In tough economic times, shoppers take haggling to new heights

By Michael S. Rosenwald
Sunday, January 31, 2010; B01

The price tag on the smooth pair of Cole Haan loafers at Macy's said $148. I considered that a fair opening bid. Standing across from the salesman and the cash register, I said, "Can you knock off 25 percent?"

The salesman said, "Can't do it." But I pressed on: "I'll get them on the Internet or at one of your competitors, so let's just do this here."

Salesman: "Geez. You're like the second person who has tried to do this today."

We stared at the shoe box. I liked what was inside. The loafers fit well, but they would feel even more comfortable with a discount.

Macy's blinked first. "Ten percent off," the salesman said. "That's the best I can do." I sensed an advantage and counteroffered: "Let's do 20 percent." I then sensed annoyance and settled for the 10 percent.

My first attempt as a haggler saved me almost 15 bucks and placed me at the center of "the biggest sea change of consumer behavior since the end of the Second World War," as Nancy Koehn, a Harvard Business School retail historian, calls it. In a country that has long shunned haggling outside of car dealerships and mattress stores, my behavior may have once appeared unseemly, even crass. That is, until the Great Recession. Firms are desperate for revenue, Americans are feeling broke, and the aisles from Best Buy to Macy's and even your neighborhood Giant -- as well as the 1-800 numbers at Comcast and Verizon -- have become venues for let's-make-a-deal.

A recent Consumer Reports study found that 66 percent of American consumers had haggled at least once in the preceding six months, with an 88 percent ka-ching rate on gadgets, clothes, furniture and steak. "People like this," Koehn said. "They are not going to go back to giving their money away. Why would they?"

The recession merely popped the lid off a retailing shift that has been brewing for a decade. EBay gave millions of consumers dealmaking training wheels (top bid for a "Goonies" DVD: $3.50). The Internet offers instant pricing data (do a Google search on "Lucky jeans and deal and DC"). And don't forget Priceline, which lets consumers name their price for flights, hotels and rental cars (thank you, William Shatner).

For consumers like me who have spent decades shopping at full retail, getting a deal on previously no-deal items is liberating and invigorating, as I found out during a recent week I spent haggling. At first, my wife and friends asked me if I was crazy, but when I reported saving $3 on steak at Giant and $50 a month on our Verizon bill, they asked only one thing: How?

I had help. I met Stephen Popick, a government economist, for coffee one day. Popick is a well-paid guy -- he can afford things. But he looks at price tags merely as suggestions. (Call him cheap, and he'll thank you for the compliment.) For years, Popick has haggled down prices on ground beef, videogames, beer, bicycles, magazines, satellite TV and even the his-and-her plastic reindeer that adorned his front lawn for Christmas.

"I've always wondered why more people don't do this," said Popick, who lives with his wife in Alexandria. "This is your money. It would be wasteful not to do this, right?"

Until the recent recession, Popick was a checkout pariah. Americans, according to economic historians, had not really haggled on retail goods since the Great Depression. Long before that (we're talking frontier days), we haggled over everything. But the Industrial Revolution brought fixed price tags. Rowland Macy, the founder of Macy's, played a key role in the trend, heavily advertising prices that he wouldn't budge from.

For today's bargain-hunters, Popick's advice is simple: Look for an edge. That's how he got his reindeer. He saw them at a home-improvement store, the last two lonely floor models. They had a couple of tiny scratches, the kind only someone looking for a deal would ever notice. They were 50 percent off. Popick said to the manager, "How about 75 percent off and I'll take them home tonight?" Deal. Imagine that: a deal on a sale.

Game on. I stopped at Montgomery Mall on the day before New Year's Eve and boldly asked a Nordstrom salesman for 20 percent off a pair of those same Cole Haans. "They never go on sale," he responded icily. Me: "But today, for me, c'mon. It's a new year." No luck.

Undeterred, I was in Macy's 10 minutes later, where I hit my 10 percent jackpot. Macy's officials, for their part, claim that such unofficial discounts are not common practice, which made me wonder: What if retailers gave up on coupons, which many people just ignore, and instead price into their business models the ability to haggle for similar discounts? After all, I had not made a purchase at Macy's in at least two years, but I bought something this time because I got a deal.

Then again, the decision may not be totally up to retail executives, particularly when you factor in ShopSavvy, a smart-phone app developed by three 30-something programmers in Dallas. "We wanted to solve a problem that people didn't even know they had yet," said Alexander Muse, co-founder of the developer, Big In Japan.

What was the problem? Say you're techy enough to Google the prices of goods on your smart phone while you're standing in a store; this can be pretty tedious. ShopSavvy is a shortcut: It converts the phone's camera into a price scanner, delivering a live listing of competing prices as you stand in front of a coveted item. The app is downloaded once every second. And retailers are playing ball, paying the company to advertise better prices if a shopper is about to make a purchase from a competitor.

