When thinking through a potential purchase, the only sure fire way of knowing if you are getting a good product at the best price is through having complete knowledge of the entire market. In Game Theory and Economics, the concept of having complete knowledge about the environment is called ‘Perfect Information’.
As with all theoretical concepts, actually putting Perfect Information into practice is incredibly difficult, perhaps even impossible, to achieve a complete implementation. There are endless reasons why this is the case. Before the rise of the popularity of the web, practicality was a big factor. Shopping would usually be done in the town you lived in or through mail order. It would be hard to find everywhere in the town that sold what was being looked for and shopping around for the best price would take hours, even days. The web changed this; it made it possible to browse through potentially hundreds of suppliers and merchants and quickly compare amongst them.
Even with the power of the internet, Perfect Information is still not a real possibility in the truest sense. The vast quantity of places that you can buy from is quite prohibitive to thorough research. The biggest obstacle, however, is perhaps the manufacturers of the products themselves. Perfect Information is of great benefit to the end user and purchaser of a product, but is undesirable for the manufacturers and the retailers. Armed with complete knowledge of the market, the consumer will know exactly where to go and what to buy to get the best deal. This invariably leads to retailers and manufacturers having to engage in a price war to be able to remain competitive. Price wars are already commonplace in high-volume, low-value markets such as food and school clothing. Price wars give an immediate advantage to the customer as they pay less for their goods, but over a longer period of time they result in lower standards of customer service and product quality and may also lead to several organizations going out of business. It is for this reason that manufacturers and retailers are keen to avoid price war and why so many manufacturers of high-value products are very strict about the prices and the imagery used by the retailers that sell their products.
One of the best examples of products that have very tight restrictions on pricing and brand imagery is the fashion and designer clothing industry. Many big name fashion brands have spent decades fine tuning their products’ places in the market with aggressive marketing tactics to ensure they retain complete control over how retailers sell their clothing. To the retailers, this means that for certain brands they have almost no flexibility in the prices at which they can sell their inventories to customers. To the customer, this means that wherever they go to shop around for the best deal for a fashion purchase, they will rarely find anywhere with significantly different prices.
Instead of competing on price, retailers have had to find different ways of attracting customers. The most common method is in the level of customer service they provide and how far they are willing to go to ensure that every sale results in a happy customer. Other methods include ensuring that the styles of clothing on offer are different from other retailers. For big name brands like Levi’s or Wrangler, this is perhaps the most common way of differentiating between retailers. Giant brands like these tend to have lots of styles each season, far too many for a single retailer to stock all of them. There is also the retailers’ usage of regular promotions and coupons that are kept in circulation. Coupons are very rare in the fashion world but they do exist, although they are often only available against certain stock and for very limited times.
Despite all of this, customers can still get a good deal by shopping around on the internet. However, they first need to rethink what it means to ‘shop around’ in the modern marketplace. It is unproductive to browse between individual merchants’ websites hoping the right product at the right price.
Now, there are websites that exist that allow you to almost automate the shopping experience. They keep an aggregate index of each merchant, along with every brand and product that they sell. This way, a customer can search for what they want as they usually would but the results they get back will be from every possible match. For example, if a customer is looking for Levi’s jeans, they simply go to a fashion aggregate and click on the Levi’s section. They will then be shown the jeans that are in stock at every merchant on the site. The customer can then sort through the results by price or by merchant to find a product they would be happy with. Once they have made a selection, they are offered a direct link to where it can be purchased from. Some of the more advanced aggregation services also keep profiles of each merchant and brand so the customer can see if there are any offers, sales or coupon codes available or to read reviews that other users have left about merchants.
In summary, while a complete implementation of Perfect Information is not really possible in the fashion and designer clothing market, there is a viable alternative. Fashion aggregation websites enable the customer to make an informed decision on their special clothing purchases without wasting their time searching every retailer individually. They can also be confident that they are buying from a trustworthy merchant by reading about other customers’ experiences with them. The convenience offered by a well-designed fashion aggregator is not quite the consumer utopia of Perfect Information, but is a very close second.