THE BLOG
10/31/2014 04:07 pm ET Updated Dec 31, 2014

The Ethics of Consumers Utilizing Full-Service Retailers for Product Education

I have posed the following hypothetical to a number of undergraduate and graduate business students:

"You are a customer and go to a retail full-service store to learn about a product. You ask a salesperson many questions about the capabilities and features of the product. You leave without purchasing, telling the salesperson that you will think about it. The salesperson gives you a business card and says to ask for her since part of her compensation package is a commission on sales. You subsequently price check online and purchase the product from a discounter who offers free shipping and a lower price. Have you acted ethically?"

95% + of the students that I have asked see nothing unethical in the conduct described in this situation.

Typical student comments are:

This is free enterprise at work. Everyone does this. No one is obligated to do business with another. It is not illegal. Retail stores know this happens. I like to see a product before purchasing. I am a little uncomfortable but would still do it. The salesperson may be lying to obtain a sale. Full-service businesses will price match if you ask them.

The debate about full-service retail store product education and its typical designation as consumer free-riding goes back to the origin of warehouse stores. Numerous court decisions stated that if the full-service store and the manufacturer agreed not to sell the product to discounters, then this constitutes a group boycott in violation of antitrust law. However, if the manufacturer unilaterally stopped selling to discounters, even after hearing full-service retailers' complaints, then this action does not violate antitrust law. The manufacturer may easily state that it is promoting full-service as part of its marketing strategy. A related antitrust issue is vertical price fixing (resale price maintenance). This is frequently legally judged under "the rule of reason."

Returning to the students, another observation is interesting. Students who see nothing unethical about utilizing a full-service retailer for product education may also cite the Golden Rule as a model for personal conduct. When asked how they would feel if they were the salesperson, the students essentially shrug their shoulders and say that this customer conduct is to be expected. I find it difficult to get students to acknowledge any disconnect between their stated ethical theory and their conduct.

What are some implications of my unscientific observations?

1. It is difficult to see how retail full-service durable goods stores will survive without subsidies from manufacturers if one only considers retail price competition and the cost of doing business. However, there is a fine line between lawful product promotion fees and unlawful price discrimination. Perhaps alternative means of customer education other than a person in a retail store will become prominent. Full-service customers will increasingly be motivated by the convenience of immediate delivery or other personal attention and customized service that cannot be provided online. Retailers of services and consumables such as food have some immunity from this issue.

2. The mom and pop community retailer may have an advantage over the anonymous big box store in creating a personal connection that translates into customer purchasing loyalty and their subsequent ethical concerns about consumer free-riding.

3. Ethical rationalizations are easily created when money is involved.

4. Ethical theory and ethical practice are easily unconsciously disconnected.

So, readers, what are your answers to the hypothetical and its implications?