Follow On TwitterShallow Thoughts: How Do These Stores Stay In Business?
I admit it. I’m guilty. In a previous article I wrote on how to spend money wisely, I stressed how one of the keys to saving money was to avoid spending it altogether. One of the main tenets of the article was to avoid going to the mall for recreation and leisure.
Well today I couldn’t help it. It was an incredibly nice day (Mid 70’s sunny) so my family and I decided to go on a walk at this ritzy outdoor mall nearby our house. For all of you who live in the Bay Area, I went to Santana Row which is a street lined full of expensive boutiques and fancy restaurants.
This was the first time that I had gone shopping in probably about a year, so I was really shocked by the high prices and the abundance of wealth that surrounded me.
The Handbag
My wife has been in the market for a handbag for quite a long time, so when we walked by one of her favorite handbag stores, Ferragamo, we had to walk inside.
Jen: So you know Christmas is coming up right?
Steve: Yes…(I don’t like where this conversation is going…)
Jen: And you know how raising our baby has been extremely stressful
Steve: uh huh (Objection! Leading the witness!)
Jen: I deserve something special don’t I?
Steve: Of course you do dear. (How much is this little conversation going to cost me? I hope this Ferragamo place is a discount shop)
At this point, she started eyeing this one particular handbag and tried it on in front of the mirror.
Jen: What do you think?
Steve: Well, it looks like a bag….that can be held in your hand…as well as on your shoulder.
Jen: Isn’t it beautiful?
Steve: No, I think it is heinous…. How much is it?
Jen: Are putting a price on my happiness? If you must know, it’s only one.
Steve: One hundred dollars? That’s not so bad. Go ahead and get it.
Jen: **cough**cough**. One thousand dollars. **clears her throat**
Steve: Holy $%!@. Son of a motherless %!@^$.
** Long Pause **
Steve: Well if it will truly make you happy, then go ahead and get it. You haven’t purchased anything frivolous in a very long time.
Jen: I’m not going to get it. I just wanted to test you to see if you’d buy it for me. That was very sweet of you.
Steve: Tell you what. Next time we go to China, I’ll pick you up a Ferragami. It’s just as good as Ferragamo at one-tenth the price.
Phew! I was so relieved that reverse psychology did the trick. Never in a million years would I have thought that a handbag could cost 1000 dollars. Besides, we need to save that thousand dollars so I can buy myself that flat screen television for Christmas:)
The Snack
After the handbag shop, my wife and I were hungry and decided to grab a snack. A cute little boutique bakery caught our eye and we decided to give it a try.
Me: Yes, I’d like a chocolate croissant and one of those puff pastries.
Jen: And I’d like a chocolate truffle please. Oh and a cup of tea too.
Clerk: No problem. Anything else?
Me: Nupe.
Clerk: That will be 27 dollars please.
Me: Huh? There must be some mistake.
Clerk: I don’t believe so sir. Each of those pastries and truffles are 7 dollars a piece.
Me: Wow!… Holy!…No Way! Ok, sorry about that. I think I’ll just have a single croissant then.
Since when does a piece of chocolate and a pastry cost 14 dollars? What world am I living in?
The Baby Boutique
Our final stop was this fancy baby boutique that sold designer toys and clothes. I full on admit that I’m a sucker for baby items for my cute little daughter. She’s now at this age where she’s mobile (she literally started crawling a few days ago) and she loves to play with toys and explore.
We had our eye on this educational block set that was pretty cool. Basically this set consisted of 26 blocks each with a letter of the alphabet embroidered on the side. When each block is squeezed, a voice says the letter out loud and iterates a bunch of words that begin with that letter. In my mind, it was the perfect learning toy for my daughter.
Me: Sir, how much are these blocks?
Clerk: They are 10 dollars.
Me: Wow, that’s it? I’ll take them.
Clerk: Very well. Your total is $260 dollars.
Me: Huh?
Clerk: The blocks are 10 dollars each and there are 26 of them.
Me(Mentally): Holy @#%^. Son of a motherless &*^&*. (Prolonged cussing)
Me: Sorry sir, I don’t think we’ll be purchasing these blocks today.
It was quite embarrassing to wait in line only to back out of the purchase, but there was no way in hell I was going to spend 260 dollars on some blocks. I can easily make blocks and say the letters out loud myself.
