Posted by: nickgerlich | November 12, 2007

Basic Black

Back in 1976, when I still lived in Chicago with my parents, I was dating a young lady who lived 60 miles away. We had met at a church camp, and since gas was cheap, I didn’t mind maintaining a long-distance relationship. So practically every weekend for about 9 months, I would head west into the corn fields of north-central Illinois to go visit my girlfriend.

As it turns out, she wasn’t that memorable. OK, maybe she was somewhat memorable, especially if I am recounting details here. I went off to college, and that was that. Next chapter, please. But something her family said has stuck with me for over 30 years now.

In this family’s home town was one of the small groceries owned by Aldi, the German food retailer. These stores were spartan, to say the least, and had only a few hundred SKUs (stock-keeping units). All the merchandise was in boxes on pallets, and customers had to go in and scrounge around for their goods. There were no prices on the products, and since this was before bar code readers were common, the cashiers had to memorize all 450+ item prices.

It seems my girlfriend’s family did not think too highly of anyone who shopped under such austere conditions, for they pejoratively referred to this place as “The Poor Store.”

Aldi sold all private-label merchandise at the time, and indeed quite well serving underbelly of the economy. Times were tough back then; President Carter was elected that fall, and promptly ushered in his own version of the triple-double: double-digit inflation, interest rates, and unemployment. It would have been a good time to hold stock in Aldi.

Generic BeerIn spite of being scarred as the detsination store of the lower class, Aldi influenced mainstream retailers considerably. It was not long afterward that grocery chains beefed up their own private label products, as well as started carrying generic products, a kind of third-class substitute. Everything from soda and beer to corn, spaghetti, and toilet paper appeared on its own aisle, their stark simple black-on-white labels screaming cheap.

In other words, you could pick your level of affordability: national brands (highest price), private labels (medium price), and generics (lowball price). And product quality went hand-in-hand with price.

As the 1980s ensued, and President Reagan’s era of prosperity unfolded, the stigma of “poor stores” and generics increased to the point that people no longer wanted to be associated with them. With cash more plentiful, shoppers resumed their preference for the more visible (and socially acceptable) national brands, thus ushering in an era of brand-consciousness that has run through to the present.

But all this doom-and-gloom talk the economics naysayers are spouting has me wondering. Might we be on the verge of a generic revival? Poor Store chic? Roll-up-your-sleeves-and-get-dirty shopping?

Could be. But I bet I don’t find that old girlfriend’s family shopping in that aisle.

Dr “Generic Equivalent” Gerlich

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