business news in context, analysis with attitude

Last week, MNB reported on an new Nielsen study saying that affluent households with annual incomes of more than $100,000 made their food shopping decisions based on both value and quality, patronizing “club stores like Costco and Sam’s Club and upscale mass merchandisers like Target in search of a deal, as well as national and higher-end grocery chains that meet their need for fresh produce, meat, poultry and seafood, along with a great deli section and alcoholic beverage aisle.”

In our commentary, we wrote: “It isn’t exactly surprising to find out that affluent consumers have both the time and the money to exercise levels of choice that may not be available to people with less time and money. It doesn’t necessarily mean that wealthier shoppers are smarter shoppers, just that more affluent shoppers are willing to go out of their way for a bargain – that’s part of how they got to be wealthier shoppers.”

MNB user Dennis Zegar responded:

Your comments re: affluent shoppers are basically correct. However, the primary predictor in eating well and healthy is education. Income is highly correlated with education. "Knowing" what is best for you to eat is why affluent shoppers are willing to go elsewhere for what they want. Lower income correlates highly with lower education levels thereby mitigating the "Knowing" factor. With today's urban sprawl you don't have to travel far to shop at any number of mass merchandisers or specialty stores to eat "smart". Case in point are chains like Food Lion opening store formats such as Blooms that target middle income shoppers.

MNB user Dave Tuchler observed:

Interesting study. In this case, though, seems that comparing incomes of >$100k/yr with those at the extremely low (poverty) level of <$20k/yr seems less appropriate for understanding affluent behavior than understanding the limitations of low-income households who are struggling to cover the basics and have little/no discretionary income:

- Low cash flow limits ability to pay membership fees or afford higher at-the-register cost of stocking up.
- Lower car ownership makes it tougher to get to these locations or cart groceries home - a problem exacerbated because low-income neighborhoods are not where these retailers locate.
- Highly processed calories are more affordable than protein or fresh vegetables/deli when you need food on the table.
- 'Value' is relative. At Costco, what is better value than a grocery store will still be out of reach for many ("wow! organic fair trade coffee for only $4/lb"!)

Collectively there are probably resources that could be pooled among lower income HHs to enable better selection/value, but overcoming cash flow barrier would require a coordination of demand and a way to bring supply closer to the consumers.

MNB user Glen Terbeek wrote:

Let's face it, affluent shoppers have both the financial capacity to buy a month’s worth of "core" items and the storage capacity to store a month worth of "core" items after they buy them. They go to clubs so they don't have to spend their time on these non-value shopping experience items day to day. Remember "core" items are items used all of the time, and are the same everywhere they are sold. The fact that these "core" items are cheaper at clubs and the fact that there is always a surprise impulse item or two of interest at a club is a plus. This gives the affluent even more time than others to shop for the quality and other non-core items of value in a variety of stores and Internet sites.

In contrast, shoppers with lower incomes live more on a day to day basis and don't have the luxury of time, excess money, or storage to shop in many different venues, often paying much more for "core" items than the affluent. Maybe that is why supercenters are doing well.

MNB user Chris Esposito offered a personal perspective:

Totally agree with this. We typically shop Target for our basics, non-perishables (paper, HBA, etc) while going out of our way (25 miles) to shop Wegmans for their selection of meats, cheeses, breads, produce, etc. And we use the local ShopRite for the in-between necessities. I think this article hits it right on the head. When you get down to it, Scott Paper is Scott Paper, regardless of if I get it at Target, ShopRite or Wegmans. But, if I want a Black Truffle, fresh monkfish, a nice Prime Cut of Beef or just a selection of cheeses for a wine & cheese party, I can't find that stuff in Target, and I know the quality and selection at Wegmans will be superior.

We reported last week about how peanut butter has been linked to a salmonella outbreak, which led MNB user Dennis Stienstra to write:

I find it mystifying that whenever a story about BSE comes out you relish to opportunity to blast the Beef Industry and the USDA, but when a true food safety problems occurs one where people actually get sick you remain remarkably quiet.

Well, it’s not like we’re on the payroll of the peanut butter lobby!

Actually, you make a good point. We thought about it after reading your email, and concluded that we didn’t make a big deal about it because the source of the salmonella seems to have been determined and a recall has been instituted. In the case of BSE, our reaction is stronger because we think that the issue isn’t being treated right by the federal government.

You probably didn’t think we did enough on cantaloupes, either. But we’re not sure what else there was to say.

We reported Friday that Wal-Mart Watch sent out an email to its subscriber list looking to raise funds to help Al Norman, founder of the Sprawl-Busters anti-Wal-Mart activist group, raise money to fight yet another Wal-Mart going up in his Massachusetts back yard.

One MNB user responded:

I appreciate you being neutral on the subject of Al Norman, mouth piece and puppet for Wal-Mart Watch. However, I think you have it all wrong. The question is not which network or cable TV station will show up first. The question is how long Samson can keep Goliath at bay.

Actually, we think that Al Norman was around long before Wal-Mart Watch…but maybe that’s beside the point.

We actually debated Al Norman years ago at a conference where he was brought in to explain to retailers how they could effectively fight to building of supercenters and big box stores in their communities. And we argued that while it is all well and good for citizens to raise objections and use every means possible to fight retail sprawl, that was not how retailers should be spending their time and money – that they’d be better off figuring out how to actually be competitive.

And MNB user David Farnam wrote:

Al must be getting pretty desperate to be asking a hydrogeologist for expert testimony to block development. Al must have a deep-seated environmental concern about all the contamination of storm water from the oil and antifreeze dripping from the all the cars that will likely be parked outside.

Valid environmental concern but it is off limits by the EPA and is just the sort of “problem” tax hungry city councils are interested in…smart development.

We wrote last week about how some restaurants are working with a hospital to offer reduced-portion menus to people just having undergone gastric bypass surgery. One MNB user responded:

As someone who recently had gastric bypass this is actually a very positive thing and will actually help several of these restaurants gain more customers. Most people who have this surgery are founding members of the clean plate club. We grew up and our parents beat it into us that kids were starving in China so clean your plate. Part of the healing process is the realization that if it is wasted on you it is still wasted. So normal sized restaurant meals, which result in leftovers sometimes work, but often do not
if you are heading anywhere but straight home - it spoils in the car. A typical restaurant meal is 4 or 5 meals for a gastric bypass patient. The pouch created is only 1/2 oz to an 1 oz in size. Unless you go right home or eat it for the next several meals or split it with family members, the food goes to waste. Why waste the food? Let people order portion sizes they can eat so there is no waste. The customer feels better because they don't feel they are wasting food or money and is more likely to go to that restaurant and bring their families and friends. I know I would and do and I'm usually the one paying. Restaurants have catered to Lo-Carb dieters, low fat dieters, etc. So the restaurants have the choice of losing customers or allowing people to order in sizes they can eat. As long as they are not cheating the system (ordering a kids meal and taking stuff off the buffet - which gastric bypass patients would have a very hard time doing anyway), why not offer meals at a size and shape that customers can eat?

Our family frequents restaurants now where we know we can order a-la-carte only or where we can do very small portions simply because we don't want to waste the food. For me, it's not so much about the money as the waste.

This surgery was a life saver for me. Truly was. I've lost 87 lbs as of today and have plenty more to go. I went from being diabetic, high cholesterol, high blood pressure, increased stroke and cancer risk to where I am today in about 3 1/2 months. All diabetes meds gone in 5 weeks after 8 years on them, cholesterol dropped to 162 in 8 weeks, triglycerides down from 437 to 187 in 8 weeks. Before this surgery I had lost 400 lbs in yo-yo diets over the years...problem is I gained back 500 lbs in the same time.

This surgery saved my life and is saving the lives of many people and growing very fast. It's a tool only for helping with life-change. While restaurants continue to get lambasted by their unhealthy menus, trans fats, portion sizes, etc. Restaurants would be wise to reach out to this growing demographic much the same way they reach out to boy scouts, schools, churches, etc.

KC's View: