Everyone making references to the younger generation's default response of, easily offended, could not be more wrong. If you truly understood the root of this discussion, you would see that context is important.
@Erica-Renee 's point I think is the most relevant.
From a customer service stand point, how the vendor used the word cheap could be considered unintentionally condescending. Regardless, an unintentionally condescending statement is still condescending.
Completely separate from OP. If I asked a vendor if they carried $10 frags, and got the response "I don't do cheap stuff," I would probably ask him if he was some kind elitist or something, and then say what do you mean you don't do cheap stuff, your selling a $25 richordea. I'd only do this because his response made me mad.
Adversely, if the vendor replied "I don't have anything under $25" or "I don't have anything that cheap," I would have just said ok, because that is a straight forward and honest answer. I worked at an LFS for 2 years, and if I told a customer we "don't do any cheap stuff", my boss (the store owner) would have told me to change my wording, as my statement could unintentionally put down a customer.
Arguments that suggest this instance is a case of people being overly offended are wrong. I think this vendor needs to work on customer service skills.
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The suggestion that millennials are soft is a cop out response. Anyone who suggested this missed the purpose of the discussion. It is more than ok to disagree, but adding points that contain no substance only serve as a beacon of misguidance. The purpose of a question is to find an answer, although OP's question likely has no true answer, a debate should not be discouraged.