Think Customers: The 1to1 Blog

That is, some customers want Nordstom-level goods at Wal-mart prices. And some companies are trying to deliver what appears to be just that--at the expense of product quality. Ironically, those who suffer most as a result are all the other consumers who end up with branded merchandise whose quality resembles that of lower-cost private-label goods.

One retail industry insider explains it this way, "Many consumers want to pay less, yet retailers want to retain their margins, as do the manufacturers and factories." At each step in the process of making and selling a specific product, businesses under price pressure will often do whatever it takes to preserve their profits. The result? Quality suffers. Manufacturers use cheaper materials; established brands that take that approach hope their names are enough to drive sales of the lower-quality products. In addition, some licensees pay huge royalties to big-name brands and need to set pricing based on maintaining profitability despite those fees, as well as meeting the sales guarantees retailers demand.

"Someone has to pay for all this and, ultimately, it's the consumer," the retail insider says.

Everyone loves a bargain. And yes, these are challenging times. But in the end, consumers more focused on price cuts than real value, and sellers desperate to retain fat margins, propel the demise of the very quality products that brought growth in the first place.