending money in certain places as u mentioned above :p

    since i dont read much books about marketing strategy nor modern advertising, i dont have a broad and too excellent essay regarding the above, but i do believe in establishing image and branding awareness, so ill try my best to give comments, as below 🙂

    modern ppl who live in big cities (such as jkt) do care a lot about image of products that they buy. cos they dont only buy a cup of coffee, a piece of white t-shirt or a pair of jeans, what they really buy is the image of said products, which has been established for years by very smart marketer ppl.

    Why they need to buy such image? i think it is all because ppl have tendencies to feel that they are a member from a certain group. it is a nature thing, since we were all born as a social person who tend to live in a group.

    so the above products are like the (unwritten) condition precendents to enter theirself in certain group.

    u want to feel like ure a part of urban-modern ppl? well, u (must) start to have ur coffee in starbucks, u must wear t-shirt from zara and ur jeans must has label ‘miss sixty’.

    so why starbucks instead warung kopi pinggir jalan.
    why zara instead white t-shirt from matahari dept store.
    why ms. sixty instead jeans mangga dua which only cost 150rb mas.

    because ppl need the image of the above products to enter theirself to a certain group, to feel thay they are belong to a specific group.

    well, that is just my opinion, feel free to debate or to further discuss it 🙂

    thanks. and it is a real pleasure to read ur blog 🙂

  11. Ika Natassa Says:

    hi syanthy, great to know. gw jg pernah bahas sebab yg mirip di postingan yg judulnya red carpet society. somehow we just let the society to decide what’s good and what’s not for us, not the other way around 😉

  12. eri Says:

    Kind of cool looking flashy girl 🙂
    Live with that…I love Zara and Starbucks, lucky me for having a friend who works in MAP. She’s generous enough for lending me her ID card so I can get an extra discount :).

  13. Lia Says:

    Well, are you after discounted branded items, too? Will the discount make any difference in your intention of buying and post-purchase evaluation? I like analyzing people shopping habit..

    And I agree : once they are on your body, branded items do look and feel different from the cheap ones. I can’t afford any of Manolos or Jimmy Choos, but I do love my ferrari-red colored Guess eyeglasses better than my frameless Polo. Both cost the same, less than Rp.1000k. But Guess was discounted (I saw the original price and for me it was ridiculously expensive). I think it’s because “Polos (and grey) are too popular, none of people I know wear Guess, especially when it’s shocking red”. Even my ex-banker dad (whose shoes cost at least 1 million) once told me that my Guess was cool 🙂

    I guess back to my question above.

    🙂

  14. Ika Natassa Says:

    i’d be a statistical anomaly if i said that i don’t like sale! hahaha

    discounted or not, basically my motive of buying is just because i like it, which leads to me never having buyer’s remorse eventhough i currently have almost a dozen unopened shopping bags in the corner of my room and my friends have been begging me to have a garage sale 😉

    it should be pretty simple, you know, you like things, you can afford them, you buy them. and if the things that you like happen to be branded, so be it.

    congrats on the red glasses! i hate the fact that i have to wear glasses, but wearing an O makes it less undesirable 😉


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