Birth Crisis in Grocery Retail?

Last two times I did this, I was taking hard aim at the way that Hostess Frito-Lay was leaving money on the table with an excess of sheer stupid.

This, I'm more sympathetic about. This is a shot in an ice cream novelties section window of a stand-up freezer display case on a hot Saturday afternoon. There's a case to be made for it being empty. Running out of things happens, this is the time of the day and season when you expect to run out of ice cream, and at some point, it is physically impossible to do more.

But, the translucent plastic flaps at the front of the empty displays are the spring loaded plates at the back of a self-facing display installation. Facing builds sales, but the display takes up space that could be used to stock more product in the first place. Has the tradeoff really been costed out?

Of course not.



These decisions continue to be made on the "Santa sends magic space monkeys" basis. The issue isn't lack of holding power. It's that, somehow, someone should have found the labour to fill the shelves. Yet it would take far less labour to just manually face up the sections occasionally. Clearly, you have lost faith in the store's ability to face. Why haven't you lost faith in the store's ability to restock?

Because it's not marketing's problem that that labour can't possibly exist in a regime of steady cost cutting. As Lord Black of Cross Harbour explains, “Now I wouldn’t do it, but some people would, and you can do it. You can get the cost reductions ahead of the revenue decline and just pocket the cash.” First, you get your cost reductions. That's your profit. Then you get your revenue decline. But that has nothing to do with you. You're riding the spiral into the ground. The point is, you've found a way to make money out of the spiral. Put it in bonds or something, and make sure you have a crash helmet.

Conrad Black is talking about newspapers here. Newspapers are dying. Grocery stores aren't. In fact, their main current issue in the Vancouver market is the number of new competitors entering the fray. Doesn't that sound just a little paradoxical?

Not really, because, at the same time that more grocery stores are entering the industry to tap the rapidly-increasing population of Vancouver, demand for groceries is in mysterious decline. What's going on? You know my answer:

While the ranks of Canadians aged 65 and older increased by just over 609,810 between 2006 and 2011, the number of children aged 14 and under grew by just 27,505, a rise of just 0.5 per cent. Old people consume fewer groceries than young people; and toddlers consume fewer groceries than teens. Teens are the market we're looking for. They buy a lot of tortilla chips. Toddlers, in my experience, don't. They like ice cream novelties, and regular potato chips with clear flavour notes. (Mmm.... Dill Pickle chips...)

But the reason that I'm repeating myself here is that I'm going to take another look at the numbers.

2010: 4,055

United States	Births		Canada
Year	Birth (millions)	Rate per 000		Births	Rate per 000
1960	4,258	23.7		478,551	c. 26
1970	3,731	18.4		371,988
1971	3,556	17.2		362,187	16.4
1972	3,258	15.6		347,319
1973	3,137	14.8		343,373
1974	3,160	14.8		350,650
1975	3,144	14.6
1976	3,168	14.6
1977	3,327	15.1
1978	3,333	15.0
1979	3,494	15.6
1980	3,612	15.9
1981	3,629	15.8		371,346
1982	3,681	15.9
1983	3,639	15.6
1984	3,669	15.6
1985	3,761	15.8
1986	3,757	15.6		372,858
1987	3,809	15.7		369,689
1988	3,910	16.0		376,755
1989	4,041	16.4		392,625
1990	4,158	16.7		405,417
1991	4,111	16.2		402,528
1992	4,065	15.8		398,642
1993	4000	15.4		388,394
1994	3,953	15.0		385,112
1995	3,900	14.6		378,011
1996	3,891	14.4		365,330
1997	3,881	14.2		348,598	11.6
1998	3,942	14.3		(335,000)	11.1
1999	3,959	14.4		(335,000)	11.0
2000	4,059	14.4		327,882	11.41
2001	4,026	14.1		327,107	11.21
2002	4,022	13.9		332,806	11.09
2003	4,090	14.1		331,552	10.99
2004	4,112	14.0		355,000	10.91
2005	4,138	14.0		356,000	10.84
2006	4,266	14.2		360,916	10.78
2007	4,316	14.3		373,695	10.75
2008	4,248	14.0		(376,000)	10.29
2009	4,130			(376,000)	10.28
2010	4,055			376,600	10.28
2011				371,000	10.28

There is a glaring lack of a web-accessible synthetic Statistics Canada product comparable to the United States Census product available here. In some cases, I've been ended up forcing the Canadian numbers based on trends asserted in newspapers, against other figures drawn from Stats Can figures that were presumably revised at a later date. These numbers are in brackets. I'm in no position to choose between varying StatsCan numbers, so I'm forcing them to the trends, because I have a thesis to sell.

So what is the significance? In 2012, there are 3.881 million 15 year-olds in the United States, less immigration. In Canada, there are 348,598. In 2008, there were, respectively, 4 million and 388,394. That is  119,000 fewer 15 year-olds to market to over 4 years in the United States, 40,000 in Canada. The decline in the United States is significant. The decline in Canada is eye-popping. I'm picking 15 year-olds because they seem to me to sit in the middle of the prime teenage impulse buying set, but I could just as easily pick 18 year old prospective college freshpersons: here the decline is 216,000 Americans, 70,417 Canadians.

Boom. That's university enrollments collapsing. Also, sales of Red Bull.

So we're doomed? Not so much. Compare 4 year-olds in 2008 and 2012, and the increase is 126,000 in the United States. In Canada, it is 21,000. The increases are not, in general, as big as the earlier declines. There were 2.005 million births during the 1997--2003 trough, 2.198 million births during the next 6 years, meaning that the 9--15 cohort shopping/being shopped for at our grocery stores is 9% smaller than the 2--8 year old set whose parents are shopping for them.  However, the upward trend continues, albeit showing signs of being past its peak.

Now, I'm not going to beat the natalist drum here too hard. It seems to me that it would be good across a wide spectrum of businesses if the Canadian crude birth rate were to converge with the American. Zero Population Growth enthusiasts can be reassured that this would still mean that Canadians are doing their bit for a human-free planet, while at the same time alleviating economic pressure on, well, me, not to put it too bluntly. The good news (for me) is that that's actually what's happening, more-or-less. Given the divergent trends in Canada and the United States, it would seem that this is due to the differential economic paths followed by the two economies over the last decade.

The unsurprising conclusion that birth rates these days are driven by macroeconomic conditions points to the double-prong of policy. On the one hand, growth-enhancing, and particularly income-enhancing policy can be expected to result in spikes in the birth rate. On the other hand, more babies will, according to one theory, mean more demand and thus more robust economic growth.

So, uhm, policy leaders: get out there and boost economic growth to help the grocery industry? Wow. Talk about labouring over a molehill. Well, at least I got to play with Word2010's tablemaker tools.