The last time Americans saw mass shortages of multiple products at retailers was World War II, when U.S. manufacturers concentrated on munitions and war production. Consumers saw the result of a command economy firsthand, as ration books became the second currency of the land.
The idea of having nothing to buy is something un-American. Not purposefully un-American, but practically un-American. How, in a country filled with resources, transportation, factories and intelligence, are we short of anything to buy? It makes no sense, unless there is government in the middle, restricting oil supplies, or printing money. Have we ever heard of such a thing? Never.
In the 1970s, there were gas lines, but that was about a particular commodity, and another particularly inept Democratic administration. Through the decades, shortages of a product have either been about a craze riot (Cabbage Patch Kids, Tickle Me Elmo), or some sort of natural disaster, where supplies and groceries naturally run thin.
Today’s rolling shortages, of different necessities in different months, are something entirely new, and reminiscent of a top-down economy in distress. Blame everything from forced factory shutdowns, war, inflation and vaccine pass requirements, among other things. But here is the reality. It is a country like Cuba that does not have enough car parts, or new cars. And we have been at that place for the last two years. Ask a pharmacist about shortages of medicines, or a car mechanic about particular car parts. Things unexpectedly go missing from the market, and the only solution is calling around, or substitution. The media has only recently taken seriously these shortages, but they are serious when they involve basic foods, medicine and infant formula.
This month, there is an over-supply at department stores for fashion goods; next month it may be cars, or houses. One thing is certain is that no one feels certain. And that is not a feeling Americans are used to, at least when it comes to buying stuff, which is our national pastime.
Perhaps the shortages, not yet completely dire, are an unwitting blessing in that they are a warning of what can happen when government tampers with the basics of supply and demand.
Soviet Department Stores
During the era of the Soviet Union, the American public had a picture in their mind of what command-economy retailing looked like. Soviet propaganda declared that GUM, or Glavnyy Universalnyy Magazin, was the world’s largest store. But no matter what happy picture Soviet Life magazine or World Book might show of the U.S.S.R., Americans knew that the goods found in GUM could not match Western shops.
GUM was a product of pre-communist, imperial Russia, with a Red Square location designed by Alexander Pomerantsev and engineered by Vladimir Shukhov. In communism, in our time it went through various state enterprise incarnations, and today is Moscow’s luxury urban mall.
Across the Iron Curtain, communist leaders gave consumers this simulation of Western consumer culture in a big store. Another example was the Sarajaka store in Sarajevo, Yugoslavia. The store (pictured above) opened in 1975; it was nicknamed the Blue Flake. The real name was Unima, and later Magros. In comparison to American department stores, it might have resembled the style of JCPenney, stripped of the wide variety of goods.
Recalling a visit to the store in 1984, one would have been impressed by the newness of the place. Along with the Holiday Inn Sarajevo, it occupied a full block, with a modern feel. Just after the 1984 Winter Olympics, the town had put forward its best, including a new ski complex, the Jahorina.
But inside, Magros was not like U.S. stores at all. Each aisle had much of the same merchandise, and only a few state-owned manufacturers. The scene was not all grim; Yugoslavia’s own Elan skis, then a worker owned co-operative, had a full aisle. It did have a grocery, and records, as I recall, so in some sense it was a more complete experience than Sears or Penney in the 1980s.
Yugoslavia was slightly different than the rest of the Eastern Block countries. While communist, it was non-aligned, and aspired to a sort of market socialism seen in other non-aligned countries like Egypt and India. Leader Josip Broz Tito, called Marshal Tito, managed to create this new Yugoslavia out of very different ethnic groups and Muslim/Christian divisions. A place like Magros could prove that such an economy and hybrid politic would provide for the needs of modern, European peoples.
The U.S. Market
It would be a massive rhetorical leap to say that the U.S. is somehow in the same place as the 1980s Eastern Block, or Yugoslavia in 1985. But there is one area where American retail looks exactly like Magros. It is in the actual aisles, where one company owns vast shelf space, and either keeps out competitors, or has few competitors stuck at the bottom shelf.
At Magros, the aisle of Elan skis was at first a revelation, as the product was the best in the world and the pride of Yugoslavia. But the lack of other brands, in the end, gave the store a generic feel. It was just Elan skis. Maybe there was a Rossignol ski, maybe. There was no surprise. It was like the saying about Henry Ford’s Model T; you could have it in any color, as long as it is black.
At any Target or Walmart, one company now owns a large section of the shelf space, and keeps out others. Consolidation in retail and consumer goods has created fewer major players. Grocery shelves are dominated by the likes of Unilever, Smithfield, ConAgra, Procter & Gamble and Nestle. The chips aisle is mostly Pepsico subsidiary Frito Lay. The cookie aisle is Mondelez and Nabisco. Woe to any Hydrox (the original Oreo) that wants space nearby. In the case of Hydrox, its parent LeafBrands asked the Federal Trade Commmission to look at anti-competitive pressure.
In some ways, it is a golden age for new consumer brands. New printing techology, and entrepreneurship encouraged by the likes of Shark Tank, has encouraged hundreds of new small startups. These companies do manage to find space on American chain retail shelves. Amazon has also allowed new brands to have shelf space equal to older ones, at least online. And in the chain store itself, inventory systems also allows individual store managers to try new items, provided the SKU can get into the system. If an item succeeds in one place, that fact is noted in the system.
Occasionally there are hit products such as Harry’s razors, Tate’s Bake Shop cookies and Dave’s Killer Bread. These seem to prove the rule that niche brands can survive, but perhaps they are the exceptions that proves the rule. And in the case of Tate’s, it was purchased by Mondelez in 2018, for $500 million.
The fact remains that in American retail, the element of surprise is dead. The thing that makes it monotonous is the dominance of a few companies. In past decades, this was not so much a hindrance, as markets were running efficiently. But when there are fewer makers, consumers can suffer when the major players stumble, as in the case of infant formula, or computer chips for cars.
The consolidation of Macy’s also destroyed competition; the individual department stores brands it shuttered each had different perspectives on what goods they sold. On top of that, the stores competed with each other. So if your product was not in Burdine’s, you could still sell it to Marshall Field’s, or Thalhimers. That loss was particularly ruinous for innovation, as the department store lended authenticity to brands, and start-ups. And because of the wide variety of goods sold in a department store, almost any brand could achieve notoriety by merely being sold at a particular department store.
There are some antidotes to this monotony. The individual franchisees of Ace Hardware, for instance, provide astonishing variety of goods at their hundreds of locations. Some Ace stores cater to the building trade, competing well with the standardized clutter of Lowe’s and Home Depot. Others offer giant gift shops that resemble the home shops of the old line department stores.
Today’s chain retail does respond to new manufacturers and makers; Publix and Target are adept at coming up with end-aisle promotions, including micro-brew beer displays. Winn-Dixie offers groupings of regional sausage brands. And Dillard’s offers “capsule” brands mini-launches, to try out new influencers and lines.
But these innovations are at the non-necessity level. People must have reasonably priced cars, appliances, medicines and groceries. Government is at the center of this issue. It is at that place where we are now looking at the failures of a command economy, ever so slightly, and dangerously, similar to the communist era.