No, You CAN'T Have It All

I completely understand the financial pressure retail executives are under to produce profitable results for their shareholders, and I’m not privy to what happens in their boardrooms. (While I am a true-blue capitalist and free market proponent, I have to admit no sympathy for shareholders in large companies that are currently experiencing pain and didn’t put money aside for these hard times.)

But my impression is that there are many executives – most notably Whitey Basson from Shoprite-Checkers – who have been honest and ethical in their communications with customers, and most importantly, they have cut costs to the bone. They have reduced the cost to serve customers, and taken advantage of all efficiencies that are possible – and more – and they seem to pass this straight onto consumers. As a customer I don’t believe there are any signs that they are trying to pull the wool over my eyes, to confuse me with false promises in their advertising, or too fool me that I am getting much more than I paid for.

They seem to be completely in touch with the most important people in their business – their customers. They know how food inflation has rocketed, and are empathetic to consumers’ pain. For example, they have not introduced any enormously expensive “customer loyalty” programmes, preferring to reward all customers.

That’s not always the case: one of their competitors has spent in excess of one billion rand just to get their twin programmes up and running to create customer loyalty, and we have to jump through hoops to redeem R4.85 on our next purchase, even while we burden ourselves with yet another loyalty card.

So what brought on these reflections for this column? The final straw was that I recently purchased some parsley from one of the premier retailers, and after chopping and adding it to my creamy pasta sauce, I tasted mud and experienced grittiness on my teeth. My family forced me to throw it all away. (I think my dogs enjoyed it.) In the greater scheme of things, I’m not going to become poor because I threw away the sauce, but I was furious.

I do have some sympathy for the differentiated, high-quality-for-a-high price businesses. After all, my own business has performed in this premier zone for three decades now. But our clients’ tight business budgets have meant our target numbers are also down. I responded almost immediately with alternative plans for them. (For example, South African clients select from a range of possible activities that will suit the talks, workshops and long-term consulting work we do. With the desperate slide in our rand currency, overseas work in developed countries – which I pursue much more of now – has meant that the SA “reductions” have balanced out.)

But when I noticed that a few couple of the premium retailers started reducing quality and quantity, but not prices, I suddenly started feeling quite agitated. That agitation needed more specific research and evidence, so we started looking at what was available. Four important issues came up.

  • First, there has definitely been a reduction in quality, quantity and variety of many fresh products or their derivatives. For example, they put bad fruit, vegetable and avocados at the bottom of the tray. There is much more fat in the meat – even that which is sold as “lean.” Bread comes in squashed little bags that distorts slices so they don’t fit into the toaster properly.

The prepared convenience foods get filled with cheaper foods like grains, vegetables, and more chemical preservatives, (especially sugar,) to preserve it for longer. Frozen foods contain more water in the form of ice – not advertised on the packaging. (This was the easiest on to prove: simply buy the frozen chicken or peas, looking carefully at the eight advertised on the pack, let them thaw, weigh them, then cook them, drain them, and you will see a reduction of up to 40% of the mass.

They have dumped many quality suppliers who refused to compromise on quality, or squeezed them to do what they want. I can think of at least one brand of sausages that disappeared, and another famous brand of pork products, whose ribs are never available.

Other suppliers – think crisps, chocolates, Biltong, tomato sauce, corn flakes, frozen foods, as well as the non-food items – have reduced the weight and size of product inside, but the packaging seems to have often remained the same. I also noticed that eggs have thinner shells, which one honest staff member stated was because the chickens aren’t fed calcium or something important for the production of harder shells.

  • Second, and here’s the thing: prices have not been reduced concomitantly to the other reductions in quantity and quality! I feel quite ripped off, to tell you the truth, buying commodities at a premium price – with nothing attractive to make up for it. Shoprite-Checkers doesn’t pretend to be anything more than what they are, and I love that integrity.
  • Third is that there are many advertising campaigns and promotions in the businesses that try to persuade consumers that everything is “normal,” or “better,” but it’s a lie. A whole family can eat for under R100 declares one promise. We will refund you the difference if we think you have been overcharged, says another. I’m willing to bet that more than 80% of customers don’t redeem these extras. Tell me if I’m wrong.
  • Fourth is that the service and customer experience levels are shockingly poor. Queues seem to be much longer than ever before. (I notice that all the signs that used to say, “If you haven’t been checked out in five minutes, call the manager on this cell phone number,” have all disappeared. Staff just don’t care to be polite or helpful. In one disturbing trend, we are asked to scan and pack our own groceries. There is incessant noise from the loudspeakers – not nice music, mind you, but constant announcements to staff, and too many promotional messages to customers. For a 59-year old like me, I just don’t want to go there anymore.

What’s the answer to this dilemma? In my mind, it’s quite simple:

  • Be honest! Stop pretending that everything is as usual – especially in your advertising and promotions. Admit your numbers are down, and that there won’t be the same quality of products, services and experiences as before – but prices will match the reduced performance.
  • If you don’t want to do that, and you want to keep your prices at a premium level, then don’t try to fool your customers that it is the same. They know there is a difference, so you have to keep trying harder and harder to keep them loyal. You will definitely lose the customers who cannot afford to shop at your business for now, but they will be back as soon as they can afford it again.
  • If you have made the decision to not erode your premium brand, how about launching a completely new and exciting low-cost brand, replacing stores in some suburbs with those that everyone knows are “cheap and dirty?” Learn, for example, from the motor car industry, where some brands have different sub-brands that everyone knows are entry level, (under R100 000, but as customers get older and earn more they can upgrade to a vehicle that costs more than R1,5million!
  • Empathize with your customers’ pain by ceasing to put shareholders first. Focus on your customers – and your people for that matter.

My wife and I have decided in principle to not support the retailers that have lied to us, or tried to fool us. It has been a very small inconvenience, (and I don’t think we’ll be boasting about this to our friends too much!) But saving around R1000 a month and avoiding the stress of constantly moaning about how we were ripped off again has made it well worth it.

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