Arriving Back At Home
On our way home, I couldn’t help but wonder how the heck these stores stay in business. Especially in our current economic doldrums, you would think that people would be trying to save their money and avoid luxury items altogether. I managed to escape our little impromptu shopping trip down only about 20 dollars. Never again will I ever go shopping in that ridiculously priced mall again.
While I didn’t regret coming home empty handed, I did feel kind of bad about not buying my daughter anything. But when I got home, I handed her an empty water bottle and an empty box and she was ecstatic! She literally played with those items for hours, laughing and giggling the entire time.
I think my daughter was secretly trying to tell me something. You don’t need to spend money to be happy. Come to think of it, we didn’t really need any of those extraneous items anyways. The 1000 dollar handbag was completely superfluous and my wife certainly didn’t need one. But buying a flat screen television on the other hand definitely requires further evaluation.
Did you like this article? There are many more articles like this on entrepreneurship, kids and money and how to open an online business on this website. Read about our journey how we went from earning 0 to 100 thousand dollars in 12 months with our online business. Looking for some laughs? Read about some of our crazy customer stories.
Ready To Get Serious About Starting An Online Business?
If you are really considering starting your own online business and quitting your day job, then you absolutely have to check out my guide on How To Create A Profitable Online Store In 5 Easy Steps.In this guide, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's absolutely free!
Stumble!
Reddit!
Digg!
Del.icio.us
Facebook
Get Free Updates Via RSS
Get Free Updates Via Email
Follow Me On Twitter
Similar Posts
- Are You Alienating Customers From Your Online Business?
- Underhanded Selling Tactics That Work But Should You Use Them?
- Recover Lost Sales From Your Online Store
- How To Make Time Equal Money 24 Hours A Day
- Kids And Money
Have you read these?
- Your Website Just Get Hacked? – 3 Tips To Minimize The Downtime
- SEO: 10 Ways to Optimize Your Online Store for the Search Engines
- How We Stopped Short Of Becoming Lazy Pieces Of Crap
- How To Make Time Equal Money 24 Hours A Day
- 5 Crucial Subjects Schools Don’t Cover That You Should At Home
While walking in our neighborhood a week or so ago, we passed a house for sale. 2 bedrooms, 2 baths for $900K – I think its sale pending now.
What recession?? (That was tongue in cheek)
I don’t get it either. I love nice things, but try not to be frivolous about it – especially in this day and age. $1000 for a purse? I’m not surprised, but I would NEVER spend that kind of money for a bag no matter how much money I have or how much I like it.
(As an aside: I brought a purse a couple months ago for $160 from a sample sale where the original price was close to $600. It takes time to find good deals, but if you’re patient and resourceful, it can be done.)
Hi Carla,
I’m not sure where you live, but here in the Bay Area, I’m not really seeing many signs of a slowdown. Outside of the shooting and a few of my friends getting laid off, it’s far from the doom and gloom stories that I’ve been reading.
Regarding the purse, I knew my wife wasn’t going to buy it:) But I seriously wonder whether how some of these luxury vendors stay around. Are there that many wealthy people in the world?
@Steve – I’m also in the Bay Area. The house I was referring to is in the Berkeley hills. From living in this neighborhood over the past couple years, I get the feeling the residents here don’t rely on “normal” jobs for financial stability the way it seems most people do.
Hey Carla,
Have you ever been to the site burbed.com? It’s pretty funny. All the site does is make fun of real estate values in the bay area.
Wow! Being from the midwest, I find those prices to be unbelievable! I imagine that the people who can afford a $1,000 handbag aren’t the ones who are suffering from the economy. Or maybe they are… but they’re so sucked into a lifestyle that they’re in denial.
Hi Sarah,
I’m not sure if it just has to do with where I live, but there was a crowd of wealthy looking people in the store with us. They were essentially walking billboards for designer stuff. My wife and I walked in wearing tshirt and jeans. It’s no wonder that we even received any service. Perhaps, the economy just hasn’t hit us hard yet.
wow,
must be a high cost of living there,
the slow down started here a year ago, it sucks
I bet you could probably come to this area, find that same hand bag, on a going out of business, or “Holiday” sale already for less than half that
everything is on sale, at reduced prices, but hardly anyone has any money
Steve,
I’ve been reading your blog for a few months now, and while I think you have some great insight into starting a business, it’s beginning to sound like you feel money is an evil force.
