The ART Of Business

The Myth of Consumer Choice

For years, it’s been preached from the highest heights that customers have more choices at their disposal than any time in human history.

We’re told that continuous innovation, greater efficiencies, and the world-at-your-fingertips via the Web are all unleashing the “Long Tail” of more options and choices.

But saying so doesn’t make it true.

Consider this: Since its 2005 takeover of Gillette, P & G now controls the total U.S. market of the following categories:

• About 60 percent of laundry detergent
• More than 75 percent of men’s razors
• Nearly 60 percent of dishwasher detergent
• More than 50 percent of feminine pads
• About 50 percent of toothbrushes
• Nearly 50 percent of batteries
• Nearly 45 percent of paper towels
• Nearly 40 percent of toothpaste
• Nearly 40 percent of OTC heartburn medicines
• Nearly 40 percent of diapers
• About 33 percent of shampoo, coffee, and toilet paper

(From Barry Lynn’s Cornered: The New Monopoly Capitalism and the Economics of Destruction (John Wiley & Sons, 2010) p. 43.

To further limit choice, think about who is P&G’s biggest customer: Wal-Mart. The retailer is America’s biggest seller of books, soda pop, CD’s, DVD’s, guns, tires, clothing and almost any mass market consumer good you can imagine.

Even in “specialized” areas like eyeglasses, take a look at Luxottica. Until the early 1990’s, buying a pair of glasses was often done at a local “mom and pop” store. Then Luxottica entered the U.S. with the 1995 purchase of LensCrafters.

Again, Barry Lynn:

“In 1999, the Italian firm began to expand in earnest, buying the Ray-Ban brand from Bausch & Lomb. In 2001, Luxottica bought the Sunglass Hut chain of nineteen hundred stores. Then three years later it delivered its knockout blow, seizing control of Cole National, which owned Pearle Vision, as well as the optical departments at Dears, Target, and JC Penney… In June 2007, the company picked up Oakley and three more retailers including Bright Eyes and Sunglass Icon, the main competitor of Sunglass Hut.”

We could go on and on about products that are controlled by only one or two major players in a given market.

And we will over the coming months….

It is important to do so because of the tectonic shift which has taken place in the global business landscape over the past 20 years.

In short, control of so many of the products we buy is increasingly in the hands of a very few massive companies (read: near monopolies).

This, by definition, limits the real choices we have and funnels more and more commercial activity –and power– to the Megas.

TAGS: Supply Chain
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