We’re on the verge of a massive sea change; it’s festering. Companies are scrambling to find the next money maker to compete, to retain earnings, to be profitable, to stay clean and away from the eagle eye of Uncle Sam litigation and taxes.
Everyone is trying to make a buck; yet, the lowliest of low is regarded as the fall guy. Who is at greatest risk of toppling and never recovering? It’s not big business, that’s for sure.
It’s you, me, we, us – the consumer.
Brands Are In Bed With Investors
They have to be; that’s how the bread and butter get served at breakfast. To make investors happy and to finance struggling business units, corporations are de-volumizing everything possible.
For years now, we consumers have noted smaller cereal boxes, candy bars, beverages and personal hygiene products. Now, even Kimberly-Clark and Proctor & Gamble are desheeting.
Kimberly-Clark Corp. is now selling “bulkier” yet “stingier” Kleenex tissue, says this story in the Wall Street Journal July 25, 2013, “Desheeting” Shrinks Rolls, Plumps Profits. Each box of Kleenex has 13% fewer sheets with higher or the same retail prices. Taken from the story, “Kimberly-Clark executives told analysts that they expect the practice to benefit the company’s consumer-tissue unit in the second half of the year.”
Several weeks ago, I bought a 12-pack of Stella Artois. When I popped a coldie, the bottle was 11.2 ounces rather than the customary 12 ounces with the same or higher price for this premium beer. I wonder how much the manufacturing expense was to retool all the factories to make the green bottles smaller? How about that packaging? Did they save two inches of cardboard on the carton?
When a consumer gets disgusted and turns to brand B to find a better price point with more volume, the quality sucks. We either pay more for less to get the quality we’ve been spoiled with, or we pay the same for more and poor quality. What’s it going to be?
Big Brands Are “Suffering”
As we consumers grapple with how to shop, here’s a peek at how big business is suffering. The cover page of the Wall Street Journal’s Marketplace section July 19, 2013 is telling:
Struggling Washington Post Buys a Furnace Company
The Washington Post Co. bought Forney Corp. an 86-year-old supplier of parts and systems for industrial utilities like power plants. What fascinating news; instead of the print media company engaging with new media the likes of app developers, gamers, or a promising start-up, it plunked down an undisclosed sum to get into grease and soot. I hope it works well for its diversified portfolio.
Ever hear of the Surface RT tablet? Yeah, few apparently have, as Microsoft took a $900 million hit for its Surface that hugely missed revenue and profit expectations. The company cites the “soft personal computer market” as the culprit; yet, it brought in $19.9 billion in revenue.
Ever hit a Best Buy and stroll through its computer department? How many devices, laptops, notebooks, tablets, PCs, Apples, ginormous phones, and other screened devices are there? Yeah, let’s see if you ever noticed that Surface RT tablet that launched well after the iPad 2.
Oreo, Meet Dorito
PepsiCo has a market cap of about $134.2 billion and Mondelez has a cap of $54.4 billion. A shareholder suggested the two companies merge and then spin off Pepsi’s beverage business. Apparently, consumers are getting grumpy about Tropicana, Gatorade and Pepsi soft drinks. Do you think it has anything to do with smaller sizes and higher prices? That means more lucrative snack foods may be a better future for the corporate giant (says this shareholder to the chagrin of Wall Street).
So What’s the Matter With Shale Gas Anyway?
Says John Bussey in his column, “Shale gas and oil are widely viewed as one of the biggest forces to hit the U.S. economy in modern history. Total U.S. gas production has rocketed 33% since 2008 and oil 46%, driving down energy costs.”
Really? I’d like to feel that “driving down energy cost” thing in my pocket book on a daily basis. Can we just have a moratorium on raising gasoline prices 20 to 40 cents in a swoop depending on the news of the day, whether it’s a holiday weekend, or just because someone lit a match? Oh, this isn’t that discussion? Sorry, I couldn’t resist.
What’s The Point?
If you enjoyed the read and came down this far to begin to help me speculate on the sea change coming, please do share below your thoughts on these 5-7 headlines and somewhat anecdotes. We’ve got trouble brewing, and it’s all pointing at the consumer.
Consumers are tired, and no one has the money for anything extra.
There is an entire generation of millennials struggling with student loans and lack of ability to finance a mortgage. They don’t own health care insurance. They struggle with job stability if there are any jobs. The very core of that generation which is supposed to finance the country’s future is unable and unstable.
These big brands that have been around for a century and more? They have to think differently and look at the demographic of the new consumer. There is no more brand loyalty, brands. I know you know this, but what are you doing about it? The 20-something is going to buy the cheaper toilet paper with more sheets, just to snub their noses right atcha. Do brands care? Heck, maybe the generics are really big brands in disguise.
What thoughts might you have on this one?
Thanks for reading my 500th published blog post at Soulati-‘TUDE!
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Wow, 500!!!! Congrats. Oh and apparently I’ve been a millennial these last 20 years, didn’t know it.
Will not get started on the oil companies jacking gas prices whilst taking million dollar tax breaks, other million dollar write-downs – then posting record profits, stock bumps blah blah capitalist douchebuckets. That’s everyone, everywhere. Everyone wants as much as they can for as little as they can pay. Cheap as clients. Ahem..
FWIW Tacking on to your list, did this start or really pick up momentum with ice cream and those ‘quart’ or ‘half gallons’ quietly shrinking as we kept paying the same price? It’s a machine but it’s not like we can really not buy toilet paper. It’s also a case of supply/demand; the smarter phones made texting easier therefore more in demand, so carriers realized they could cap, limit, jack up price plans – and people would pay. We the consumer sometimes fight back, others we go w/ it. I miss the ‘good old days’ when we really did pay less and got more at WDW; but I still go. So back to it’s ‘us’ we ourselves are too happy to play the dumb consumer role. So when that millennial or hipster or anyone complains about how expensive Whole Foods is, all they get from me is a nice healthy eyeroll IYKWIM.
3HatsComm How did you know I’ve been missing you? Said today on a Skype call that I have not visited and need to boost my engagement and ‘raderie. Rather than reading stupid books at night (which calms my errant brain), I should be on blogs commenting and sharing on Triberr.
THANK YOU for coming!
You’re so right. We all have choices as a consumer; yet, the backhanded way the companies are making $$ off the weak does suck. Yes, the gas crap. We’re exporting our oil now; why do we remain over $3/gallon? Don’t they know how that would help the economy if the consumer had more $ in their pockets to spend on other goods and services?
I am verklempt.
Do they actually think consumers aren’t going to notice this kind of desheeting? I’ve seen studies saying that during this recession, consumers are looking and picking purchases more carefully, to make sure they get their money’s worth. And the indication is that this behavior will continue post-recession. So, I think these companies are just shooting themselves in the foot.
Neicolec I have a feeling we’re in recession the rest of our lives! We got out, we’re back in and everyone still hurting to make ends meet, most of all us. I cannot sustain growth with the expenses I face as a SMB; I want to hire people to help me to be able to free up and then the costs become exorbitant.
As a consumer and single-parent household, I am able to spend higher dollar for better quality; however, if I had a family of your size, there would be no way at all.
I’m agog over these continued practices. And, as per Queen D below, the gas price shot up 35 cents overnight. Why? Because it’s Wednesday?
I think it’s true that as consumers, when we see these trends, we flee to other brands. But does it become rearranging deck chairs on the Titanic? It sure feels like that to me. I felt bummed reading your post (no fault of your own) so instead I’m going to chide you gently for drinking Stella Artois.