business news in context, analysis with attitude

Sometimes, you can see consumer trends in the oddest places. MNB user John Chesak offers an example:

I often get a good chuckle about articles and perspectives shared on MNB. Today's unrelated articles about recessionary consumer spending and HEB's recycling efforts give me a reason to get on my own soapbox to share a perspective. People do buy cheap stuff in times of crisis (including alcohol) and when it comes to recycling they would rather throw it out their car window as litter than be responsible enough to reduce waste.

As a market researcher and retail consultant who is trying to do more to clean up the environment in my own community I can report on a completely unscientific 'dust bin study' about what people buy and the sorry state of recycling to illustrate my point. Not being a big fan of treadmills, I prefer to go for a morning run outdoors along my area roads. To pass the time (as running is largely dull) I play a mental game of "Who buys this stuff?" as I come across their litter - especially when it comes to alcohol. Increasingly I find two products: really cheap vodka (in plastic fifths, no less) and cheap brands of beer (in cans, of course). Litter has always been a pet peeve of mine but what I have started to notice more than anything is the lower quality/price points of the booze they are buying, drinking while driving, and discarding. In just the 5 miles of roads that I run on we have gone back to pick up dozens of bags of aluminum cans for the local Girl Scouts to redeem as part of their recycling fundraiser.

My observations always start me wondering: how many people trade down? and, what's so hard about recycling the container? In a tough economy people still drown their sorrows. I just wish they could do it in ways that are cleaner and more safe for the rest of us. Tell 'em to pick up their trash!

MNB user Richard Lewis also had some thoughts about the 8.2 million people who last year decided to stop shopping in supercenters:

Very interesting piece and thanks for sharing those numbers. I think this is about trade-down. What I've been saying is that, in the current climate, whether you are a retailer or a brand manufacturer, you need to offer a trade-down alternative as part of your brand family. Shoppers who were previously choosing more upmarket channels have clearly traded down to the supercentre channel, creating that massive influx. However, 8.2 million existing supercentre customers also appear to have found some way to trade down, which cut supercentres out of the picture. Thing is, I don't think the new customers want to trade down too far. Otherwise they too would have gone to wherever the 8.2 million have gone. (My hunch is that they went to hard discount.) To win, I think the supercentres need to find out where their old customers have gone and offer that experience AS WELL. (That might mean ramping up the private
label, for example ...) Then they are serving both consumer groups. That would also, I imagine, allow them to encourage the 8.2 million to trade back up, either later on when money's easier, or right now on a few treats they may not find at the other place. The little treats that keep you sane when money's a worry ...

Premium brands that don't want to compromise their positioning can still offer a trade-down by reducing pack size and charging less. And while we're on treats, don't underestimate the power of frugality chic and recession nostalgia among the more affluent consumers. I think recession cuts both ways and not everyone is out of money. Repackage your simplest, most frugal products with a retro design and sell them at
a mid- to premium pricepoint with a brand story about simplicity. That appeals to the "downshifter" mentality, the backlash against greed and conspicuous consumption brought on by the financial crisis, while allowing the consumer to maintain a certain lifestyle perception. I think these consumers still want premium but are afraid to flaunt
indulgence in the current social climate ... there's a margin opportunity for suppliers here, I think. If simplicity is the new indulgence, less could really, finally, mean more.

On the same subject, MNB user Dan Jones wrote:

The thrust of your article is correct – there are millions of consumers in play, and the aggressive retailers can attract them. Personally, I pass a Target, Trader Joes, Ralphs, Albertsons, Smart & Final, Costco, Fresh & Easy and WalMart (to name a few) on my 15 mile commute every day. So every trip I take is a fight among these retailers and more.

However, a churn of 8.2 million consumers in Mass Merch must be looked at somewhat skeptically. Because there is no loyalty card in Mass Merch, they are measuring consumer retention via tender on each transaction. So…

If I change from my MasterCard to Visa, I look like a new consumer (and a lost consumer).

If I shopped with my wife for Christmas, and used my card, then never went again on the weekly trips, I look like a lost customer, even though my household continues to spend.

If I used a check after my Credit Card was stolen, I look like a new customer.

Shopping on vacation or paying in cash are other ways these numbers will be inflated.

That said, even if IRI overstates the number by 3X, there are 2.7 million consumers changing behavior!

Retail is a dogfight - every day. From my perspective, there are 100 million households in play at all times.

Fair enough. And the bottom line is the same.

Responding to yesterday’s news about the lawsuit filed by the owners of Marsh Supermarkets against former CEO Don Marsh for misuse of funds, MNB user David Livingston wrote:

I think sometimes we forget that Marsh was Don Marsh and family's company and they have the right to run it as they please. If the other stockholders didn't like it then they didn't have to own the stock. Marsh stock barely traded because it was so thinly held. Marsh stock was not an investment but rather a novelty. Obviously Don Marsh had the blessing of the board of directors. This sounds like sour grapes. Maybe things are not going so well for Sun and they are looking for a scapegoat.

I do my best, with few exceptions, not to pass judgment on positions taken by MNB users. After all, I get my say, and you get yours.

This is one of those exceptions.

This is one of the dumbest things I’ve ever read, and I’m going to assume that David Livingston wrote it to get a reaction rather than to be taken seriously.

You don't have the right to run a company the way you please if you’ve sold stock in it. That’s the trade-off. You get cash to play with, but you also have to live up to certain rules.

If you run a company and sell stock in it, you have a responsibility to the shareholders, whether they think it as an investment or a novelty. You have a responsibility not to fly off to Cuba and other far-flung places on personal pleasure trips that are being funded by the shareholder’s dime. You have a responsibility to behave in a way that does not put the corporation at risk of being sued for personal and self-indulgent behaviors,.

To say that investors in a company do not deserve such consideration, and that they can be treated in a near contemptible fashion, is absurd…and it is hard to believe that someone who wants to be taken seriously by public companies (as he does when leveling criticism at them here and in other places) would have such a cavalier attitude toward the responsibilities of public corporations and the rights of shareholders.

Yesterday, MNB reported that Unilever-owned Ben & Jerry’s had created a fictitious dairy company, Cyclone Dairy, that supposedly was only going to sell products made from 100 percent cloned cows – a ruse that it perpetrated through a website and supposed street sampling. Ben & Jerry’s said it lifted the veil on the hoax to make its true point – that people have a right to know whether the foods and beverages they are consuming come from cloned animals or the progeny of cloned animals.

I commented that I’m with Ben & Jerry’s 100 percent on this – both on the need for labeling of cloned food, and on the use of the occasional hoax to get attention.

One MNB user responded:

Sorry Kevin, but you've bought into the Luddite line on animal cloning. There is no scientific evidence of danger from cloned animal progeny. Mandatory labeling only serves to encourage irrational fears of the sort of folks who would oppose the horse if it was invented tomorrow. The planet is only getting more crowded every day and we aren't going to feed those people without using science.

Foe the record, I don't think I have any problem with consuming cloned foods, or foods made with genetically modified ingredients. I just think that for the moment, such things ought to be accurately labeled…in the same way that I also believe in Country of Origin Labeling (COOL). It’s called transparency.

Another MNB user wrote:

You're with Ben & Jerry's on the occasional hoax to get attention and to make a point, but you slam PETA when they do the same thing.

Well, yeah.

I like Ben & Jerry’s. I find PETA to be sort of annoying, dogmatic, and humorless. And I’m not big on dogmatic.

Speaking of dogma…yesterday we had a story about a Dunkin’ Donuts franchisee who was forced to give up the business he’d owned since 1979. The reason? Walid Elkhatib is a Muslim, and is forbidden by his faith from handling any pork products. When he invested in a Dunkin’ Donuts franchise in 1979, it did not sell breakfast sandwiches. When the company did introduce them in 1984, it allowed him to not carry them, and to post signs that said “no meat products available.” But it changed its mind, and Elkhatib lost the franchise…and I commented that “You’d think that there would be a better way to handle this. I would argue that Dunkin’ Donuts would look a lot better if it could find a way to accommodate this man’s religious beliefs, even if it meant deviating from the strict franchising agreement. Sure, there would be complications … but isn’t it better to actually be a little tolerant, especially these days?”

One MNB user responded:

You must also believe that pharmacists should have the right to deny prescription drugs based on their beliefs. That employer should cater to all the various religious beliefs in the country? Restaurant Chain stores rely on the sameness and quality of every store in the chain. I do not know but I would guess that franchisees have a contract and that the court case Dunkin Donuts won was a validation of their contract.

Further, should Catholic pharmacists be allowed special privileges? Should companies be forced to hire someone who cannot handle meat because to not do so would be constitutional violation. Perhaps the franchisee should have been more tolerant.

Another example might be a chain that reduces staff due to economic times and now has to ask a “Vegan” to work the meat department or the dairy department and that person refuses to do so because their personal beliefs. If one’s personal beliefs get in the way of a job or work then it should be the worker’s responsibility to change jobs. I am general left of center but not on this issue.

In general, what I am saying is that reasonable people ought to be reasonable.

In your first example…and this is usually good for a few hundred outraged email responses…my problem with the pharmacist metaphor is that last time I checked, the availability of a bacon and egg sandwich is a little less important than the availability of certain prescription drugs.

I have less of a problem with individual pharmacists not wanting to dispense certain medications than I do with corporations that make those judgments, or don't insure that their pharmacies have people on duty with fewer qualms or less of a desire to impose their moral compass on other people. This can be an issue in small markets where there is only one pharmacy, and people’s access to certain medications is limited. Besides, pharmacists have a public trust…at least in my opinion.

I say it again. Reasonable people ought to be reasonable.

On the same subject, MNB user Al Kober wrote:

Tolerance and compromise are similar to preference and conviction. I have tried to be tolerant about my preferences, but I will never compromise my convictions. If a conviction can be compromised it is not a conviction, it is a preference. You must be willing to die for your convictions which leaves no room for tolerance. Having an understanding that allows for the convictions of others to exist and be accepted and not changed, is where tolerance should be applied.


The problem with that argument is that it doesn’t look quite as persuasive when you realize that the guy on the other end of the gun or the sword or the bomb also feels the same way about his convictions. Of course, you can argue that you are right and he is wrong…and this is how wars are started and why people get killed and how civilizations collapse.

Maybe I have too many preferences and too few convictions. My father, who thinks I am a hedonist, would think so. I can think of a few priests and nuns who probably would agree as well. But I still think that people should believe in whatever gets them through the night, and not worry so much about what other people believe.

KC's View: