Why do some spend hundreds of dollars on shirts that can be found at Kmart for a fraction of the price?

The first and foremost reason I hear is quality. Let’s get this out of the way, price does not necessarily equate to quality. Nor do esteemed brand names necessarily equate to quality.

If I am going to shuffle my way to financial independence and early retirement, I can’t afford to be lining the pockets of the rich. Nor can I afford to buy low quality products that need continual replacement. So let’s sort this out.

Price does not equate to quality

We often equate higher price with higher quality. However, this certainly isn’t the case for cars. Some expensive luxury European brands have been found to be less reliable than their cheaper Japanese counterparts.

You can find the same inequality to be true for washing detergent, cleaning products, food and even some wines! With price seemingly completely uncorrelated with quality.

High quality items can be either good value or bad value.

Especially when items become very expensive, each extra dollar you spend gives you increasingly diminishing returns.

Let’s look at a dress shirt for example.

A high quality dress shirt will typically exhibit the following characteristics of quality.

Material, generally made of 100% cotton. Stitching, has a strong double stitch along all seams. Cut, has a form fitting cut that fits well for your body type. Style, it has been made to look stylish by a designer with an eye for colours and patterns.

I have been able to find all of these things in non-branded dress shirts for years for about $40. Final price is irrelevant to this argument. What matters is that at some price point, quality can be achieved to a satisfactory level. Everything above this is:

Quickly diminishing returns on the shirt quality. Pure profit for the manufacturer/retailer; or Money put toward stuff that doesn’t affect the shirt quality, like advertising, sponsorship, company inefficiency etc.

We all know intuitively that a $200 dollar dress shirt is not 4 times better quality than a $50 dress shirt.

Even if designer clothing is good quality, as it generally is, an intelligent shopper must realise that as part of the purchase price you are necessarily paying for all the advertising, sponsorship, high street rents (even if not purchasing from the high street store), fashion models & shows and luxurious store designs & fit outs.

A huge clue

When the Boxing Day sales come around, some high end designer clothing is discounted over 50%.

Shoppers gleefully rush to these sales believing they are saving a huge amount of money, but it is all a ploy to rob you of your money.

Do you think anyone is making a loss when selling these garments at these huge discounts?

Of course not, they are still making a healthy profit. So how much of a markup must the retail price be!

This high pricing and high discounting is done to take advantage of a cognitive bias called anchoring. Anchoring is the mind’s tendency to place more importance on the first piece of information it receives to make subsequent judgments upon. So when an item is offered for $300 and is later discounted to $150, our minds rationalise this as a $150 saving. However, the product may have always only been worth $50.

Brands do not equal quality

Companies spend huge amounts of time and money on their branding, sponsorship and advertising. They hire experienced degree-qualified professionals in marketing, branding and psychology. They often have decades of successive iterations upon their branding and marketing campaigns.

This is all to convince you to part with your hard earned cash.

Most of the time you don’t even realise you’re being gamed!

These subtle techniques push the branding upon you:

Expensive and roomy store fit outs

Expensive store locations

Well dressed and good looking sales staff

Well presented packaging

Tactical choice and placement of store lighting

Store music

Store smell

All of this isn’t to say that expensive brands do not produce quality products, just that they do not necessarily produce quality products. What is guaranteed however, is you are paying for their advertising and branding. A shuffler needs to look past this and look at the product itself to ensure that they are getting good value.

Branding fooled me in a previous life. I purchased dress shirts for $90 and more from a popular young men’s clothing store, albeit definitely not a designer label outlet. The clothing tags reveal that the shirts are made with a polyester/cotton blend! 65% polyester to be exact.

One could be forgiven for thinking that this outlet would not sell cheap material clothing. But it does. It passes off cheap polyester shirts as high quality garments with its branding and store design.

There is no excuse for selling a shirt at this price point that uses that much polyester. But targeting young men, they know they can get away with it.

The takeaway lesson

That was a great little tirade, but what is the takeaway lesson?

Stop equating quality with price and brands.

If you are not content with a $15 shirt from Target and still want to purchase a higher quality garment, then do some research.

With a little bit of time, I attained a basic knowledge about fabrics, stitching and cut that was sufficient to allow me to accurately identify a quality garment. This can be applied to almost any purchase you make.

Once you have knowledge, you can ignore advertising. Additionally, you start to realise all the subtle ways that stores try to get your money off of you. By avoiding the top brands, you avoid paying more for things like advertising and high street rents. Therefore, a higher proportion of the money you are paying is going into the product itself. In this way, you have a better chance of getting a high quality product at a good price.

Branded products then, should only be purchased at steep discounts, and only after you have verified their quality compared to other products at a similar price. This will ensure you are looking at a good value offering.

Buying good quality products at a cheap prices means I can really save money in the long run. All of the extra money I save will help me increase my savings rate and get me closer to my goal of financial independence.

Shuffling brands and pricing.

Pat the Shuffler

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