Four Reasons the Retail Apocalypse Hurts Frugal Consumers

In our last post we talked about how the decline of physical retailing is great for the environment. That was the good news.

But there's bad news too, unfortunately: The retail apocalypse is not great for consumers. Not at all.

And for frugal, bargain-hunting consumers, it's going to be really not great. As the retail environment evolves, we're going to get less and less value for the money we spend. Here's why:

1) Retail will become more oligopoly-like and less competitive. If you've read Casual Kitchen's recent posts on inflation and how to beat it, this will be obvious to you, but I'll say it anyway: as more and more physical retailers close down stores and exit the marketplace, the players that remain simply do not have to compete as hard to earn your purchasing dollars. This means higher prices, fewer alternatives, and less value for consumers.

2) Amazon is the mother of all "meet or beat" pricing players. As we know, meet or beat pricing results in higher prices for consumers, not lower prices. When a store claims it will beat any competitor's price, it just gives the other stores in a market an excuse to raise prices. Since consumers shopping in say, Best Buy, can quickly check their phones to compare prices, Amazon has zero incentive to cut prices--after all, they are the benchmark everyone will compare to. Worse, Best Buy has zero incentive to offer any price significantly lower than Amazon either! Neither retailer wants to start a race to the bottom that no one--except consumers--can win.

3) Fewer truly attractive sales. A less competitive retail environment will drive second-order effects: there will be far fewer retailers offering truly attractive sales and doorbuster-type opportunities. Doorbuster pricing and inventory liquidation sales can offer extraordinary value to disciplined and patient consumers--admittedly at the expense of a physical retailer that planned poorly for customer demand. In the increasingly virtual world of retailing, it's much easier to manage inventory, distribution is less complicated, and companies know a lot more about you and what you want (more on this in a moment). Truly glorious sales--the kind that result when a retailer badly misjudges demand and later needs to liquidate unwanted inventory--will be far less common in the new retailing environment.

4) Worse informational asymmetry. Amazon and all the various online information gatherers know a lot more about us than we know about them. As their share of retailing grows, the informational advantage they have over us grows too. We will know less and less about what happens behind the scenes. Worse, we can't see--and most of us are hardly even aware of--all the informational trails we leave online. Online retailers gather this information relentlessly, and use it to their advantage.

Final thoughts
There will be other pros and cons to the new retail beyond the negative impact on consumers. For one thing, there will be lots and lots of job losses. But don't forget: at one time the USA's labor force was 95+% agricultural (it's less than 1% now), and buggy whip manufacturing, whale oil refining and 35mm photography all used to be gigantic industries. Our economy has handled bigger and far more wracking transformations--we'll muddle through this one as well.

It's probably too early to really forecast the cultural impact here, although I can speculate that the Amazoning of retail will further worsen the atomization of our society. I'm sure there will be other cultural impacts that we haven't even thought about.

Finally, remember that one of my central goals here at Casual Kitchen is to help consumers become better informed and more empowered. And there's a laughably easy solution for the coming consumer-unfriendly retail environment--and it's a solution anyone can adopt: just buy less freaking stuff. We have an absurdly consumerist culture here in the USA. Would it be so bad to tone it down a little? No matter how much market share or informational advantages online retail might have, they cannot take away our power and our psychological agency. We are the ones who willingly fish our credit cards out of our pockets and click "buy"--and therefore we consumers are the ones with ultimate power here.

What do you think?

Readers! Despite these secular trends (!), you can still help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!

What Could POSSIBLY Be Good About the Retail Apocalypse? Just This One Thing...

By now the phrase "retail apocalypse" has entered everyday parlance and everyone knows what it means: Amazon will destroy everything, leaving smoking holes wherever there used to be perfectly nice and harmless retailers.

It'll be just like what Walmart did twenty years ago, except Amazon will do it faster, meaner, and with more clinical detachment.

And when it's all said and done, there'll be a few Chipotles and mani-pedi shops left over--you know: service businesses Amazon hasn't yet learned how to replicate. There will be no other retail survivors.

This unmitigated disaster is the consensus scenario on what Amazon is about to do to the retailing industry. Cheery, huh?

Then again, to borrow a phrase from my old investing career: the consensus is often wrong but never in doubt. And it's generally a terrible idea to allow consensus thinkers to do all our thinking for us. So, could there be another, non-consensus perspective on the secular growth of Amazon and online retailing?

Here's one: it's an unmitigated blessing for the environment. The six bullet points below explain.

1) Stores can revert back to green space and habitat. Most stores simply don't have to be there anymore. Retail space could return to open space, and all those hideous-looking big-box stores, shopping malls and strip malls could go back to being trees, grass and the natural habitat they used to be. Or, perhaps even better, these built-over spaces could be reused for low-cost housing, public parks and playgrounds. Any of these uses would be far more societally beneficial than feeding consumerism.

