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CommentaryRetail

The real reason for Shein’s success? A cognitive bias known as ‘temporal discounting’

By
Neeru Paharia
Neeru Paharia
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By
Neeru Paharia
Neeru Paharia
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October 15, 2024, 11:59 AM ET
Neeru Paharia is a professor of marketing at the W.P. Carey School of Business at Arizona State University.
Shein's rapid global expansion since the COVID-19 pandemic has upended the fashion industry.
Shein's rapid global expansion since the COVID-19 pandemic has upended the fashion industry. Per-Anders Pettersson - Getty Images
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They don’t make things like they used to. From sweaters to furniture, cheap consumer goods break down quickly and are frequently discarded. Consumers typically wear fast-fashion products for less than a year, part of an over-decade-long 36% decrease in the number of times an item is worn. People used to treat buying a dresser or kitchen table as a once-in-a-lifetime event. Now, with most furniture made from pressboard and plywood, their purchase may only last a few years.

Companies like fast-fashion empire Shein or online marketplace Temu are spending millions to spotlight impossibly low prices that feel too good to be true. These prices come with their own hidden costs. Consumers may end up spending more to replace mediocre products. Goods end up in landfills. Water and energy are wasted churning out the next batch. The fashion industry alone contributes to 10% of global carbon emissions each year.

And yet consumers appear to be voting with their wallets in favor of cheap goods, creating a race to the bottom as companies slash prices and quality to compete. But there’s a way to stop the cycle. My research suggests that consumers do care about durability—but it’s rarely top of mind when they’re making a purchase. Better marketing that emphasizes how long a product lasts can unlock dormant demand for high-quality goods.

A higher price doesn’t always mean a vastly superior product. Valentino’s $825 plain white cotton t-shirt probably isn’t 75 times better than Hanes’s three cotton t-shirts for $11. But overall, high-end goods last longer than cheap alternatives. My colleagues and I examined 20 retailers who sell secondhand products such as shoes and handbags. We found that high-end products are far more likely to be re-sold than ordinary goods.

Consumer behavior and product quality explain why. Our research found that when consumers purchase a lower-quality good, they tend to keep it for less time and dispose of it when it’s no longer useful. There’s no second life for a pair of shoes where the heel snapped off, or a sofa where the springs are pushing through the bottom.  

On the other hand, consumers keep high-end products for longer and are more likely to pass on, donate, or re-sell them than just throw them away. That’s possible because there is demand for prestige, high-end goods even when they’re used—and because used high-end goods retain functional value. Journalist Anna Kramer wrote about the 35-year-old Kitchen Aid passed down to her that’s older than she is.

Despite the benefits of high-quality products, consumers often fail to consider durability. One survey we ran found that more than 75% of people prefer to buy multiple, lower-quality products rather than a single, high-quality one—even if the total cost is the same amount. Those who preferred the cheap goods ignored how the product might not last as long.

Consumers’ lack of attention to durability is an example of a cognitive bias known as temporal discounting, in which we prioritize immediate rewards over future value, even if the future value is greater. Consumers benefit from the cheap price or variety of low-quality goods immediately. Durability, however, takes time to materialize. 

However, our research shows that priming customers to think about how higher-quality goods last longer can reverse this effect. While only 16% of people chose the durable option on their own, when we prompted them to consider durability, that number jumped to 27%.

Consumers take the future into account when they’re prodded to consider how higher-end goods are more durable. Highlighting durability can also promote sustainability. Our research suggests that consumers care more about how sustainable products benefit them—for example, by lasting longer—than how it can help the environment or workers.

We’re already seeing a wave of products and marketing that lean into quality. Concepts like “buy less, buy better” and “slow fashion” have emerged in recent years. The Reddit forum “Buy It for Life” has 2.1 million followers. In France, a national anticounterfeiting campaign partnered with luxury brands such as Chanel to educate consumers on how knock-off products break down sooner. And here in the U.S., as the Associated Press recently reported, “retailers like Kohl’s and online shirt retailer Untuckit have recently revamped their marketing campaigns … to focus on durability and versatility.”

Still, there’s room for improvement. Marketers of high-quality products should highlight items’ durability as much as features like style, comfort, and status. They should clearly articulate the product’s life span—for example, 10 years—rather than use vague descriptions like “long-lasting.” Companies should also consider mentioning “price per wear” or “price per use” to demonstrate how high-quality goods can be cheaper long-term. Spending $200 on a product you use 200 times is better than a $20 purchase that lasts only five or 10 times.

Companies can also use warranties and guarantees to signal that they stand behind their product’s durability—from Old Navy’s one-year guarantee if school uniforms “don’t stand up to the wear and tear of a school year” to Lodge’s limited lifetime warranty for a Cast Iron Dutch Oven to Patagonia’s “ironclad guarantee” that if a product does not perform up to standards, it would be repaired, replaced, or refunded.

Not every consumer will be convinced to put down more money upfront. However, new financing options might make it feasible for more people to access high-quality goods. Buy-now-pay-later programs have their drawbacks but may allow some consumers to avoid the trap of purchasing cheap goods over and over because they lack disposable income.

Long-term, widespread purchases of cheap consumer goods are bad for the environment and consumers. But companies that deploy the right marketing and emphasize product durability can reverse the trend and boost their sales in the process.

More must-read commentary published by Fortune:

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  • EPA administrator: Rolling back Biden-Harris infrastructure and climate investments would mean backlash in American communities
  • The U.S., EU, and India must urgently come together in a free trade agreement on clean energy, says the CEO of one of India’s largest renewables company
  • We keep celebrating low unemployment—but data shows jobs and economic activity have been shifting to big business

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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