"This is the latest spin on the old tactic of saying, 'I know I can get this for a better price down the street,' " said Greg Daugherty, executive editor of Consumer Reports. Only now, the tactic actually works.

At Best Buy in Rockville, using ShopSavvy, I scanned a three-DVD set of the "Go, Diego, Go!" cartoon for my son. BestBuy had it for $30, but I found several other outlets selling it for $24. Time to haggle: I went to the checkout aisle and showed the clerk the list of cheaper offers. He called over the manager. I said, "I'll buy it for the price on my phone." Deal.

If my haggling at Best Buy was high-tech, my deal at the Giant in Germantown was decidedly 1980s. The transaction involved a tiny intercom. Spotting two nice packages of steaks with their sell-by date approaching, I asked the butcher for a discount. He called the manager over the intercom. He said he could do $1.50 off each. Deal. Giant executives told me that "price negotiation is not our policy." Really? I did it another day in the florist department. "These flowers look a day old -- can I get a discount?" I asked the employee. Three bucks off. It felt fantastic.

Feeling good, according to Koehn, the Harvard retail expert, is what could make this behavior last beyond the economic recovery. Consumers want to feel powerful, she said, to exact revenge on Wall Street for crushing the value of their homes. "This is Rocky running up the Philadelphia museum steps," she said.

I'm not going to lie: Pulling one over on a publicly traded company feels pleasant, even if it is probably misguided blame. After all, Macy's didn't lower the value of my home 20 percent. But how much all this haggling is hurting -- or helping -- retailers is not yet clear, according to analysts. Personally, I see two advantages for them: I was generally buying things only because I got a good deal, and I felt more positive toward the companies that helped me out. I'll go back to Macy's for some spring shirts -- at a discount, of course.

This feel-good stuff held true especially for Verizon, which provides me with fiber-optic cable, Internet and phone service. I can't remember the last time I felt loyalty toward an Internet provider. Who would? But when I called Verizon to tell them I was thinking of switching to satellite TV -- shhh, I really wasn't -- they lowered my bill by about $50 a month, doubled my Internet speed, tripled my HD channels and added free Showtime. I am not making that up.

The edge I had is that Verizon, like Comcast, reports to Wall Street every quarter about "churn," or the number of customers they lose. Churn is bad. "You got a better deal because you indicated you would leave," said Verizon spokesman Bill Kula, one of the only corporate representatives to break down one of my transactions. "We need to maintain as many broadband customers as possible and also show growth." He said many customers trying to save money don't play similar games, instead trimming their services.

Could they get a better deal by threatening to quit the company? "Yes," Kula replied.

I didn't think I could be any more impressed by the churn angle until I called Verizon's cellphone unit with a professional haggler in Florida named Allan Stark. A former office-supply store owner in Baltimore, Stark haggles on everything from planes to TVs to cellphone bills. For the older crowd uncomfortable with smart phone apps or even the idea of haggling, Stark offers his own deal -- whatever savings he wins for you, he splits with you.

I decided to try him out. If I left Verizon Wireless, I'd owe it about $600 in early-termination fees, so the odds were against me. I had no edge. But then Stark went to work on the customer service reps with me on the phone.

Some of the things he said: "I've got my friend Mike on the phone, and he's inundated with competition -- they are all over him, and we don't want to leave because you guys are the best." . . . "Where are you right now? Where are you from? I like to know who I'm talking to, you know?" . . . "You're doing great. I'm gonna tell your supervisor." . . . "What can we do without him losing any features? Will you give us a deal because I'm overweight?"

The agent agreed to give me 10 percent off the data portion of my bill for a month. Not a big dent, but nice. Then Stark got us connected to Verizon's loyalty department. A fellow named Mike came on the line. Mike the service rep didn't want to do much for Mike the customer. He said if I wanted to save money, I should cut back on services. Then Stark said, "What about a one-time credit?" Mike the service rep said, "I can do $50." I would have stopped there. Stark said, "How about $100?" Mike the service rep said fine. Mike the customer was stunned.

We all hung up, and I called Stark back to tell him I couldn't believe he got me a discount while I was under contract. "Mike, there is nothing you can't negotiate these days," he said.

My savings, over the course of a week: $730.

Michael S. Rosenwald is a staff writer for The Washington Post. M.K. Perker, a comic book artist, is the author of the graphic novel "Insomnia Cafe." Rosenwald will be online to chat with readers Monday, Feb. 1, at 11 a.m. ET. Submit your questions and comments before or during the discussion.

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