OVERSEAS GOODS SPREADING TO SUPERMARKET RETAILING

David Merrefield

Certain goods assembled and manufactured outside the United States have become so ubiquitous that it's difficult to find their domestically made equivalent.

That's especially true of textiles and apparel. Indeed, this country's capacity to manufacture such goods has atrophied nearly to the vanishing point. That's because few consumers care to support higher price points needed to prevent the move of manufacturing capacity offshore.

To some extent, supermarkets have been immune from this since many of the channel's products are superior when domestically made, or there are few offshore-made equivalents. That's the case for consumer packaged goods, less so for other categories; produce, for instance, is sourced from wherever favorable growing conditions are being experienced. Another exception is general merchandise categories, particularly seasonals.

That brings us to the news feature, starting on Page 23 of this week's SN, which shows why many supermarket companies are now sourcing seasonal nonfood merchandise from China. The explanation is a simple one. Discount chains have been importing goods from China for many years. During that time, quality has improved while price has continued to fall.

Let's summarize the situation with these quotes drawn from the feature: "Deep in the soul, the shopper would rather have American-made goods, but it's becoming less a reality; the [price] gap is getting too great." Going further, "The American consumer wants quality, and where it comes from is not an issue anymore."

How great is the price gap? The "China price" is as much as 50% less than goods obtained from domestic sources, and the quality is as good, if not better. Take a look at this news feature for much more.

ALBERTSONS OPTS OUT

Readers who took a careful look at the news coverage of Albertsons in last week's SN may have noticed the truncated report on that company's annual meeting. The report weighed in on the light side because Albertsons barred all reporters from its meeting.

It's the right of companies to do that, but, at the moment, Albertsons is unique among its peer group of supermarket retailers in exercising such an option. Why would Albertsons do this, especially since its meetings tend to be perfunctory? More than that, Albertsons had a comparatively positive story this year.

Companies sometimes bar outsiders from annual meetings to establish the principle that certain persons can be excluded, such as, say, copious numbers of union representatives or bizarre gadflies. Generally, though, that doesn't work since malevolent visitors come equipped with a share or two of stock. That option is also available to reporters, of course, and represents a solution to this problem.

The odd thing about forcing well-intended meeting attendees to buy a share of stock, apart from its pettiness, is that the cost to the company to service the share with quarterly reports, proxy statements, annual reports and the like exceeds the value of a share, in many instances, such as this one. The more sophisticated approach, and one employed by many businesses, is to permit guests to attend the meeting, but forbid them from asking questions. This is the superior option from any point of view, and is far better than running the avoidable risk of alienating a key constituency.