Based on this post, you and many of your readers don’t understand it, but there is a tremendous amount of wealth out there and they shop in stores like the ones you mentioned which is how they stay in business. They don’t give the price a second thought because they can easily afford it. Many, if not most, are self-made millionaire entrepreneurs.
If I wanted to constantly find ways to make a dollar stretch as far as humanly possible, I’d work for someone else. Why bother with the headache of owning a business? For me the headache is worth it because I am finally at the point where I could afford that $1,000 purse – 10 of them even, without thinking twice. All because I worked like heck for the first 5 years of my business. I was willing to live frugally for a while, but in the end I simply wanted to be able to afford anything I wanted.
Money may not buy happiness, but it sure helps.
Just a reminder that for some people (like myself – I admit it), the pursuit of wealth is a perfectly valid reason to be a business owner. If I wanted to scrape along, I’d go get a great paying job and just live paycheck to paycheck.
But I understand that your niche may be just for those who want to “own their own job” – and that’s fine. But keep in mind that those of use who want the expensive car, the big house and the crazy vacation are out there – and our motivation for working hard is just as acceptable. Those stores and those pastry shops stay in business because I can easily afford what they sell – and that’s an important part of the economy as well.
In the words of Gordon Gekko: “Greed is good.”
Hi Tim,
I wouldn’t say that we feel (or at least I, as a reader here) feel that money is an evil force. I guess reading and hearing the doom and gloom in the media on one hand and then observing where we live kind of have me scratching my head every now and then. Seeing a Maserati drive down the street is not uncommon here while it seems the rest of the country is in shambles.
I did a search where I live and this area has the highest per capita concentration of Nobel laureates in the United States and its only 1.1 sq miles. These people are not wage slaves working for “the man” and living on credit!
My personal goal is to be SET financially. I know I will get there one step at a time. I’m sure it wont be this business, (maybe, maybe not) but I know something else would come along to help me achieve my goals.
I hear you Carla – and I think the post “reading and hearing the doom and gloom in the media on one hand and then observing where we live kind of have me scratching my head.” is the perfect point.
The media loves to spread doom and gloom. But there are folks out there quietly continuing along with their businesses and doing very well because they refuse to be told that they should be struggling right now.
The comments like one above that say, “$1000 for a purse? I’m not surprised, but I would NEVER spend that kind of money for a bag no matter how much money I have or how much I like it.” drive me nuts. I guarantee that person will never have the money to afford that purse so they essentially justify the reason why they wouldn’t want it.
I truly believe that most people don’t achieve the wealth they want because they have it in their head that they don’t deserve it. BS! If you want that $1,000 purse – don’t fell guilty about it – go earn it!
Actually, I was the person who said I would never spend that kind of money on a purse and I won’t no matter how much money I have. I mean, it’s a purse. On the other hand, I know people would never spend the kind of money I do. I know people whose net worth is in the Bs will never spend that kind of money on something like that. Its fun to shop – I love shopping but I do have limits no matter what my financial standing is.
Its all about preferences.
Hey Tim,
I definitely don’t consider money an evil force. I guess the main point that I want to emphasize is that money shouldn’t be the only motivating factor. There has to be some other driving force that makes you want to start your own business.
My wife and I always talk about whether our lifestyle would change if we were rich (By rich I mean 10-15+million). Quite frankly, I don’t think our lifestyle would change much. We might get a big house and travel a bit more but that’s about it. I don’t think I’d be buying the 1000 dollar handbags or the 3000 suits either.
My wife and I can afford nice cars, expensive handbags, gadgets, you name it, but buying those things isn’t our style. But heck who knows? I might change someday once 1k becomes a drop in the bucket. We’ll just have to see. Right now, we’re doing our best to diversify our income streams so I can retire too.
The other point that I want to make is that there is always this gray area between spending and earning. If your business makes so much money that you can spend money on whatever you want, then that’s fine.
But there’s also a middle ground. While my business and income are doing great, my end goal is to amass enough money such that the money itself makes enough for us to enjoy life. When that occurs, I’ll probably sell the business, retire and live off of investments doing what I want to do the most, hang out with my family.
Tim, it sounds like you have reached that point already and power to you. Meanwhile, because of compounding, I know that I will reach my retirement goals much faster if I don’t spend frivolously.