Throwing bricks at Internet windows

Chris Oswalt has that rare gift of being both urbane and approachable. His panache is tempered only by hard-nosed determination. In other words, he’s a businessman.

As the co-owner of Vertigo Home, the modern, European housewares and interior design store in Laguna Beach, Oswalt has been immersed in the challenges of a brick-and-mortar operation since 2009. So he knows a few things.

Like don’t sell cheap.

Add value with great design.

Deal with honest suppliers.

All of these things have helped fend off the Internet price war.

“It’s very difficult,” he says, handing me a Nespresso from one of his vendors. “It’s a challenge we face on a daily basis.”

Oswalt pauses to sip the hot, strong coffee. He asks me how it tastes.

“Good,” I say, admiring the thick plastic cup that he served it in. It’s like an adult sippy cup but with a stylish Danish sensibility.

That’s how his store is overall (vertigohome.us). It’s as if you were suddenly transported to Copenhagen, but instead of shorts and flip-flops, you’re now wearing a scarf and sporty, bright-green athletic shoes.

“We only deal with vendors that have minimum advertised pricing,” he continues.

Minimum advertised pricing (MAP) basically precludes finding a cheaper price on the Internet. It’s an agreement between suppliers or manufacturers (like Nespresso) and retailers establishing a number below which no one can advertise. It keeps big box discounters and other high-volume sellers from completely obliterating traditional retail stores.

“It hurts everyone if everything is sold just above cost,” he says. “It’s finding that right line. Vendors know it’s an important part of the equation. I think they know it cheapens their product.”

The other variable is advertising. Vendors like Nespresso or Apple will only allow ads at certain times and for certain products.

“It’s the same for all of the retailers online,” he says. “They respect the guy putting it on display in their stores.”

So who controls this pricing game when it seems like any bloke can open a storefront on Amazon, for example?

The U.S. Supreme Court, for one, along with the Federal Trade Commission, which can impose significant fines on violators.

But MAP can also work against consumers. In 2000, the five record groups that made up about 85% of the U.S. market — Sony, BMG Entertainment, Warner Music Group, EMI and Universal Music — had to stop working together to keep the minimum retail prices of CDs much higher than the market deserved. Consumers had paid nearly $500 million more than they should have over three years.

Oswalt steers clear of the price game by focusing on the quality and uniqueness of products. Like many store owners in Laguna who trend toward originality, Oswalt and his business partner, Martin Ulrich, know their niche.

“We do mostly European shows,” Oswalt says, explaining where and how they get their products. Interestingly, he said that Danish manufacturers often have to lower their prices on goods for the U.S. market compared with the European market.

Either way, pricing always determines how shoppers view products and interact in the store. In the old days before smartphones, there was no way to compare prices. Now, people can do so in seconds.

“I’ve watched people stand in the store and look at the bottom of an item and check online to see if they wanted to buy it or not,” he says, a little exasperated. “Have a little respect for the people who pulled it together.”

Furthermore, because Scandinavian designs are usually very simple — but ingenious — people sometimes have a tendency to scoff.

“They say, ‘I can make that,’” Oswalt says. “Well, yeah, you can but you didn’t.”

Oswalt allows a small wry smile and takes another sip of coffee.

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DAVID HANSEN is a writer and Laguna Beach resident. He can be reached at hansen.dave@gmail.com.