retail news in context, analysis with attitude

Got the following email from an MNB user about yesterday’s Eye-Opener about the growth in luxury spending:

In reading your eye-opener on luxury spending, I am always surprised when anyone somehow thinks this is bad.  In your piece, I get the impression that you think this is bad in that it highlights the gap between have’s and have not’s.  The rich are not throwing these dollars into a hole in the ground.  They are “throwing” them into the economy. When a celebrity throws a party and is rumored to have spent millions on the party, my thought is “this is great”.  There is a very happy caterer somewhere, a florist is smiling, a lot of dressmakers and tailors are happy, hair salons and nail salons are feeling the love, etc.  When a rich person builds an obscenely large McMansion, I can only think of all the masons, carpenters, interior decorators, landscapers and other laborers/craftsmen/artists that will be working for a relatively long time on this one house, not to mention all of the merchants who will see their bank book balances rise w/the purchases to fill this house.  In my opinion, what is bad for America is when the rich do not spend, when they “hoard” what they’ve earned.  While I don’t know how they view it, their spending is what keeps others working.  And isn’t that what it’s all about—i.e. the economy, the constant circulation of money?  In summary, the rich are circulating money, and that is the only thing that ever keeps a stable economy humming.

First of all, I’m not sure we have a stable economy right now.

Second, while I suppose it could be argued that the affluent are not hoarding their money when they spend on luxury items, it also could be argued that when top executives make salaries and benefits that are insanely higher than the people on the front lines, and even lay off thousands and hundreds of thousands of people while taking salary increases, that is a kind of hoarding...and not good for the economy in the long run.

However, let me be clear.

I have no problem with affluence.  I aspire to it.  But I also think that somehow the system has gotten out of whack … but I'm not sure that government can impose solutions.  What we probably need is for some boards of directors to say that they are changing the way top executives are reimbursed, that people who get fired don't walk away with multi-million dollar severance packages even if they were incompetent, and that there probably ought to be some formula that connects how much executives are paid in relation to the lowest people on the organizational chart.  (Sort of the way Costco does it.)

I absolutely believe in the free market, and do not believe that government should set standards and limits in this regard.  (Except, perhaps, in cases where the government helps to bail out troubled companies and industries…there is a reasonable argument that if companies are surviving because of taxpayer money, there should be some limit to how much senior execs should make.)  What worries me is that the foundations of the free market may eroding because of greed and short-term thinking, and that companies are institutionally unable to address the problem.  

So, if government shouldn't and private industry can't….what is the solution?

I have no idea. But I’m reasonably sure that if we don’t focus on the problem, we’ll never arrive at a solution.

MNB user Tom Devlin offered the following thoughts about yesterday’s Michael Sansolo column about how hockey player Jeff Halpern has kept himself relevant and extended his career:

What a fantastic Metaphor because I am sure a large percent of your experienced readers can relate to that story. I’m one of them - a young fiftysomething living in the world with a whole bunch of  twenty somethings, who are more tech savvy and not only up to date but truly the target consumer of many of the brands that I work with.

Even though I use Facebook, Twitter and QR codes, etc. I am NOT the consumer and I’m always bugging my two high school students about the latest things they are doing. This weekend alone I was engulfed in the music world where now it is online radio, Pandora, Spotify and others. The scary part is, it will all change in the next six months.

In addition, this weekend we started the college visits for my High School Junior and to see the advancement in colleges is mind boggling for anyone. This reality check goes with people, school systems, companies and internal departments. What really hit me is also all the funding that is available from scholarships to personal groups that you can write to. One group where funding was available was for parents who had twins !!!

This MNB was a true eye opener on what Mr. Halpern did and what it really takes to stay in the game in  business and life.  I thank you for that.

Our pleasure.

Finally, I got the following email from an old friend, Eamonn Quinn. Now, when you read this it will almost seem like a commercial ... and while I don’t usually allow these to run in this space, I decided to make an exception here.

Two reasons. First, I like Eamonn, and he hosted a dinner in Dublin many years ago at which I met two of my favorite people in the world, Ann and Fiach O Broin. Second, and probably more important in this context, he makes a point that needs to be made about a larger issue:

I am following up on the Wal-Mart pork mislabeling story published yesterday. This is just one of many incidents recently where the origin of food products has been brought into question.

As you know I am chairman of Identigen Inc, a company that specialises in DNA traceability for meat products, especially pork and beef.

DNA is nature’s bar code and despite the best intentions, paper systems are very hard to implement in large processing plants.

With a DNA traceability system the information is never lost. So that even on the supermarket shelf, spot checks can be done to ensure that what is in the pack is indeed what it claims to be.

Superquinn implemented this system in 2000 partly in response to the BSE crisis but also to ensure that it could stand over its' standards. Superquinn still implements traceback® from Identigen today.

The issue is really quite simple. In most production situations you are assembling many pieces to make one final product. In beef or pork production you start with one piece and proceed to break it up into many pieces or joints.

The problem is that the first label will have to break up into multiple sub-labels and that is where confusion can arise. Precisely because of this problem, I believe that ultimately consumers will demand this type of assurance from the industry. The interesting thing is this is that it is not expensive to do, depending on the program it can usually be done for 2 to 3 cents per lb.

You don't change an industry overnight but it is getting traction from some leaders in the industry.

In the US we are beginning to see early adopters, such as PFG, a leading food service company, has just launched Braveheart beef into 11,000 restaurants with traceback®.

Aurora black Angus has just commenced exporting US beef to Korea on the strength of a DNA traceability program.

In Canada the Overweightea group is having great success with sturgeon valley pork a regional Alberta brand. 

Just to be clear, DNA traceability doesn't make the product any better. It just ensures it is what it claims to be.

Which I think most consumers would feel reassured about.

I agree.
KC's View: