From The Consumerist:
Does this strike anyone else as strange? I would hope, for your sake, dear readers, that you don’t sit up at night thinking about whether it’s time to restock that fireproof safe. (If you do suffer from frequent fires or attempted robberies, my condolences.)
Economists divide goods into two categories: nondurable goods (or soft goods or consumable goods) and durable goods (hard goods). Nondurable goods are things that people generally consume at one point in time- for some reason, I like to use yogurt as an example here. (You’ll see why in a second.) In contrast, durable goods are items that people tend to consume over a longer period of time, or equivalently, that provide utility over a span of time. For this reason, cars, refrigerators, televisions, etc. are all considered to be durable goods. (Roughly speaking, you can think of durable goods as things that last a while.)
Given this definition, I would hope that a fireproof safe is a durable good for most of you. (If not, might I recommend moving perhaps?) Furthermore, the fact that a fireproof safe is a durable good *should* have an impact on how Staples chooses to market it. Consider the following two cases:
- A grocery store puts yogurt on sale: This is likely to boost sales both in the short run and overall, since most of the increase in sales during the promotion are likely to be sales that wouldn’t have been made otherwise. (Note that I use yogurt as an example here because, in addition to being a nondurable good, yogurt is difficult to stockpile.)
- A car dealership puts cars on sale in the middle of a model year: This will probably increase sales in the short run (or at least increase the quantity sold), but the effect on overall sales is unclear, since it may very well be the case that people are just shifting the timing of their purchases to line up with the sale.
Offering a promotional discount on a durable good only makes sense if the profit from additional people buying the item at the lower price more than offsets the lost profit not only from people who would have bought the product now anyway, but also from those who purchase earlier than they would have otherwise in order to take advantage of the lower price. (Technically, a sale could also get people to buy an item later than they would otherwise if the sale is announced in advance, since some people would wait to get the discount.) Marketers sometimes defend promotions on durable goods by citing evidence that people who bought the good report that they wouldn’t have done so without the promotion. That’s all well and good, but it only helps sales if that person would NEVER have bought the item otherwise (or not for a really long time, I suppose). This was in large part the Cash for Clunkers justification:
Though many dealers fear the clunkers effort has simply accelerated sales that would have taken place anyway, many buyers said they were not in the market for a new car until the program kicked in.
It’s certainly worth noting that it’s now going to be a longer period of time until those people buy a car again, so the program borrowed from future sales to some degree even in these cases. Given this discussion, it shouldn’t be surprising that sellers of durable goods often only put their products on sale when they have a new version coming out and need to offload the old inventory. Perhaps there is a new shiny version of Staples’ fireproof safe on the horizon?
I am now thinking of other durable items that would be funny as nondurable goods- what else could we humorously “restock?” (Note: I can’t help but see an eHarmony ad in here somewhere.)
P.S. If you actually are in the market for a safe, I can’t help but suggest this one.