Ben Buckman.net

On the way home from work yesterday, I stopped at a mall to pick up two items. Home Depot had the drill bit I needed, a 35mm Forstner bit (for installing a hinge on a cabinet I'm building) for around $16. That seemed expensive, so I pulled out my Droid, opened the ShopSavvy app, and scanned the bar code on the back of the package. The app correctly identified the product, and within 20 seconds of finding it on the shelf, I had a list of competing prices in my hand - all lower than $16, most closer to $11.

So I brought the product to the customer service desk and asked if they matched competitors' prices. Yes, but not online stores. How about True Value? (The list included one of their franchise's prices, $10.11, and they were a "real" store.) Yeah, they'd honor that. So the item was marked down $5 and change, I bought it, and tweeted "Score 1 for the tech-empowered consumer!" as I left.

Across the parking lot in Best Buy, I needed two cable couplers. I explained what I needed to the salesmen in the Home Theater department, he gave me the items (6" connector cables), it looked right, $8 each. I scanned the barcode again and it came up at $3.82. Customer service marked it down again, somewhat angrily: the manager marked it down 20 cents below the lowest price, I said "I don't want to cheat you, it's actually X," and he said "I don't give a damn."

In the parking lot, I took a closer look at the items and realized the connectors were wrong. I went back inside, picked out the right items - these were $3 for 2 couplers - and returned to the customer service desk. But this time it didn't seem fair to haggle about $3, so I didn't check the competitors, I just returned the others and paid list price for the new one.

Coincidentally, on the ride home I was listening to Marketplace on WBUR, with an interview of behavioral economist Dan Ariely on The Price of Free. His research led to a fascinating observation: when something has a price on it, any price, people buy as much as they want/need/afford. In his example, if you bring cookies to work and charge 5 cents apiece, a few people will buy them all fast. Make something free, on the other hand, and other, non-financial factors come into play: we think more about the welfare of those around us. Bring a plate of free cookies to work and most people will only take one or two, leaving some for their co-workers. (He relates this to cap & trade: he's concerned that the price will be set too low and non-financial environmental concern will be tossed aside, causing more net pollution.)

So: It's a good deal to bargain $16 down to $10. It feels cheap to bargain $3 down to $2.50. 5 cent cookies are a great deal to the point of inviting hoarding. Free cookies are a valuable public resource to be equitably shared. Fascinating.

The implications of the tech-empowered consumer taken to its full extent is an amazing and frightening prospect in itself. Home Depot's $16 tag is presumably set to compete with Lowes, Sears, etc. Maybe they figure Forstner bits are a specialty item, so they can mark that up while keeping large appliances competitive with Amazon. But I'm not a construction contractor, and $16 to drill two holes is a lot of money. (At $10 I rationalize that I'll have it for later, should I ever need that size again.)

How long is it before a critical mass of shoppers in every retail store is price-matching everything? (Barcode scanning will certainly be part of my shopping routine from now on.) I suspect if the last decade's online competition threw brick & mortal retail into a shock, they ain't seen nothin' yet. Consider the ramifications of that broader trend, and the past (and future-expected) patterns of growth through more spending, on the prospects of recovering from a recession and long-term growth.