May 30, 2016The Fundamental Things (STILL) Apply
By Cliff Ennico
Last year, they shut down the Post Office in our town.
Well, not actually . . . what they did was consolidate three branch offices into a single Post Office, which they located in a part of town that's absolutely impossible to get to, especially during rush hours.
What's interesting is what they did with the Post Office location they shut down. Rather than use it for another governmental purpose, they sold it to a local developer who renovated the building, divided it in half, and leased it to two tenants:
- A supermarket offering all-organic, locally sourced produce, meat and other basic groceries (part of a national chain that competes with the likes of Whole Foods, Sprouts and Trader Joe's)
- What we used to call a "greasy spoon" restaurant offering hamburgers, fries and other comestibles that are great (I'm told) when you are suffering from a hangover.
Both tenants opened their doors about six months ago. Last week, I read in my local newspaper that the "fresh food" supermarket had closed its doors. The greasy hamburger joint, on the other hand, is thriving and planning to open a second location elsewhere in town.
The supermarket advertised aggressively in local media, through direct mail and in Val-Paks
, offering discount coupons of as much as $15 off of some items. I personally never visited the store (it's too far away from where I live), but friends and neighbors who had said the store felt "cramped" and priced their merchandise way too high (who discounts groceries by $15?). The fact that Whole Foods and Trader Joe's have locations in town didn't exactly help.
As for the burger joint, there are several fast-food hamburger restaurants in town, including all of the national franchises, and a fair number of Irish-themed pubs and other "red meat" oriented eateries. As it happens, I have visited the burger joint - their prices aren't cheap, although the burgers are terrific, really gourmet "steak burgers" with all the trimmings.
What exactly went on here? In my opinion, this is a classic case of how the fundamental laws of market economics stubbornly persist even in the so-called "new economy".
If you took a basic economics course in high school or college (microeconomics
, to be exact), the very first thing you learned were the laws of supply and demand in a market-driven economy. When demand exceeds supply, prices go up. When supply exceeds demand, prices go down. Demand decreases when prices are raised significantly. Demand increases when prices are decreased.
Whenever I visit my local (regular, not "fresh") supermarket, and want to get to the milk, bread, butter, orange juice and other "basics" quickly - you do know, of course, that all supermarkets locate these at the very back of the store so you have to walk the entire length of the floor, picking up impulse purchases along the way? - I always go down the organic food aisle, because there's never anyone there and I know I won't be tempted to buy anything there.
Lest anyone accuse me of being overly cynical (horrors!), there's no question we all need to eat healthier, fresh, organic, non-GMO, sustainable, low-calorie, low-fat, throw-in-your-favorite-buzzword-here food. People aren't stupid. They know the stuff at the burger joint will not help them live longer. If organic food cost the same as the "usual junk," I have no doubt many if not most people would opt for the organic, and that "fresh food" supermarket would have wiped out its local competition.
Sadly, as we all know, organic, "healthy" food comes at a premium price, and people don't want to pay it. They want to live and eat healthier, but they also are value- and cost-conscious. The burger joint offers good value for what they're selling; the "fresh food" supermarket simply didn't.
And we're not just talking about food here. Recent articles in The Wall Street Journal indicate that sales of gas-guzzling SUVs and other large vehicles are way up because of today's historically low gas prices. Now, we all know that sooner or later gas prices will go up, and these larger vehicles are terrible choices for the environment. But man, do they look good on the highway, and you feel safer riding up higher surrounded by ten tons of metal, don't you?
Sometimes the only way to get people to do the right thing is for the Government to mandate it. But without a solid economic incentive, even the Government can't change people's behavior. Look around your neighborhood. A lot of people are putting solar panels on their roof, seriously uglying up their homes and jeopardizing their "curb appeal". Why? Because of global warming? Or because of the federal solar energy tax credit and the potential for lower utility bills?
Remember that relocated Post Office in my town? The local UPS Stores and FedEx outlets have reported a significant increase in volume since that happened. Yes, they're more expensive than the Post Office, but they're more conveniently located and you get in and out of there much faster.
Now, if only they could do something like that for organic produce . . . Cliff Ennico
) is a syndicated columnist, author and host of the PBS television series 'Money Hunt'. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com
. COPYRIGHT 2015 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE, INC. Permission granted for use on DrLaura.com.
Posted by Staff at 9:53 AM