Costs & coats: product pricing relative to salary

I went to the British Museum last year to see a particular exhibition that had captured my fancy – “The Cost of Living in Roman and Modern Britain” (it’s on until April, go see it if you can). It was just a small exhibition, but full of plenty of incredibly fascinating information. One thing in particular that stuck with me was the relative cost of items in terms of how much a soldier in the army could afford, then compared to now. It turns out that the salary of a new-recruit soldier in the Roman army, if you take into account currency values, inflation, etc., was pretty much the same as a new-recruit soldier in the modern British army could expect (somewhere in the region of £16,000 per annum if I remember correctly).

The exhibit included items that both the Roman and the modern soldier might buy and how much it would cost them respectively – what fraction of a day’s salary for a dozen eggs or some dice or whatever. What struck me in particular was that if the modern soldier wanted to buy a winter jacket from the high street, what would it cost him or her? Maybe a couple of days’ worth of salary. By comparison, if a Roman soldier wanted to buy a coat to keep him warm in the winter months, it would set him back a month’s worth of salary. That’s equivalent to about £1200, which most people would consider a pretty large amount of money to be spending on a coat. Incidentally, clothing was also not particularly affordable all the way up until the 19th century, with a man’s suit in the 18th century costing £8 when the cost of providing for a family for an entire year was £40.

Now obviously it’s very much an understatement to say that things have changed a bit since Roman times and since the 18th century. We now have different ways of producing fibres for fabrics, we can do it on a larger scale, we have all sorts of ways of reducing the time taken and the cost of the materials required for manufacturing a garment. But still, I have this misgiving that what we expect to pay for a garment is actually wildly out of step with what it would cost to manufacture a high quality garment from high quality materials using adequately paid skilled labour.

I don’t have much to go on in terms of what such a garment would cost to produce, since the price-tag of a garment (as I’ve mentioned time and time again) is no guarantee of quality. All I have, really, is the price break-downs provided for each garment in the Honest by Bruno Pieters collection, which I discussed here. Those detailed break-downs would suggest that a well-designed, well-made, ethically and sustainably produced garment costs well above what people expect to pay these days – €300-400 is the actual cost for a men’s shirt, €900-1000 for a coat (that coat works out at about £800, so still much less than our Roman soldier was paying back in the day). Maybe the prices would be a bit less if the production scale was larger (since runs are limited to about 10-20 garments per style at the moment), but even an expanded scale wouldn’t reduce the current prices by an enormous amount.

I certainly appreciate the value of low-price clothing for people who are economically disadvantaged and keenly aware of their budgets. There’s no doubt that there are people who really do benefit from that sort of affordability and whose lives are made more comfortable as a result. But for those of us who do have a bit of spare disposable income and whose economic situation isn’t so precarious, is it a valid assumption that we only think that €900 for a coat seems expensive because the profusion of cheaper alternatives has skewed our perception? Is it because we aren’t forced to immediately notice all the compromises – poorer quality materials, underpaid workers, overall diminished longevity – that a more cheaply produced coat entails? I’m reasonably sure that’s the case. It also doesn’t help that genuinely good quality, well produced items are relatively difficult to come by (and designer brand labels are no indicator of it), so we don’t necessarily notice something good when we do see it. That’s if we get past being overwhelmed by the seemingly ridiculous (but actually maybe kind of justified) price-tag.

Does it ultimately come down to the fact that, for whatever reason, we think we’re entitled to not have to spend time saving up for something that’s worth it?

The evident expense of ethics

I will endlessly recommend Lucy Siegle’s fascinating book To Die For: Is Fashion Wearing Out The World?, because anyone who participates in purchasing fashion and is economically privileged enough to make informed choices about what they buy really should read that book. I cannot even begin to summarise the dire state of the fashion cycle, from the sourcing of the raw materials to the production of garments and accessories to the disposal of everything that’s so willingly discarded. Avail yourself of Siegle’s book and find out for yourself. Suffice to say it’s all in a pretty bad state, ethically and sustainably, and if you ever wanted something to put you off nonchalantly waltzing into a shop and buying whatever took your fancy, this book will do it, I promise.

On the topic, it seems like one of the impediments that ethical fashion will encounter is the unwillingness of consumers to pay more for those ethically produced garments. The garments indeed will cost more – that’s a corollary of ensuring an appropriate wage and working conditions for everyone along the whole the production line.

How much more do people assume they’ll have to pay to get an item that’s ethically produced? If the results of a study looking at people’s attitudes and opinions towards purchasing ethically produced beauty products are generalisable, it seems that people expect that they’ll have to pay 30-40% more for ethically produced items compared to non-ethically produced items. That’s certainly discouraging to anyone who has to be conscious of their budget. There might be a desire to buy more ethically, but it might simply prove to be impractical due to the much higher prices.

Except according to industry standards, it actually only costs an extra 2-6% to ensure higher, ethical wages for workers. Not so challenging to deal with, perhaps, even if you’re on a budget.

And amazingly, it also turns out that people report that they are willing to pay about the very same amount, around 2-6% extra, for an ethically manufactured item. So they’re willing to pay how much it actually costs, but they’re simply unaware of the actual cost, and they’re deterred by how much they think it will cost.

Sounds like something’s begging for an awareness campaign…

How to encourage impulse purchases

Impulse purchases: we’ve all made them, we all probably regret a decent proportion of them. Making an impulsive, unplanned purchase from time to time seems inevitable, but are there ways for retailers in increase the likelihood that we might feel that impulse and act on it? The research paper “Cues on apparel websites that trigger impulse purchases” describes a study which aimed to identify potential cues and triggers that online retailers might use to encourage impulse purchases, and then the researchers looked at whether there was a correlation between the use of these cues and the retailer’s reported web sales total. It’s impossible to tell which of the sales on a website were impulse purchases and which weren’t, of course. But given that surveys have found that apparently around 50% of purchases in bricks-and-mortar stores are impulse buys, total sales both in real life and online are definitely driven to a decent extent by impulse purchases. We should therefore be able to see if there is a relationship between total sales and the things people think have induced them in the past to make an impulse purchase online.

There are quite a few cues on retail websites that people report thinking probably led them to make impulse purchases, fitting into four categories:

  • Promotions, e.g. buy-one-get-one-free deals, coupons, discount when you spend above a certain amount, gift with purchase, free shipping or shipping discount, ability to return online purchase to a physical store, competitions, membership discounts.
  • Sales, e.g. markdowns, clearance items, limited time only sales, discounted prices put in bold.
  • Ideas, e.g. featured items, featured outfits, top picks or favourites, gift ideas, items presented by price point (such as “items under $20″).
  • Suggestions, e.g. offering coordination items for the item currently viewed, suggesting visually similar items (not necessarily for coordination with currently viewed item), customer favourites, reviews and recommendations, last item viewed.

Perhaps surprisingly, it was the promotions category of impulse cues that people most commonly identified as leading to an impulse buy, particularly if it was free shipping or a shipping discount being offered. The next most commonly mentioned cue category was ideas, followed by sales (I personally would have thought this category would been a lot more encouraging than ideas-related cues), with suggestions coming in last.

The study then had a look at the extent to which each impulse cue was present on a range of websites (it was US-centric, so websites included those of Neiman Marcus, Saks, J.Crew, etc.) and then tried to see if there were any correlations between the use of particular cues and the web sales of each retailer, potentially revealing whether the use of such cues really does translate into greater sales, presumably partly driven by impulse buys.

Sure enough, web sales are very significantly correlated with the number of impulse cues on the retailer’s website. (For the statistics nerds out there, p < 0.00001 which, I think you’ll agree, is labouring the point.) So the more cues, the greater the web sales – and we’re talking sales in the hundreds of millions of US dollars for the upper-end retailers like Neiman Marcus. And what were the cues most greatly associated with the huge sales of the upper-end retailers (the top 30 of the top 99 online retailers) compared to the lower ones (the bottom 30 of the top 99 online retailers)? Upper-end retailers more frequently used “shop by outfit”, “new style”, “featured item”, “gift idea”, “price point”, “return purchase in store” and “suggested similar item” cues than the lower-end retailers. All up, the upper-end retailers provided more impulse cues overall than lower-end end retailers, which the researchers have taken to mean that the greater use of cues possibly results in greater web sales. (I do have reservations about the way some of the results have been interpreted in this study, but I won’t go into that right now.) The impulse cues mentioned above could be considered warning signs we can all use to know when we’re in dangerous territory regarding impulsive decision-making, because even though impulse purchases can sometimes be perfectly wonderful things that you love for years to come, that generally only happens when you impulse-purchase because of the item itself, and that alone. When you’ve got myriad other cues jostling for your attention and making your brain buzz and saying “buy now for all these fantastic reasons!”, you’re less likely to make a well considered, worthwhile purchase.

Learning from your mistakes requires seeing them

Have you ever planned a purchase, mulled it over, anticipated it, imagined how maybe it will bring something into your life that will make you a little bit happier and fulfilled – and then when you make the purchase, despite the fact that there’s nothing objectively wrong with it and it’s more or less everything you thought it should be, the allure and the appeal seems to dissipate kind of quickly? It seemed like it would be a fantastic purchase, like it fitted in perfectly with some aspect of your personality or lifestyle or whatever, but then when you got it – it’s just not conjuring up those joyous emotions. Yeah, it’s alright… I guess. It’s perfectly… nice. But it’s not thrilling and exciting and fulfilling. It’s just… there. Doing its thing, being an inanimate object, and you find your mind wandering, considering another potential purchase and imagining how it would bring a bit of extra happiness to your life…

The genesis of the problem is that humans are pretty bad at predicting their future emotions. When it comes to accurately imagining the emotions we will experience as a consequence of decisions we make or events we experience (a process known as affective forecasting, since it involves forecasting one’s affect) we’re just really not that good.

As if suffering from that particular blindspot wasn’t bad enough, it also turns out that we’re pretty bad at another thing: figuring out that our judgement was ever wrong. As reported in this paper in the Journal of Experimental Psychology, people are not only bad at making predictions about their future emotional states, but once they get to those emotional states, they’re bad at remembering what their predictions were in the first place.

In one particular experiment, looking specifically at happiness regarding important purchases, people firstly tended to make predictions that overestimated how happy they’d be after they made an intended purchase (you ask them beforehand how happy they think they’ll feel following the purchase, then get them back after the purchase and ask them how happy the purchase made them). Secondly, when you ask people to remember back to their predictions of how happy they would be due to the purchase, they misremember their prediction – they say that their prediction was less positive than it actually was. So, for example, they might predict that they’ll be very happy post-purchase, but then it turns out that they only feel moderately happy, but then they incorrectly remember their prediction and think that they had always predicted that they’d only be moderately happy. Their brain incorrectly remembers their prediction as being more accurate than it actually was.

It also turns out that the bigger the error in a person’s recall of their prediction (e.g. they predicted being very happy but ended up being not happy at all), the less likely they were to adjust their beliefs about the ability of purchases to make them happy in general. This results in people never realising that they’re consistently wrong about predicting how happy a purchase will make them, and continuing to assume that purchases will make them happy.

The killer is that even though people predicted they would be happier after making their intended purchase, there was no difference in happiness levels between the people who did make the purchase and those who didn’t end up making the purchase. In short:

People continue to make purchases that never make them as happy as they think they will, they never realise that this keeps happening, and they really could have saved themselves the trouble because it’s possible that they would have been just as happy all along if they hadn’t made any purchases at all.

As amazing as it is, the human mind can still be quite a disadvantageous thing sometimes.