The real Trader Joe’s

An interesting story at CNNMoney.com goes behind the scenes at Trader Joe’s. This trendy grocery store certainly has its fans; I had one friend in graduate school who seemed willing at times to drive 2 or 3 hours to shop at one.

Some of the details about the company:

Few customers realize the chain is owned by Germany’s ultra-private Albrecht family, the people behind the Aldi Nord supermarket empire. (A different branch of the family controls Aldi Süd, parent of the U.S. Aldi grocery chain.) Famous in Germany for not talking to the press, the Albrechts have passed their tightlipped ways on to their U.S. business: Trader Joe’s and its CEO, Dan Bane, declined repeated requests to speak to Fortune, and the company has never participated in a major story about its business operations.

Some of that may be because Trader Joe’s business tactics are often very much at odds with its image as the funky shop around the corner that sources its wares from local farms and food artisans. Sometimes it does, but big, well-known companies also make many of Trader Joe’s products. Those Trader Joe’s pita chips? Made by Stacy’s, a division of PepsiCo’s Frito-Lay. On the East Coast much of its yogurt is supplied by Danone’s Stonyfield Farm. And finicky foodies probably don’t like to think about how Trader Joe’s scale enables the chain to sell a pound of organic lemons for $2.

Companies are often made or broken based on their image and it sounds like Trader Joe’s want to keep a low corporate profile while building upon its popular name.

A question: would the store’s loyal customers not shop there any longer if they knew where the food really came from? Or knew more about what happened behind the scenes?

German copyright > English copyright?

Der Spiegel has posted a summary of the work of economic historian Eckhard Höffner (see here for one of Höffner’s presentations).  As Der Spiegel summarizes Höffner’s question, “Did Germany experience rapid industrial expansion in the 19th century due to an absence of copyright law?”  Höffner argues that England’s draconian 19th century copyright laws resulted in a “chronically weak book market that caused England, the colonial power,to fritter away its head start within the span of a century, while the underdeveloped agrarian state of Germany caught up rapidly, becoming an equally developed industrial nation by 1900.”

As Matthew Lasar points out in his analysis for Wired, however, Höffner’s thesis is vulnerable to correlation vs. causation objections.  For one thing, many European countries (and their colonies) had growth outpacing England’s during this time period, and many of these countries also had strong copyright laws.

I find one of Lasar’s other objections to Höffner’s thesis less persuasive:

…when we put all the legal and economic comparisons aside, we have to ask how much the United Kingdom really suffered from its allegedly stultifying copyright rules. Sure, the nation’s economic growth declined compared to Germany and the US, but it certainly turned out some great literature; we’re still talking about the country of Charles Dickens, John Stewart Mill, Jane Austen, Lewis Carroll, and Arthur Conan Doyle.

And don’t forget that this is the nation whose scientists discovered the electron and the precise behavior of heat, explained the nervous system, electromagnetic laws, and the true nature of evolution, and whose inventors pioneered modern steel, the telegraph, the suspension bridge, and (over a century later) the theory of Internet packet switching as it is widely understood today.

I’d be curious to hear what you think.

Predicting working class job growth

Richard Florida (of The Rise of the Creative Class fame) writes at Atlantic.com about where working class jobs will increase in the future.

The largest metro areas are expected to have the greatest amount of blue-collar job growth. Why these places are expected to have this kind of growth is left unexplained.

Overall, Florida describes the situation:

The good news is that the U.S. will continue to create relatively high-paying working class jobs. These jobs will continue to provide good livelihoods for the workers fortunate enough to have them. The bad news is that their rate of growth will be sluggish and not nearly enough to provide the amount of good, family-supporting jobs required to undergird a middle class of lower-skilled workers.

Takeaway: there will be some good blue collar jobs in the future – but they will be limited.

Dynamic pricing at sporting events

Kevin Arnovitz at Truehoop reports that the New Orleans Hornets are embracing variable pricing for tickets for the upcoming NBA season. But more interesting is the link to a story about tickets sold by the San Francisco Giants, the first team to completely embrace dynamic pricing.

Last season (2009), the Giants played around the concept of dynamic pricing. Based on demand for tickets for each game, the prices in this section of about 2,000 tickets would fluctuate. When I was in San Francisco last August and was looking for Giants tickets, I saw this section online and was intrigued by it. (For the record, I bought tickets in other seats on StubHub which were cheaper than the variably-priced seats.)

Based on the success of this small sample, the Giants went ahead and introduced dynamic pricing for all the tickets in AT&T Park (a beautiful stadium) during the 2010 season. They are the first team to do this and now several other teams are tinkering with the concept on a small scale.

The demise of Barnes & Noble

Bookseller Barnes & Noble (B&N) is in bad financial shape. According to a commentator in the Wall Street Journal, B&N fell prey to the Internet though they made some missteps on their own.

I, for one, will be sad if bookstores such as B&N and Borders go completely out of business. B&N came to the Chicago area in the 1990s and I shopped at some of the early locations. They were like a new world compared to the bookstores that existed then: relatively large, nice decor, with a varied selection. (I know some would argue this could be found at independent booksellers but I haven’t ever had much experience with these in my suburban life.) As both B&N and Borders expanded into music (a section I spent a lot of time in) and coffee, I found them even more likable locations. I still occasionally am very happy to spend an evening in one of these stores, browsing through magazines, music, and all sorts of books.

Shopping for these things on the Internet has some advantages, including the big factor of pricing. But browsing Amazon.com is still a qualitatively different experience than browsing a large bookstore.

Military towns benefit from increased compensation

USA Today reports “16 of the 20 metro areas rising the fastest in the per-capita income rankings since 2000 had military bases or one nearby.” Compensation packages have increased since 2000: “Soldiers, sailors and Marines received average compensation of $122,263 per person in 2009, up from $58,545 in 2000.”

While places with nearby military bases benefited from these changes, USA Today also found some losers in per-capita income over the past decade. These include high-tech centers, college towns, and industrial cities.

Colleges have debt too

The New York Times has published an opinion piece by Mark C. Taylor, the chairman of the religion department at Columbia University, that puts a slightly different spin on the perennial college-costs-are-out-of-control argument.  He suggests that the institutions of higher education are themselves as indebted (and troubled) as their students:

There is a similarity between the debt crisis on Wall Street and what threatens higher education. Just as investors borrowed more and increased their leverage in volatile markets, many colleges and universities are borrowing more and betting on an expanding market in higher education at the precise moment their product is becoming affordable for fewer people.

It’s an interesting observation with potentially far-reaching implications.  There is always going to be demand for higher education, but it’s hard to see how a university like N.Y.U. can sustain debt levels higher than its endowment (“a staggering $2.22 billion debt with a relatively modest $2.2 billion endowment,” according to the article) in a world where “four years at a top-tier school will cost $330,000 in 2020, $525,000 in 2028 and $785,000 in 2035” if present trends continue.

Conspicuous consumption during a recession

Trying to make sense of how recent events like the lavish wedding of Chelsea Clinton, the furor over Michelle Obama’s trip to Spain, and other similar events, can take place during this recession, Bella English of the Boston Globe turns to the concept of conspicuous consumption.

Sociologist Juliet Schor comments:

“It’s adding insult to injury at a time like this when so many Americans are suffering such extreme economic pain,’’ says Juliet Schor, a sociology professor at Boston College and author of “Plenitude: The New Economics of True Wealth.’’ “Those kinds of conspicuous displays of wealth undermine everyone else. They make us feel poorer and less satisfied with what we have.’’

Thorstein Veblen coined the term conspicuous consumption. According to Veblen, consumption is not just about buying necessities; it is about projecting an image and establishing status. The wealthy intentionally are wasteful in their consumption in order to show that they can afford to be wasteful.

Schor is expressing what the people toward the bottom of the economic ladder feel when the rich show off their riches. Should the rich cut down on their spending in times like these? Or perhaps they could draw less attention to themselves? My guess is that if one has the money, one is going to spend it whether it is a boom time or a down time. The only barrier to this may be a popular backlash – if the consumption actually leads to decreased status (rather than increased status), it may not be worth it.

Hotbed for exports is…Wichita?

The Financial Times reports that according to a Brookings Institution study, Wichita has the highest percentage of exports of any metropolitan region in the country:

Thanks to a cluster of aircraft manufacturers such as Learjet, Cessna and Hawker Beechcraft, the economic focus of Wichita – population 366,000 – is very different from the emphasis on services and consumer demand typical of 21st century America. According to a study published late last month by the Brookings Institution, a Washington think-tank, nearly 28 per cent of the city’s gross metropolitan product is sold abroad. That makes it the most export-oriented in the country, just ahead of Portland, Oregon – noted for its computer and electronics companies – and San Jose in California’s Silicon Valley.

Wichita is not who I would think is leading this list. But the article goes on to say that Wichita and some other places have figured out how to move beyond two lagging sectors of the economy, consumer goods and housing, to move forward. For the rest of the country’s economy to move forward, they may have to follow Wichita’s model.