2) Think about all the pavement. For every 1,000 square feet of retail space, there's another 1,200 additional square feet of paved-over parking space. This is pavement sufficient to park 3-4 cars, roughly. [1] This doesn't even count additional paved-over ground for road access, for truck loading/unloading, for firelane space, for space between parking lanes, etc. Every square foot of decommissioned retail space counts well more than double--possibly more than triple--once you consider accompanying paved areas.

3) Pavement and parking lots are disastrous for the environment. Pavement disrupts the soil's natural role in cleansing, draining and filtering our water. Parking lots and road surfaces also generate pollutant-heavy storm sewer runoff that typically goes directly into local rivers and lakes. Remember decades ago when we used to pollute our environment with industrial waste? Now we do it with pavement runoff. [2]

4) Redundant warehousing and distribution infrastructure eliminated. For every retail store you see, there's a largely invisible network of warehousing and distribution supporting it behind the scenes. This represents still more environmentally disruptive buildings, infrastructure and pavement, most of which are unnecessary. As a recent example of what I mean, consider the failed and now-liquidated retailer Sports Authority. It competed with Dick's Sporting Goods, often placing its stores in the very same malls and neighborhoods. Sports Authority had its own warehouses, storage, distribution hubs, trucks, inventory and systems--an unprofitable, unnecessary and entirely redundant national retailing infrastructure exactly copied by a nearly identical retailer. All totally unnecessary. Imagine all the other carbon-copy retailers in the innumerable subsectors of retail, and then imagine all the additional infrastructure behind the scenes that simply doesn't need to be there.

5) Redundant shipping/trucking/fossil fuel use eliminated. Merchandise doesn't magically travel to store shelves and display cases by itself. It needs to be trucked there. Worse, physical retailers also have to guess what you're going to buy, and in what unit volumes, and then ship it from the docks to warehouses and distribution nodes, and then to the stores themselves. All this inventory (assuming it isn't stolen, broken or damaged en route) is unloaded and set on display in brightly-lit, well-heated and completely wasteful indoor environments designed specifically to tempt you to buy. If the retailer is wrong about what the customers want (they often are), they pack it back up and then ship it all the way back to be dealt with yet again. This is an entire layer of shipping, distribution and display now made largely unnecessary by online/virtual storefronts.

6) Wasteful last mile customer driving reduced significantly. One of the largest single drivers (pun intended) of excess carbon footprint and energy waste occurs when customers drive to and from stores. [3] Most of this last-mile customer driving could and probably should be replaced by UPS, FedEx and the postal system, all of which already have well-scaled distribution systems in place which are far less wasteful and far more efficient than individual cars on individual shopping trips.

Concluding thoughts
Retail is entering a period of much-needed and long-overdue rationalization as we replace an old, outmoded way of selling things with a more efficient and less environmentally harmful way. We are vastly overstored in the USA, and for every unnecessary store, there's still more pavement, warehousing, distribution, trucking and redundant infrastructure behind it all.

Maybe the retail apocalypse isn't so bad after all.

Resources/for further reading:
[1] See this intriguing 1950's era parking/planning report giving standard assumptions for parking space/retail space ratios. Today, ratios probably run meaningfully higher still. Also note this gem of a quote: "We know of no existing [shopping] center that has too much parking."

[2] Scientific American on stormwater pavement runoff and its environmental impact.

[3] Intriguingly, the extraordinary wastefulness of last-mile driving is also one of the most compelling arguments against the local food movement. For more on this, see the readable and counterintuitive book The Locavore's Dilemma by Hiroko Shimizu and Pierre Desrochers.

Readers! You can help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!

Ingredient Bragging

A long-time CK reader, Stuart at Addicted to Canning, ran a post recently about recipes with pretentious, impossible to find, or inappropriately up-market ingredients.

For example, let's say you offer your readers a recipe that includes potatoes. But instead of just writing "potatoes" in your list of ingredients, you (unnecessarily) write "organic, local potatoes."

Here are some other examples:

* Instead of writing "milk" as a recipe ingredient, write "raw milk"
* Instead of "chocolate" (say for my Mole recipe) write "fair trade, organic chocolate"
* Instead of "carrots" write "local, organic Purple Dragon carrots"
* Instead of "pork shoulder" write "pork shoulder from traditional hog breeds finished on acorns"

I bet you think I'm joking about that last one. Sadly, I'm not.

This is a surprisingly common phenomenon in food blogging, and we need a new phrase for it. So allow me to coin one: ingredient bragging.

When offering a recipe to strangers over the internet, self-aware food bloggers know full well that they can simply write ingredients as is. If a recipe requires carrots, the word "carrots" suffices. If an individual reader wishes to use organic carrots, local carrots, carrots from their backyard garden, cruelty-free Purple Dragon carrots from their local hipster farm market--or, uh, just carrots--they can.

Now, I fear that any food blogger who actually needs to be told this is already beyond help, but... if you actually write local, organic Purple Dragon carrots as a recipe ingredient, you impose an obligation on your readers: an obligation to restrain themselves from throwing their laptops across the room. You've pretentiously given your readers a non-obtainable, expensive and frou-frou ingredient, and then forced them to ask various near-existential questions:

Does this recipe really require Purple Dragon carrots? 
What the heck IS a Purple Dragon carrot, and where could I possibly buy one? 
Can I substitute just... carrots? Am I a bad person if they're not organic?
How much longer is this urge to throw my laptop across the room going to last?

Your readers only just read your recipe, and already you've condescendingly given them all kinds of extra mental work.

But there's more to ingredient bragging than just pretension. And annoying your readers. And doubling their time spent shopping. And quadrupling their grocery bills. And replacing their laptops. There's more going on here.

If we really want people to cook at home--for health reasons, for economic reasons, for personal development reasons, for whatever reason--we want to make cooking accessible. Ingredient bragging does not make cooking accessible. On the contrary, it makes cooking seem far more difficult and far more expensive than it really is. It actually encourages people not to cook! This was Stuart's point in his post, and it's a good one.

But worst of all--worst, worst, worst of all--is the bald-faced status signalling. If you have the temerity to engage in ingredient bragging you are openly, transparently and unnecessarily signalling your status. You are overtly advertising that you are the type of person who of course always buys these high end ingredients. You are elevated and refined, and you want to make sure everybody knows it. In fact, it's so important that your high status be known that you will remorselessly make your readers' lives more expensive and more difficult in order to signal so.

Ingredient bragging: Just don't do it.

Readers, what are your thoughts?

PS: Every new annoying trend ought to have its own neologism. When I touched on this topic before here at CK, I called it organic-dropping, an admittedly stone-handed portmanteau of organic and name-dropping. Readers, I hope you like ingredient bragging better.

Readers! You can help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!

Is “Meet Or Beat” Pricing Anti-Consumer?

The four biggest British supermarket chains all offer some form of price-match guarantee, promising that their customers could not save any money by shopping elsewhere.
--from The Economist

Any savvy, empowered consumer will have a predictable response to claims like "You won't save money by shopping elsewhere." We laugh inwardly and disbelieve. Claims like this work out great for the claimer only if no one actually tests it.

So when a claim like this is made by four separate grocery store chains in the same region at the same time, it's a "what you talkin' bout Willis" moment. [1] A real credulity-stretcher.

Obviously, and by definition, not every store can be the cheapest. But every store benefits by fooling their customers into not checking!

Which takes us to the counterintuitive economics of "meet or beat" pricing.

When a store in your community adopts meet or beat pricing, it sounds at first like a great idea. Theoretically, you always know that you'll get the best price by going there. So, you can just go there.

Wrong! What real-world examples teach us is that meet or beat pricing is inflationary--it actually makes prices go up. In order to see why, though, you have to ask the second order question: And then what?

This is exactly what all the other competing stores in town are asking themselves: How can I compete when I know this meet or beat store will always match or beat my price?

It then becomes game theory situation. The other stores can try and cut prices, but they'll only hurt themselves. Worse, typically, the store adopting meet or beat pricing is usually that market's low-cost provider anyway.

You don't compete on price unless you can compete on price. So, the other stores must compete some other way. Thus the correct game theory response--if you're not the store with the lowest cost structure--is to raise prices. It sounds counterintuitive, but this is actually what happens in any market where one player embraces a meet or beat strategy.

In this case, the market creates its own pricing umbrella, and all the retailers win. At your expense. Your prices go up, even as you think you're getting the best deal in town.


A 30 Day Experiment with Mini Habits

Today's post returns to the elegant ideas of Stephen Guise, author of Mini Habits and How to Be an Imperfectionist. I wanted to share with readers the results of a month-long experiment I ran to test out the usefulness of mini habits, a cornerstone of Guise's unusually creative approach to personal development.

A quick word on what mini habits actually are--and the best way to describe them is by explaining what they're not. They are not aggressive resolutions like "READ 200 PAGES EVERY DAY!" or "RUN 10 MILES EVERY DAY!!!" or whatever. Those are exactly the kinds of unsustainable goals that don't become habits. They're too hard. They drain your willpower. And you'll resist them and eventually quit on them.

A mini habit operates under completely different incentives. The idea is to make the habit so small, so easy, that you have no resistance whatsoever to doing it. Guise gives his own amusing example of building a surprisingly robust workout habit based on the mini habit of doing one pushup a day. If he does his one pushup, he "worked out."

You might snicker at this at first, but once you think through the psychology of it, you'll realize the sheer elegance and intuitiveness of such a laughably easy goal.

First, put yourself in the place of someone who never was able to make fitness a regular habit, as Stephen Guise was for many years. A "one pushup" mini habit was a device that got him to start doing something. What typically stops us from doing things (and produces procrastination as well as frustration with ourselves) is our resistance to getting started.

This is particularly true if the goal has some enormity to it, like READ 200 PAGES TODAY! Unfortunately, the subtext to a goal like this is: AND IF YOU READ ONLY 199 PAGES YOU ARE A COMPLETE LOSER!

In stark contrast, the mini-goal mechanism lowers the entry fee. The goal is something easy--hilariously easy--to do. And because it gets you started, you sidestep procrastination and inner resistance.

And, all along you have the option to continue or to quit. You can do your one pushup and stop. Or you can do a few more, if you want. Or a lot more. It doesn't matter! You've met your goal already so it's all gravy. It takes away all the pressure.

This totally altered Guise's mental construct of what "working out" meant, and it changed his image of what it meant to build an exercise habit. Moreover, setting the bar so low annihilated his exercise perfectionism which had been a substantial obstacle between him and fitness.

Contrast this with a person who does 80 pushups but feels like a failure because he "failed" in his goal of doing 100. As somebody who tried (a few times) to follow the 100 pushups workout (and for whatever reason I never was able to get much above 70 pushups in a row), this resonates with me. I would do 74 pushups yet feel like a putz because I couldn't do more. Sad! It just goes to show how rubber our yardsticks can be when we measure ourselves.

Note also: It shouldn't be a surprise that under this kind of self-imposed negative reinforcement, I kind of... slipped out of the habit of doing pushups. Which takes us to the key psychological takeaway here: it's impossible to build a healthy and sustainable habit out of something that's a source of failure and frustration.

Okay. Clearly, there are many reasons why the mini habit concept makes intuitive sense. But I still wanted to test it for myself. And what I didn't know was there was yet another gigantic advantage to this seemingly innocuous mental hack. I'll get to it in just a minute.

So, I picked two imperfectionist-friendly mini habits and trialed them both for 30 days, just to see what would happen. My mini habits were:

1) Write for 20 minutes
2) Read 25 pages of any book

The thing is, lately, I haven't been reading as much nor writing as much as I would like. Entire days would go by where I wouldn't write at all, and I'd often go a day or two not really reading much in the form of long-form works--like books that really teach you and change your thinking in ways short-form reading cannot.

I wasn't satisfied with this. At all. There's so much to learn, so many insights to gain out there... and yet I seemed to be passively letting myself waste time consuming useless information like the news, or peoples' political rants on Facebook.

So, I set goals that, for me, were the equivalent of "do one pushup." After I reached them, I'd permit myself the freedom to stop, yet grant myself the success of having met my goal and taken a small step forward.

I'm guessing readers conversant in the psychology of goal setting already know where this is going.

Had I merely met the laughably easy minimums for each day, over 30 days I should have read approximately 750 pages (30 days x 25 pages) and I should have written for about 600 minutes, or 10 hours (30 days x 20 minutes). This is nothing to be ashamed of: it's actually quite a decent amount of reading and writing.

But what actually happened was I read a grand total of 1,195 pages and wrote for about 1,200 minutes. I exceeded the reading mini habit by some 60% and crushed the writing goal by 100%. More importantly, it felt easy. Weirdly easy. A lot easier than I expected.

We mentioned before the central idea that these mini habits served to get me to sit down and start. In both domains, reading and writing, it often got me into a groove, but not always. Some of those brief writing sessions ended the minute the timer went off: I wasn't feeling it so I quit. But that was okay too: I met my minimum, so I was cool with it. I didn't castigate myself. (Side-benefit: no negative reinforcement!)

On some days however, I kept going. Sometimes, while writing, I never even heard the timer go off as I slipped effortlessly into a glorious flow state. Interestingly, I never knew which type of day it was going to be until I sat down and started. Which meant there was a strong positive incentive to try each and every day.

The same thing happened with reading: many of the days I read just the minimum, and that was okay. But on other days I'd get engrossed and read double, triple or even five times that minimum page count. And once again, I never knew which day was going to be which.

This was an unmitigated success, and I recommend to readers to try out their own mini habits in domains they wish to explore. Who wouldn't want to easily fit 20 hours of writing and the reading of some 5-6 books into a given month, and have it feel easy? These mini goals, they really work.