Wednesday, April 27, 2011

Don't make a peep: the high volume cost of quiet consumerism

I was listening to the radio this past Sunday, and I heard an Easter fact that was a bit hard to swallow.

According to the National Retail Federation, the average consumer spent 131.04 on Easter items this year, up from $118 last year. That translates into $14.6 billion in Easter merch.

That's a lot of peeps.

And bunny-shaped chocolate. And cards. And plastic grass.

All of this Easter spending got me thinking.

What does the average American spend on other discretionary items?

To be fair, discretionary spending is subjective. For instance, there are many people who (for some reason I can't fathom) don't drink coffee, or simply have an occasional cup after dinner. For those people, coffee is discretionary.

Taking coffee off the table isn't an option for me. So in my world, coffee is a must-have. But going to Starbucks is discretionary.

It's not discretionary for a whole lot of people, though. Starbucks reported a record $3 billion in net revenue for the first quarter of 2011.

After all that coffee, who doesn't enjoy a refreshing breath mint? And what's better than the curiously strong Altoid? The sparkly zing of an Altoid is resonant in the mouths - and wallets - of consumers, racking up $48.1 million in sales last year.

Starbucks and Altoids aren't the only companies seeing market share increases and healthy bottom lines despite this tenuous economy.

Domino's Pizza is raking in the dough. A whopping $1.6 billion last year, in fact. That's an 11.9% increase in sales from 2009.

What better beverage to wash down this Domino's news than a Diet Coke? Just yesterday, the folks at Coke released their first quarter information, and I suppose it's no surprise that Coke products experienced a 6% growth in sales in North America during the first quarter of this year.

We're hooked on Coke. The average American drinks 412 Cokes a year, and that number doesn't even factor in the Diet Coke consumption

Hershey's first quarter net income is up 9%.
Yum Brands, Inc., which has Pizza Hut, KFC, Taco Bell and other eateries under its umbrella, announced record first quarter earnings earlier this month.

I'm not cherry-picking companies here. I've just thought about what items we buy that we don't necessarily need, and I've done a bit of digging.

I could go on and on with my findings, but it's safe to say that a trend has been identified. Cheap, discretionary products seem to be faring quite well despite what's happening with the economy. Maybe we buy all of this stuff as some kind of self-soothing reward.

The reality is that we quietly, habitually, willingly spend billions and billions of dollars every year on items that we could easily live without.

If word gets out to Domino's, Coke, Starbucks and the others that we know we don't need what they're selling, things could get ugly.

But I doubt that's going to happen (she wrote as she cracked open a Diet Coke).

And those companies are banking on it.

1 comment:

  1. Hmm, I'm pulling down the average for all these companies. I don't use any of them. Need I use discretion?