On Sale? Really? Prove it.

Fantastic article I found, On Sale? Really? Prove it, discussing the pricing inequities found in the world today.

With major companies now trading on the Market for the price of a hamburger, you’ve got to wonder what a SALE! sign means when you see it in every retailer’s window. I don’t think their idea of a SALE! is my idea of a sale. Like, before this whole depression works its way through the system, I think the idea of pricing is going to need a good hard look.

I’ll give you a few examples.

I eat a restaurant that business people frequent in order to a) have lunch and b) feel they’re important. It’s been a hot spot for quite a while, and its prices never really mattered because everyone there conducted their lives on plastic. That of course is changing. The big dudes who are doing all right still go, but the mid-level and borderline players no longer throng. I want you to guess the price of their cheeseburger. Give up? $35. That’s right. I asked the maitre d’ the other day whether they were planning a Recession Special to keep the seats somewhat more filled. He got very offended and went off on a screed about how expensive it is to maintain a restaurant in midtown Manhattan. Of course it is. But unless they moderate the prices, I’m guessing the grand institution will be out of business soon. Which is better? Selling five cheeseburgers for $35 or fifteen cheeseburgers for $20? You do the math.

In my little California town, there is a furniture store. It’s always had ridiculous prices, but their stuff is nice. There was, in particular, a bedroom dresser that we had our eye on. It was, I think, worth about $400 in real American dollars, so naturally, throughout the Fall, they had it in their window for $2500. No, I’m not kidding you. The store catered to people with too much money, and people with too much money don’t want to pay a little bit for the things they like, they want to pay a lot. Except there aren’t so many of those people around anymore. So last weekend there was a big SALE! sign in their window, as there is right now in virtually every window of every store in the United States, from Madison Avenue to Wilshire Boulevard. And we went in to look at the dresser and indeed, yes, it was ON SALE! For $2000. Come on, man. Give me a break. That is not a SALE. That is not even a recognition of reality. I’m positive that, just as my restaurant paid $1.29 for the meat with which they make their $35 cheeseburger, this place paid $300 at some yard sale for that dresser. When it’s ON SALE for $400 or $500, let me know. Because I like it.

I’ll tell you two places that know what a SALE means. The first is Wal-Mart (WMT). Today I heard an ad on the radio promoting greeting cards that start at 44-cents. Okay. That’s an amount I haven’t heard mentioned in a while. Their numbers beat analysts’ expectations last week. The other is McDonald’s (MCD), where sales were recently up 7.1%. I can assure you that a very good Big Mac in that establishment tops out at well under $35, and is probably a better buy at that price than most bank stocks that come to mind.