Published on: September 14, 2009
We continue to get email about my stated position that when supermarkets carry brands that compete with them for share of stomach (like Dunkin’ Donuts coffee, or Burger King French fries), they could be seen as damaging their own brand equity in the long term.
There was, to put the following email in context, an email last week that observed that “people have not ALWAYS eaten out. It is the failure of supermarkets to simplify, provide and educate about other solutions that has led to almost 50% of food dollars going to the likes of Burger King.”
Which led MNB
user Ken Wagar to write:I really hate to keep harping on the issue of competitors’ brands in the supermarket but I just can’t let it go. It seems to me you have a vested interest in seeing supermarkets be successful as your living is tied to the continuation and improvement of the business. Yet I suspect that you eat out in restaurants much more frequently than the average American. Now I don’t have any issue with that but when you endorse comments such as the one (that) would suggest that your being a regular at the Mexican Restaurant or going out for Indian on the last day of your vacation were due to a failure by your local supermarkets. I find that to be ridiculous. I would suggest you think long and hard about why you eat out when you do, what the motivating factors are and why you didn’t instead make the apparently simple decision to prepare your meal yourself in your home.
I would be flabbergasted if you could actually say your decisions are the result of the failure of supermarkets.
I also think we need to be cognizant of the number of items carried in the supermarket that got their start and established their brand elsewhere first. Ice Cream Brands that started in Dairy stores or Ice Cream Shops, Coke which began as a fountain item in Drug Stores, cookware marketed by restaurant chefs, BBQ sauces that came from Restaurant beginnings and on and on. Heinz Catsup is the #1 brand in food service should we quit carrying it because of that? What about Certified Angus Beef, which established credibility by being featured on Restaurant menus? What about Wal-Marts Steakhouse Cuts of fresh beef which in a way indicates the best steaks come from Food Service not the supermarket.
I think it is a very slippery slope and leads to comments like that of your reader above. A leap from BK fries to the restaurant business being a result of Supermarket failure.
Give me a break!
First of all, let’s be clear. I am making a broad argument that ought not be taken literally…which is that sometimes supermarkets don't play hardball when it comes to share of stomach. I’m using these competitive brands as an example…
That said, I think an argument can be made that supermarkets were asleep at the switch to some extent when fast food restaurants started a trend that moved a lot of the food business away from the supermarket business…and that this happened, in fact, because a lot of supermarkets thought they were in the business of selling other people’s brands, and thought in terms of boxes and cartons and bottles and jars. They forgot they were in the food business…and that, combined with strong marketing by the competition and a lot of societal changes, created the competitive challenges they face today.
I’m not sure how my restaurant habits factor into this, exactly, but I would also point out that while I may have a vested interested in how food retailers do, I am not a cheerleader. At least not all the time. And I like to think that at least some of my dispassionate observations – as well as my passionate ones – have some value in terms of adding perspective.
On the other hand, there is a very good argument that I’m completely wrong on this, as was pointed out by one MNB
user, who threw my own quote back at me when I referred to the MNB mantra – in the 21st century, effective retailers need top be where consumers want them, when consumers want them, how consumers want them, selling products at prices that consumers believe are appropriate…
And this MNB
user wrote:Except when that customer is looking for BK French fries, or Dunkin Doughnuts coffee...?
I had to laugh at this…I love it when I get hoisted on my own petard.
And now, I’ll have to think about it.
Had a story last week about how Aldi is doing a small test in the US, accepting credit cards for a fee. MNB
user Matt Muir, who certainly qualifies as one of MNB
’s more far-flung readers, sent this email from Down Under:In Australia, Aldi suffered initially when offering higher priced goods whilst not offering a credit card payment method. They have now offered credit card payment for some time, with a small % fee charged.
They are probably the only bricks & mortar retailer to do so, and I can't say that I've ever heard anyone complaining profusely about the charge.
Thanks for that.
And, on the subject of labor vs. management, one MNB
user wrote:I am 62 and my parents are doing well - they have told me numerous times that they think things have gotten worse over time due to corporate greed.
My Dad as most neighbors did, went to work and Mom stayed home to raise the kids. Then they retired comfortably with only one parent working 40 hours a day all those years ago.
Today in most traditional families, both Dad and Mom must work and this is 80 hours compared to 40 hours years ago.
With all our productivity increases - where has the gain gone for the families and workers. It is still a 80 hour grind for to days Dad and Mom trying to survive and who knows about retirement anymore.
Corporations and their execs are far better off today than they were 50 years ago but most of us dumb workerbees are not.