At a shopping mall recently, we observed an interesting deal at Sketchers. If you buy two pairs of shoes, the second is 30% off. Sketchers has long offered deals like this (sometimes 50% off). This is a sign of deflation.
Regular readers know to wait for the punchline.
Manufacturer Gives Away Its Margins
We do not refer merely to the fact that there is a discount. We are not simply arguing that Sketchers are sold cheaper—hence deflation. That is not our approach. Let’s look beneath the surface, and drill deeper.
Sketchers makes the sort of shoes that you wear frequently, especially for exercise. They are not made to last forever, and not haute couture that will be worn once every blue moon. If the customer likes the Sketchers styling and they fit well (e.g. for wide feet), then he will be back to buy the next pair in three or four months.