Friday, March 27, 2009

Will I live long enough to use a 60-tube pack of toothpaste?

There are many folks, if given the slightest opening in conversation, who will rail against the evils of super retailers like Costco, Wal-Mart, Home Depot, Target etc, for hours on end. They put small businesses out of business, they ruin the older downtown areas of our cities, they sell foreign junk at low prices, basically, if turned loose inside your city limits, they will kill your town.

There is an amount of truth to these arguments; small businesses cannot compete against the buying power of a super retailer. Retail giants like Wal-Mart and Costco have a competitive price advantage before the product hits the shelves simply because they buy in tremendous volume and receive a discount from the manufacture. A discount they can use to their advantage when they set their prices. They do take shoppers away from traditional shopping areas. New developments offer larger parking areas and larger square footage opportunities for these stores and that is what they need, space, and lots of it. It would be almost impossible trying to carve out a place in a downtown setting for a super retailer, and the price per square foot would be prohibitive.

I have lived in Yolo County long enough to remember businesses with great customer service, like Cranston's Hardware on Main Street. I also remember stores with less than stellar service and high prices in the downtown area. I miss having a true hardware store like Cranston's, where the guy behind the counter had actually rebuilt a pneumatic screen door closer, and would sell you the right parts and explain how to fix it. I'm not so impressed with the slacked-jawed look of the kid at the local home center who wouldn't know a pneumatic screen door closer if you hit him in the head with one.

There are family owned businesses in Woodland that still offer good service, and I try to shop there first. I will pay a little more for customer service and product knowledge, but if I get the same slacked-jawed look to my question, why bother? I hate to see the closed storefronts downtown, and I would love to have a vibrant downtown in Woodland, I’m just not sure the best way to go about it.

Setting aside that argument for a moment, I would like to point out a not so obvious evil of big box stores, especially the warehouse stores; overbuying.

Before Costco was Costco, we knew them in the Sacramento area as Price Club. Our family's name for it was the $200 club. It was almost impossible to return from Price Club without spending at least $200. This was back when spending $100 at a grocery store was a rare occurrence. The large quantities of goods you purchased at these stores made you feel as though you were running the kitchen for an NFL training camp or a logging mill.

I like bacon, but do I really need 6 pounds of it? I need ketchup, but where am I going to store a one-gallon container of it? Do I have buy laundry detergent in a 5-gallon bucket? Do I need to buy a hay-bale sized bundle of socks? Will I live long enough to use a 60 tube pack of toothpaste?

Judging by the success of these stores, the answer to these questions is yes. I found a place to put the laundry soap, and after shopping at Costco for a while, we bought an extra freezer for the garage to store the extra five packs of bacon, the 800-packs of chicken nuggets and so on.

A good marketing plan for Costco might be to sell energy efficient freezers right at the entrance of the store. Now you can stock up in the frozen food isle because you have a place to put it. Better yet, Costco could give you the freezer and charge you a monthly service fee, say $5 a month on a three-year contract. The $180 bucks would probably pay for the freezer and just think of the extra revenue in frozen food sales.

I should go into Marketing.

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