First off, I am so glad to be blogging again. My last post was the day before my first child was born, and babies, as it turns out, are a “disruptive technology”.
I’ve collected a lot of thoughts and decided on a more personal direction for the blog (at least for now). Rather than regurgitate and link out to things on the Web I find interesting, I’ll post more thoughts about what inspires me in the world of writing, marketing, and life in general.
This evening I went to the local grocery store and was shocked. It looked as if a hurricane were bearing down on us: empty shelves, disheveled aisles, wide open spaces where goods were once jockeying for my attention.
There’s no other sensation quite like depression, and that’s precisely the feeling that bore down on me as I traversed the aisles, looking (in vain) for Size 2 Huggies. Each empty shelf added to the melancholy, until I could only imagine a new version of that littering commercial, with Alan Greenspan shedding a single tear as consumers drive past an empty store.
What happened? Flyers near the exit told no more of the story than “Goodbye as of February 23.” I think I can fill in the blanks.
Albertson’s was the closest supermarket to our home. It’s right on a main road in a residential area, and one block from a new I-15 onramp/offramp that’s being built. This is prime real estate for a grocery store.
It wasn’t particularly dated, either; clean, late-90’s decor, and good upkeep lent a trustworthiness to the meat and produce that other, decades-older stores in the area seemed to lack.
But the explanation for this store’s demise (and I forsee more) is simple: Albertson’s gambled against the customer and lost. In a robust economy, they noticed that with “Preferred Savings” cards and yellow “look at the price” labels everywhere, customers didn’t notice when they nudged prices on staple goods ever higher.
Plus, every week I’d go in and a specialty brand or variety I used to purchase had been eliminated, losing a battle for shelf space with the generic Kroger brand. So instead of 24 varieties of soup, there are 12. It wasn’t just soup, it was any item that seemed to sell well. Selection tanked while prices rose to an insane degree. In a robust economy, people aren’t watching as closely, and Albertson’s took advantage of the situation in a move to boost quarterly profits at the literal expense of the customer.
I use a simple indicator for a store’s general sense of value: What’s the everyday price on a 12-pack of Coke, Dr. Pepper, or Pepsi? At Smith’s, it’s typically $3.50. At Harmon’s, it’s $4. At Albertson’s, they had, over the course of 5 years, jacked it up to near $8. You could walk out to the vending machine and buy individual cans of soda for less!
The saddest part is that this and other future closures will be blamed on the economy, no lessons will be learned, and the executive staff at Albertson’s/Kroger will continue to insulate themselves from the needs and feelings of their customers, until they are out on their collective asses, wondering what went wrong.
I’m not saying there are no real victims of this economic downturn, but I’ll bet that out of 4 businesses that shut down and blame it, 3 are victims of mismanagement, bad business models, or sheer hubris.
What’s the lesson? For starters, stop screwing your customers over. You know who you are. Your prices are too high. Your service isn’t good enough. I can promise that the customer doesn’t share the sense of value you think you’re offering with your product.
Old justifications of value don’t work, because suddenly, we’re all on a fixed income. Everyone’s looking for a NET COST SAVINGS: How can I pay less next month than I paid last month?
Second, if you’re selling a commodity, you’d better be darn sure you’re priced in accordance with other avenues the customer will take. Because right now, customers will take those avenues, loyalty or convenience be damned.
I’m confident that we as a nation will weather the storm. My hope for myself and for you is that we have the wisdom to quickly learn the lessons necessary to prosper during the downturn and to retain them when it’s over.