I received a call from a reporter Friday looking for comment about Aldi, a giant grocery chain of over 800 stores in the US with an average size of 17,000 sq. ft. They don’t take credit cards, no baggers, deli, flowers, etc. Oh yeah and no name brands – its all private label.
This flies in the face of stores like Safeway’s smaller footprint The Market that has only a handful of the best brands – at higher markups – in all categories. This allows them to add more profitable fresh fruits, prepared meals, expanded Deli and a Starbucks.
Here’s the kicker, after debuting nearly two years ago, The Market still only has one prototype in Long Beach, CA. Aldi is opening 100 in 2010 and even more in 2011. That got me to thinking, “Are Retailers Banking On America Becoming Poorer?”
Read any of the breathless articles on the Dollar Stores and their meteoric rise in stock price and you’re sure to receive the message that Americans are trading down. But are we doing less with less?
America’s retail was founded on aspirational shopping. We wanted things that meant we were better than the other guy or would make use feel smarter or would help us to appear who we perceived ourselves to be. That led to all the name brands’ marketing campaigns for new and improved-which often cost more.
Now brand names are selling off their unique selling propositions to compete with their own premium products as “private label.” Exact same PMS colors describe the product in such similar terms – who wouldn’t pick the private label?
Look no further than legendary detergent Tide. The Wall Street Journal reported last year that Tide Basic is currently for sale in about 100 stores throughout the South. It lacks some of the cleaning capabilities of the iconic brand — and costs about 20% less. You settle for less to receive less. Its very existence is one of the most telling signs to date of how mass marketers are trading down themselves.
Are we willing to settle for less? Less service? Less choice? Less aspiration? Does that make us feel better after working all day? And what does that do to our psyche?
OK rabid anti-capitalists – don’t flood me with your “of course we’re wrong.” I’m talking to the bulk of you working, shopping and living some form of American dream that I am. Yes its not what we were taught in the sixties but it is still founded on merch – creating and consuming a wide variety.
John Winthrop admonished the future Massachusetts Bay colonists that their new community would be a “shining city upon a hill,” watched by the world. Presidents Kennedy and Regan both quoted that term frequently to invoke pride and hope.
After 9/11, the housing bubble and recession, are we forever to be picking through generic “stuff?” Responsible to scan, pay and bag ourselves and leave feeling that we deserved the Yugo instead of the Lexus? And are retailers who dwell in the Rent-To-Own, Discount Dollars segment just riding a trend that could be ending or reinforcing our worst fears and reshaping retail?
And if we keep settling, how does that play out? For example in:
- Home Furnishings? “Get the vinyl floor, you don’t need tile.”
- Travel? Three stops on a cross country flight can make you dread coming home, even if you did get a great deal.
- Tourism? It’s a room by the elevators over the bar but you got a great deal.
- Apparel? “We make it to meet the price point, who cares if it shrinks after one wash.”
EBay and the rest continue to diminish expectations. Sorry, it’s used or a second, it’s not smart.
Will we become even more disaffected, depressed and unable to sleep as we settle for minimal experiences that reinforce a siege mentality?
What do you think? Are businesses banking on us becoming poorer?
Don’t forget: my new book The Retail Doctor’s Guide to Growing Your Business, a step-by-step approach to quickly diagnose, treat and cure (Wiley & Sons) in stores Monday, May 3.
Have you grown tired of the Polly Paranoids who have pulled the wool over our eyes the past year that luxury is dead? I have.
