Don't abuse numbers!

Last summer, on an inbound flight to NYC, I was seated next to an employee of a numbers-driven consultancy. His assignment was with a large grocery chain in the US, for which he had to come up with what else if not a strategy to turbo-charge stagnant revenues. The problem seemed to be that his numbers did not add up beyond the usual suspects, some improvement here, some scale there, or, in other words, more of the same albeit to a greater extent and at a larger scale.

My suggestion at that time was as simple as one word can bear it: organics! My word fell on deaf ears. Then, I tried to counter his skepticism with some off-the-cuff quantitative proxies: organics have higher margins, are the fastest growing segment, and so on. Perhaps, I continued, if the organic goods were to be eventually private-labeled the vendor would stand to make even more of a profit. He followed on with a whole line of argument that I could sum up as "organics are too risky."

Fast forward to a visit at Sam's Club this past week: 5-lb. bags of organic apples selling at the price of regular apples. First and foremost as a consumer, I hope this is just the beginning of a new stage in grocery retail, and vendors will come to understand that what is good for the consumers will be good for them, too. Secondly, I hope there will be enough independent groups to watch over the increasing number of 'organic' claims from vendors. Thirdly, I hope the days of that business, dear to some and known as whole-paycheck to others, are numbered; in the end, an apple is just an apple and should stay an apple, in price that is...

P.S. Sometimes the most numbers can reveal is the need for change.

1 comment:

fCh said...

On March 25, 2006 AP comes up with the following piece:
Wal - Mart's Organics Could Shake Up Retail

Here's an excerpt:

Wal-Mart Stores Inc. is throwing its weight behind organic products.

Putting new items on the shelf this year, from organic cotton baby clothes to ocean fish caught in ways that don't harm the environment, is part of a broader green policy launched last year to meet consumer demand, cut costs for things like energy and packaging and burnish a battered reputation.

A new Supercenter that opened this week in the Dallas suburb of Plano features over 400 organic foods as part of an experiment to see what kinds of products and interior decor can grab the interest of upscale shoppers.

In other words, when the difficulty to capture the future in some quantitative model arises, astute retailers can still find a way to innovate. In this instance it is about testing small and learning greatly.