Addicted to Cheap Shopping? Why the Real Cost of Goods Keeps Going Down

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Addicted to Cheap Shopping? Why the Real Cost of Goods Keeps Going Down (61:00)
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In this program, host Libby Potter travels around the world as she takes a meaningful look at the economics behind the inexpensive goods for sale in big-box stores and malls. Cost cutting through supply chain management and waste reduction, economies of scale achieved by shipping offshore-manufactured goods to market via super-container ships, the Wal-Mart effect, and the no-frills philosophy of IKEA are addressed. The triumphs and woes of China, in its role as manufacturer for the world, is given special attention, and the clothing industry is presented as a case study of the cheap goods cycle. But the program also considers the hidden societal costs of cheap goods, such as sweatshop labor and the environmental impact of cavalier overconsumption, and questions how much longer prices will continue to drop as China’s standard of living rises. Original BBCW broadcast title: Addicted to Cheap Shopping? (60 minutes)

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Segments in this Video - (18)

1. Retail Prices vs. Cost of Personal Services (02:42)
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Prices in retail shops have generally declined over the past few years, but inflation prevents consumers from noticing. Yet, despite the relatively lower price of consumer goods, the cost of personal services (plumber, home insurance, etc.) has risen by 60% since 1997.

2. Public Perceptions of Price (02:14)

Using the price of blue jeans as a standard, prices were higher and options fewer a decade ago. Today, prices are lower and options are plentiful. Evidence to the contrary, the public perceives that prices have gone up considerably.

3. Shopping Malls Influence Lower Prices (04:10)

A portable DVD player cost approximately five times what it cost today. An expert asserts this is 99% good for the economy. Shopping malls have turned consumers into "cheap shopaholics" and made shopping very pleasant and relaxed.

4. Art and Science of Cheap Consumer Goods: Wal-Mart (03:50)

Sam Walton, the "father of cheap," now owns the largest company "in the history of civilization." Walton perfected the system of getting goods from suppliers onto the shelves. He bypasses the middleman with a computerized system of ordering.

5. Wal-Mart's Efficiency and Frugality (01:56)

Wal-Mart gets goods from suppliers to its shelves in two days and passes the savings on to customers. By eliminating small cardboard boxes for deodorant and other beauty products, Wal-Mart saves billions.

6. New Shopping Concepts: Wal-Mart and IKEA (03:57)

Consumers who do not shop at Wal-Mart still benefit from the "Wal-Mart Effect." The chain of stores actually keeps the U.S. inflation rate down. IKEA's no-frills warehouse-type retail outlets keep prices down by making customers do all the work.

7. Globalization: Changes in Manufacturing Costs (03:27)

Many products today are made for a fraction of what it cost a decade ago. Today, more and more goods are made in China, flooding the West with cheap goods. As more manufacturing plants were built, more young people were lured from the countryside with the hope of better pay.

8. World Center of Electronic Manufacturing: Shenzhen, China (04:16)

Shenzhen is a center of foreign investment, and since the late 1970s has been one of the fastest growing cities in the world. It is the world's largest supplier of low cost/high tech goods. Chinese factory workers earn around $200 US per month.

9. Shipping Goods by Container Ships: Economy of Scale (03:36)

Super-container ships contribute to the lowering of prices on consumer goods that come from China. These ships are the "floating embodiment" of the economy of scale.

10. Clothing Prices Drop in Britain (03:00)

Enticed by cheaper prices for clothing, consumers buy more unnecessary items than at any time in history. In Britain, clothing prices have dropped 35% in the past decade. This has created a "fashion lust" on the part of shoppers.

11. Cheap Swedish Clothing: Not Made in China (03:14)

In Sweden, new fashions appear almost daily instead of the traditional 4 times per year. Speed is important to keep profits high. From the drawing board to the shelf may take only 3 weeks in Sweden--by manufacturing locally.

12. Downside to Cheap Goods: Charity Shops Suffer (02:06)

Cheaper goods keep people shopping--but there is always someone paying the price. The unexpected casualties in this trend are the charity shops. Cheaper clothing does not last as well, so the shops get fewer quality goods to sell.

13. Cheap Prices: Consumers Over-Shop and Overstock (04:01)

Consumers' addiction to cheap clothing has changed attitudes towards buying. Consumers exercise their power by comparison shopping. A British consumer has a house full of goods, CDs and DVDs, and even duplicate products he bought "because they were on sale."

14. Over-Consumption: Environmental Effects (03:27)

The trend for consumers to buy so many cheap goods had adverse environmental effects. Garbage dumps are overwhelmed with throw-aways, and resources are gobbled up to the detriment of future generations. Recycling is not a perfected solution.

15. China's Wholesale Shopping Center (03:23)

In Yiwu, China's largest wholesale shopping center in the world is large enough to house 350 football fields and contains 30,000 individual stores. Yiwu is a barometer for Chinese economy. Some experts believe the trend in falling prices cannot last.

16. Changes in the Chinese Economy (02:38)

As China continues to manufacture products for cheaper prices, some companies may go bankrupt--with a subsequent rise in prices. Labor shortages will also drive up costs and consumer prices. China's first car manufacturer explains the rapid growth of his company.

17. China's High-Tech Growth Patterns (02:47)

China is often mis-perceived as a mid-tech country. Yet, China sends people into space and makes advanced-level semi-conductors. China buys technology and also makes it--putting China in the ranks of high-technology world powers.

18. Addiction to Cheap Goods: What Is the Real Price? (02:16)

What are the consequences of consumers' love affair with low-cost shopping? The real price of these goods may be global warming, child labor, or depletion of resources. Are consumers willing to pay the "real" costs of cheap goods?

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