retail news in context, analysis with attitude

We continue to get email about the Fast Company story focusing on the “Fab Four” of technology companies - Amazon, Apple, Facebook and Google.

MNB user John J. Toner V wrote:

Great article, glad you mentioned to your readers – it will be interesting to see how 5 years from now the food retail business will be influenced by these companies.  They are already starting to change how the 1% shop with Amazon Prime for staples, Facebook for recipe referrals, Apple for well creating a smart phone that allows people to geotag where they purchase items, and Google for search.

On the subject of Netflix’s eroding market value and consumer enthusiasm, one MNB user wrote:

The problem with Netflix is that they’ve lost a lot of their streaming content so it changed their value proposition.  From my perspective as a consumer (streaming + DVD by mail), they raised their prices significantly (60%), but now they offered less.  If they had added a bunch of new streaming content that wasn’t made up mostly of B movies from the 1990s, I might have stayed a customer.  Even their survey asking why I left is flawed.  It asked if you left because of price or content; you could only choose one.  They seem to have forgotten the value equation.  If I had gotten more, I might have been willing to pay more.  You can’t increase price, lower quality and expect to be successful.

And another MNB user chimed in:

As a non-Netflix user, my take on the complainers is that they are a bunch of spoiled brats who didn't want to give up their "good deal",  just like I didn't want to give up my Chase Rewards Visa card that gave me 5% back on grocery and drugstore purchases.  I suspected that wouldn't last forever.  It looks like about 95% of subscribers still think the service is worth the money at the new price.  Personally I am not looking forward to all these movie buffs hogging the internet bandwidth and thereby adversely affecting my internet surfing experience.

I am fixing up a house to resell.  I have an old but working clothes dryer.  I asked my real estate advisor if I should put that with the house.  He said no, if the buyer sees the dryer they will also demand a washer.  Sort of like a Netflix junkie.  I am waiting to see happens when Target reduces the 5% "Red Card" discount.  Will there be protest camp outs in the parks?

We’re also getting a lot of email about whether smokers should pay more for their health care premiums, which Walmart says they should (and I agree).

One MNB user offered:

Here we go again--the smokers.  I don't smoke, so an increase will not effect me.  I don't have high blood pressure, diabetes, heart condition, etc.  I am blessed with pretty good health.  I do however, try to eat right, exercise everyday, drink no soda--but have red wine with my dinner.  I take responsibility for my health.  Do I get a discount?? 

What about obese people?  Should they pay more?  It is their fault they are fat, just like smokers.  No one made them smoke, no one made them eat in excess.   What about drinkers?  Should they pay more for insurance?  The list goes on and on.  Let's be fair here.

I am so tired of everyone punishing people who are buying a legal product.  Punish them, but watch out--you might be next.

But MNB user Brant Borchert wrote:

You always order the special for $10. Your friend always orders an appetizer, steak and lobster, and a dessert for $50. Then, when the check comes, you split it evenly. How does that make you feel? Is that fair? Wouldn’t you prefer your friend to kick in more because he/she is choosing a more expensive option? To take the analogy further, let’s also say that your friend goes out to eat several times each week without you, but you are still expected to split those bills, too. Doesn’t this situation sound ridiculous? It should. Health insurance is no different – some people are knowingly and willingly making choices that negatively impact their health and increase associated healthcare costs, and everyone else helps pay for it.

Also, for those who are not yet aware, many companies already set premiums rates and/or ! deductible amounts based on other behavior related metrics (i.e. weight/BMI, cholesterol, blood pressure, triglycerides, etc.).

From MNB user Tim McGuire:

Fascinating to see the inherent contradiction in the note from one of your readers that first says that there's no way we can/should charge people who make poor lifestyle decisions (smoking, obesity) higher medical insurance premiums - but then says "this country has to address the insanely high, unsustainable costs of our byzantine health care system."  We have to bring down health care costs, but we can't use the world's most proven method of supply/demand management - charge more for things that cost more and people will "consume less" of those high-cost items (or in this case, make fewer unhealthy and expensive lifestyle choices)?

If you're concerned about the "slippery slope" of charging people more because they make bad lifestyle choices that cost more in healthcare costs because they won't want to admit that they make bad choices, then turn it around and charge everyone more, but give discounts/rebates to those who prove they make better, lower-cost lifestyle choices.  If you charged everyone a "list price" that was twice what they are paying now, but then gave them the chance to get up to 75% of that back by making healthy lifestyle choices that reduce health-care costs (which means people committed to healthy lifestyle could end up paying half of what they are today and a quarter of what the folks who continue to smoke, eat to obesity, etc. have to pay) then two things would happen.

First, many people would be happy to pass a physical once a year that, among other things, tests for nicotine, illicit drugs, body mass levels, etc. - wouldn't you do that if it could save you a few thousand dollars per year?  Second, some of the unhealthy people who don't want to pay those higher costs would actually change their lifestyles in order to save money - and lives would be saved in the process.  If that's an invasion of your privacy, then just go on and pay the higher costs.

That's how we could truly reverse the incredibly damaging downward spiral of personal health choices that is causing the unsustainable healthcare costs.

From another MNB user:

How do you prove a person is smoking if they simply SAY they aren’t at work?

Simple, there is a nicotine test that involves a swab to the mouth.  The key is to charge more for behavior, not genetic conditions.  Yes, insurance is a pooled resource, but should that pool be used to distribute the costs of genetics-based health issues (that people can’t control) or should it also include behavioral issues (that people can).  For myself, I have no problem at all subsidizing someone who is predisposed to cancer due to heredity.  However I have a BIG problem subsidizing someone who drives up costs for everyone by smoking, sedentary lifestyle, etc. 

For the past several years (two companies), open enrollment has included a quick trip to the cafeteria to get my weight, blood pressure and cholesterol measured, and my nonsmoking status verified.  The trip is voluntary, but I save $$ on my premiums.  I know several people who have had serious health issues uncovered by these routine checkups and have been able to make changes in their behavior to be healthier. 

The key is focusing on behavior and things that are measurable at a low cost.  It’s the 80/20 rule that actually works.  If it isn’t at your company this year, chances are that you’ll see it in the next couple of years.

And, from another reader:

In today’s commentary on higher health care premiums for smokers, many comments asked if higher rates for obesity is next.  That is exactly what is happening to my company’s plan next year.  Users get a discount for low BMI (Body Mass Index), low cholesterol, low blood pressure and for not being smokers.  Blood tests with physicals are preformed at the office.  The low BMI is new for 2012.  In other words, the unhealthy and overweight have to pay a higher premium.
KC's View: