business news in context, analysis with attitude

We had a story yesterday about high grocery prices in Southern California, even higher than those nationwide, which are themselves increasing in part because of high energy and transportation costs.

One MNB user wrote:

Is this the same community that wants to keep Wal-Mart out? It’s obvious that there’s a lack of competition in the LA Basin. Just who is the LA City Council protecting? Ah, that’s right, the ever present unions. Money, money, money. Politics, politics, politics. What ever happened to government, government, government?

One of the things that the LA Times story about prices showed was an enormous increase in milk prices, which prompted one MNB user to write:

The dirty little secret that no one wants to address in this story relates to the milk prices. Wow, milk prices are up 30% vs. 3.2% nationally? What they forget to mention is that milk prices are controlled by the state, with the state dictating the minimum price you can charge for milk. Yet if you tell the average consumer that, they do not believe it because the state does not want people to know, and the media just perpetuates the ignorance by only telling half of the story.

Another MNB user wrote:

Do you think some of this might have something to do with the higher employee costs per man hours, which could be caused by the highest cost of benefits for any grocery companies in the country? All of Southern California are paying for their benefits they are demanding and the rest of the country are not getting. Could have a bearing.

Still another MNB user chimed in:

Hmmmm how many Wal-Marts, WinCos are there in So Cal???

Maybe So Cal retailers need to get a bit more competitive?

Then again, So Cal retailers tend to pay their employees a better wage...

Is that a double edge sword?

Another MNB user wrote:

This one is fascinating and goes to the “boneheadedness” of SoCal grocery retailers. I’m betting Costco and Trader Joe’s didn’t raise their prices accordingly….

Yet another MNB user wrote:

Maybe prices are higher because of the cost of living in California! Also all the stores are unionized which increases the labor cost for those stores! Prices are relative to where you live. I would suggest that everyone move to the Midwest where housing and the cost of living is very reasonable and grocery prices are controlled by competition! Not to mention that it is a great place to raise kids.

MNB user Steve Lutz of the Perishables Group differed with the LA Times numbers:

I would be interested to know where the LA times generated their data. It brings to mind the old Mark Twain quote of “Liars, damn liars and statisticians.”

My quick check of produce item pricing from our database of 16,000 stores doesn’t necessarily match the LA Times. I pulled the most recent 13 weeks (through April 1, 2007) and found:

1) Pricing on total fruit for the US is up 7.1% vs. YAGO. LA pricing is up by 10.8%, well above the national average. But Seattle is up by 14.9% and Sacramento is up by 11.4%.

2) On citrus pricing, the total US average retail price over the last 13 weeks compared to YAGO increased by 22%....probably driven by the California citrus freeze this winter.

Average prices in LA jumped by 39%, way above the national average. However, pricing in Sacramento was up by 41% and the entire west coast region increased by 36%. More importantly, these percentage increases can be misleading. Average citrus price per pound in LA is now $1.01….compared to $1.12 for the west coast and $1.17 for the total US. So while citrus pricing rose more in LA on a percentage basis, the average price the consumer pays in LA remains nearly 20% below the national average.

3) Total grape pricing for the US over the last 13 weeks increased by 1.8% nationally, up 2.7% in LA. So LA is well above the national average. But pricing in Seattle jumped by 7.9% for the same period while prices in Portland, Oregon jumped by 6.5%.

So my quick assessment (at least for produce) is I’m reluctant to jump on the “LA price gouging” bandwagon.

We also had a piece yesterday about McDonald’s trying to get employees think about the company as a “McCareer” as opposed a “McJob.”

MNB user Neil A. Bourjaily responded:

Line employees may consider a career at McD’s or even grocers when they see the current managers working human hours, rather than the 60+ hours that Sr. management currently expects. That’s the unfortunate reality of our industry, we work too many hours, and the next generation isn’t willing to match our generation’s single mindedness.

And MNB user David J. Livingston wrote:

A while back McDonalds thought they would design such cool looking uniforms that employees would want to wear them off the clock. What happened to that concept? McJob or McCareer, these are not family supporting jobs. It’s really hard to candy-coat an $8 an hour job no matter how you market it.

I noted your comment on Starbucks and how they treat their employees at partners. The way I see it is that the employees and the customers are often from the same socio-economic background. I think we are talking about two different classes of employees. So it’s much easier for Starbucks to pull it off. Kind of like comparing Wegmans or Publix employees to those who work at Wal-Mart. Or comparing Costco employees to those at Sam's Club. McDonalds is not going to get a Starbucks employee to come work for them. Just the same way Brett Favre is not going to play football in Canada and Kentucky Derby winner Street Sense is not going to be running races at Hoosier Downs.

Go to Starbucks and take a look at who is working there. Are they immigrants who have trouble speaking English? Do they appear to be the working poor of America? Probably not. Go to McDonalds and you will see teenagers and a few misfortunate adults. Making them actual partners such as starting an ESOP or generous profit sharing plan would go a long way. But if McDonalds did that it would force out a lot of people who need those McJobs as a better class of employees join the McTeam.

We had a piece yesterday reporting that in the UK, Tesco plans to launch two new clothing lines – one for men, one for women, both called “Ultimate Comfort” - designed specifically for senior citizens.

And we commented: The plaid polyester pants and spacious pantsuit products will be to die for. Though maybe, if these products are for older Americans, that’s the wrong phrase to use…

One MNB user wrote:

As a 44 year old, even if I wanted comfort, I would RUN from anything that smacked of senior citizen marketing, look or feel - yikes... I'm not old!!

And I don't think I'm alone w/ my tail end of the boomers friends. I sure hope they have a good marketing plan.

But maybe that's my 'American' talking and in the UK it will fly marketed to 'seniors'.

Ah, to be 44…

Reminds us of an old Broadway musical, “Two by Two,” in which Danny Kaye played a revitalized Noah charged with building an Ark..and he sings “Ninety Again!”

Another MNB user wrote:

Tesco, or any retailer, is smart to address this demographic now. Along with the rest of the baby boomers, I am bearing down on "senior" status and our generation has a lot of purchasing power. Being treated as a valued customer instead of an old person to be mocked will help us remember where to spend our hard earned money, now and in retirement.

We weren’t mocking.

We kid because we love.
KC's View: