Retailers; the average price of a basket of groceries is trending up! Are your profits?

July 15th, 2010

The economy, the economy, the economy! Is anyone else as tired as I am of listening to this excuse for everything?

One thing that news print (I still love newspapers) offers that internet based news does not is the tactile fell of holding the paper open and scanning all items on those two pages quickly. Sometimes you actually find pearls that really bring in to question the logic or understanding of the relationships between seemingly unrelated articles. In data analysis we call these tangential or affinity relationships.

Now back to my original premise. I was reading my local ARIZONA REPUBLIC business section the other day and two articles jumped out at me. The first was titled “Arizona Grocery prices continue to climb”. It was on the front of the first page in the business section. The second was titled “Technology helps Valley logistics company to thrive”. It was on the bottom of the second page of the business section right near DILBERT. In this case, that is appropriate.

The first article discussed the fact that prices were rising because of an improving national economy (why?) and higher energy costs (this means fuel). The second article discussed the use of technology to optimize the flow and storage of merchandise within the ground freight industry by selecting the best transportation options.

As I work in this space, I was already thinking (duh) when I saw the title of the two articles. It occurred to me during reading them that the authors could have combined these two articles to come up with something great that might be titled Retailers are finding better ways to keep retail prices flat during an improving economy by using logistics technology. The byline might read something like this. Retailers can improve profit without raising prices and gain market share.

I never would have found these articles on line or had them jump out at me like they did if I did not still read newspapers. Jay Leno always uses news articles in his humor that causes one to think. This is my version. So think about this if you are a retailer. Why do your prices need to rise when the economy improves? The truth is they don’t.

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