business news in context, analysis with attitude

Reaction to yesterday’s piece about United Airlines upping the price of beer on its flights to $4 and reinstituting the serving of so-called food on coast-to-coast flights, as one MNB user wrote:

“It will take a lot of $4.00 beers to bail out United. Why does your piece on United sound like Kmart and McDonalds?

“I have no sympathy for United Airlines. Recently I queried Expedia, Travelocity, and other sites on ticket prices for upcoming trips. A trip that United wanted $1,200. for can be arranged for $300 on Southwest with a 1 1/2 hour drive to the closest airport they serve. I figure that my time is worth that extra effort.

“I am baffled as to why all the airlines don't rethink their basic pricing models. Southwest, for example, has a simple pricing model which tells you, exactly what you will pay, given your lead time and other factors. No BS. Simply making this information available, up front, gives their whole scheme consistency and credibility.

“United could take steps to fix their situation. Get competitive on pricing. Pull out of airports with outrageous landing fees, restrict pricing to their website, or at least restrict transmission of pricing to travel sites where the flight combinations are not competitive. Will they? Will Kmart fix their out of stock problems? Will McD's fix their menu? Try not to lose sleep over these questions.”

We fly a fair amount, and we happen to think that there is room for different approaches to air travel. Sometimes Jet Blue is the best alternative, but sometimes United’s more upscale approach can be very attractive. Certainly wild swings in pricing are hard to swallow, but sometimes we’re willing to pay more to have more elbow room to write, access to a Red Carpet Club, and the like,.

Same goes for retailing. There’s no reason that a Central Market and a Wal-Mart Neighborhood Market can’t exist in the same neighborhood --- they serve different needs at different times. Where we get frustrated with food retailers is when they all feel they have to be Neighborhood Markets, even when they can’t be. That doesn’t seem to make sense.

As for losing sleep…well, don’t worry. We’re free of such problems…because freedom’s just another word for nothing left to lose.

Another MNB user wrote:

“I was in a moderately priced restaurant called "Bar Louie" last night and got charged $4 for a 16 oz Bud Light draft I bought to wash down my sandwich. I felt ripped. At $4 for a 12 oz can of often not quite cold Bud Light served on an airline flight I would feel really ripped! You would think United would not be trying so hard to tick off their customers at a time like this. There's a 300% markup at $2. And there is more profit in selling 75 cans at $2 than 25 cans at $4.00. At $4 I'll opt for the free Coke. Does anyone here remember Peoples Airline and their 50 cent beers?”

We remember People’s Airline. They’re out of business, right?

Reacting to our analysis yesterday of a Chicago Sun Times story about a possible merger of Kmart and Sears, in which we suggested that this seemed to have no value for the consumer, MNB user Alan Binder wrote:

“I read this article on the Sun-Times website yesterday…and the piece was a very editorial "what-if" story, called "Why a Sear-Kmart Merger Could Happen". There were many pros and cons cited in this report, focused specifically on what Lampert (Ed Lampert, a major shareholder in both companies) would get out of the deal, and NOT what consumers would gain or lose.

“Again, as you consistently recognize, here is a situation where the key component of retailing is missing form the equation - the consumer.”

Wouldn’t it be interesting if there actually were a shopper on Kmart’s new board of directors? And a store manager? Both of whom might ask common sense questions that would never escape the lips of lawyers and accountants and assorted consulting types.

However, not everyone agrees with our position on this, as MNB user Gerry Marrone made clear:

“I couldn't disagree more with your point of view - I think there are great benefits to the consumer. Why is the endgame Wal-Mart? Contrary to what you read, there is more to the retail landscape than Wal-Mart. Granted,
they are the 2000 pound gorilla, but the consumer is looking for other retail experiences. Sears has outstanding capabilities in tools and appliances - both area where Kmart is weak or non-existent. In your article you mention that ability to combine Martha and Lands End - a natural fit. With the right management in place, Kmart could benefit from the retail experience and expertise of Sears and be a significantly bigger force against the real competition - everything except Wal-Mart. They will NEVER beat Wal-Mart, but Wal-Mart doesn't own 100 percent share. And finally, I think Kmart could use the help for it's image that Sears could provide - stability. The consumer trusts and respects Sears - that is something clearly needed at Kmart.”

Fair enough. We could be wrong on this. We don’t see the Martha Stewart-Lands’ End combination as such a perfect fit, though…but it’d be interesting to see Martha modeling Lands’ End clothing in the catalog.

Finally, we got the following email in response to our story yesterday about Eagle Food Centers’ bankruptcy filing:

“Bob Kelly came from Vons in California and made many changes in operations; quality of their perishables and especially bakery and produce. His enthusiasm is evident in the stores as he visits them as often as possible.

“Interesting that their out-lying stores (away from Chicago) seem to be doing quite well, but sad to say, their problem is ‘the price-driven competitors that are draining away their market share.’
“It's unfortunate that in some small communities -- that without Eagle to handle the populace's grocery needs that many of the residents will have to drive long distances. Just doesn't seem fair.”

Well, as we said to our eight-year-old daughter just last night under somewhat different circumstances: “Life’s not fair. Get used to it.”

And with that piece of abidingly cynical wisdom, we bid you a good day.
KC's View: