Tuesday, 16 September 2008

Why politics iz stoopid 2

On the weekend, the family and I headed down to Weken toys, a new toy warehouse that opened in Oshweken, on the 6 Nations Reserve.

It was grand opening weekend, and as with all big events, the computerized POS system crashed, and all items had to be tallied by hand.

That contributed to long line-ups at the cash register. But that isn't the reason some people stood in line for over 2 hours to pay for their purchases (I was only in line for 20 minutes). Because the store is on native territory, you don't have to pay any sales tax. So you save 13% tax on any toy purchase.

Well. You'd swear it was a 50% off sale. People went crazy. Their shopping carts were over flowing with toys. They were hand totaling total purchases of over $200, $300. So yeah, people were saving $26 - $39 in sales tax. But most of the items were regular price, the same prices that could be found at Wal-Mart, Toys 'R Us, etc.

So here's what I found illogical. Because there was no tax, people were buying way more toys than they would if they went shopping at a regular retail outlet. At Wal-Mart in Brantford (where we made a quick stop on the way home), no one was buying $300 worth of toys at regular price. But because there was no tax, people were making purchases way in excess of normal shopping habits. To me $300 is $300, whether tax is included or not. If I can't afford a $300 worth of items with tax, I can't afford $300 of items tax free, the money still has to come out of my wallet!

Well, there were hundreds of people that disagreed with me. A sale is an excuse to spend like there's no tomorrow.

(and on to the point of the post)

Which is why this announcement by Stephen Harper is freaking genius. The government will help you save $750 on a $316,000 new home.

Convince people they're getting a deal, and they'll worship the ground you walk on.

(HT DTK.)

3 comments:

Greg said...

What you've discovered is that marketing works. Surely you've seen the "1.9% financing" scam from the car dealers? That's nothing but trickery. What matters are the monthly payments. Would you rather have the car for 16k at 1.9% or 14k at 2.9%? No one ever does the math.

Do you think anyone at that toy store went out and compared the prices with other toy stores to see if 13% off was really a deal?

I wish the tax cut trick didn't work. I wish politicians were forced to lay out what services they will cut in order to achieve every tax cut they offer.

Ken Breadner said...

Oh, hell. I see this every day. Here's an interesting example that has nothing to do with a grocery store...Rhapsody online music store. For a while there, all their songs were 49 cents apiece, half what iTunes charges. Rhapsody ate the loss. And it turned out to be an appetizing loss to eat, because people bought, not twice as many songs as one might expect...not even three times...but SIX TIMES AS MANY SONGS. And yet the record labels rebelled, because they felt their product was being "devalued".
I will never understand people. Even being one doesn't seem to help.

Raphael Alexander said...

A solid argument Catelli. I'm convinced. But then, I've felt people are relatively thick-skulled when it comes to retail matters anyway.