Do High Prices Equal Opportunity?
By Steve Gillman
Humans love to complain, and one of the things we complain
about most is prices. But sometimes those high prices can mean
opportunity. I will explain with a story...
When we moved to Naples, Florida, we had been warned by forum
posts about how expensive it was to live there. I wrote it off
as the usual complaining about one's home town that fills these
forums, and so I didn't really expect to see high prices in the
stores. In fact, we were moving there in part because condo prices
had fallen by more than 70% since the peak, so housing cost wasn't
likely to be a problem. But what about the other necessities
and common purchases of life?
To start with, we noticed that fruits and vegetables were
much cheaper than they were in Colorado. That was a pleasant
surprise. Gas cost a bit more, and household bills for electricity
and cable television and internet were about the same. Complainers!
But then, as we got ready to buy a condo (we were renting
in the meantime), we started to look for furniture. It is our
custom to sell almost everything when we move and buy new things
for the new home. Since we don't have expensive tastes this is
usually cheaper than moving a house full of furniture. We quickly
discovered that a queen-sized mattress like perfectly comfortable
one we had bought in Colorado just a few years earlier for $450,
would cost a minimum of $800 here in Naples. I don't think prices
have gone up that much nationally, and we checked several stores,
so we were beginning to suspect that things really are
We looked for a nice wooden dining room table and chairs.
The last one we bought was under $300. Here there was nothing
to be had for under $800. Patio sets (we planned to buy a condo
with a screened lanai or porch) were typically $2,000.
We started going to Goodwill and other thrift stores to shop.
Beat up used dining room sets were selling for over $300 at all
of them. Some were as much as $1,200. Granted they may have been
big, and may have been twice that when new, but there were no
cheap options. Used couches, even when stained and worn, were
all over $300. It was shocking to say the least. We went into
a used-furniture consignment store and saw a large wooden bookcase,
not quite as nice as the oak one we had bought for $160 in Canon
City, Colorado. It was priced at $425. For a used bookcase!
Finally we found one store out of hundreds where we could
buy furniture at reasonable prices: Big Lots. They had a location
on the south side of town, forty minutes from where we were living,
and the quality was not great, but the prices were. Actually
the quality varied; The $300 couch we bought was not the greatest,
but from what we had seen you could drag it down the street behind
a pickup truck and spill coffee on it and still get more for
it at a thrift store here. The $300 dining set we bought required
a lot of assembly, but it is the nicest we have owned.
The point of this story? It is that there is a huge opportunity
to provide decent furniture at decent prices here, especially
on the north side of town. Retail space is not that expensive,
and it can't cost too much to get the furniture here if Big Lots
can sell at those prices and presumably make a profit. I'm not
sure what the future will bring for us, but if we decide to do
an offline business, it might well be in furniture.
The more general point is that when almost every place you
go to has a class of items at very high prices, there may be
big profits to be made. As it turns out there was one other thing
that is very expensive here: clothing. We went to several consignment
stores which sold used clothing and noticed that almost everything
was far more expensive than what we normally paid for new items.
Later we discovered a flea market in the next town over where
clothing vendors were charging quite a bit for clothing--but
less than all the other places in Naples--and they were busy!
If you can price your clothes higher than most stores in the
country while selling at a flea market, and have people lined
up to buy them, that's an opportunity!
So look around at what things seem too expensive where you
live. It might just be a chance for you to start a profitable
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