The Truth About The Real American Economy As Measured In The Average 'Sam's Club'

Look at the behavior of small businesses and consumers - it tells you all you need to know about how much excess capacity that existed during the 'bubble years' is being absolutely stripped out of the economy. And the current status is not the end. Things will continued to tighten.

Look at the fact that real estate office managers are actually going out of their way to save 3 cents on coffee cups. Or that restaurants are canceling supplier deliveries, so as to save coin on hamburger patties or chicken breasts - picking it up themselves - at Sam's.

And look at the comments about small businesses - they are continuing to lay off people in droves, tightening their belts in every conceivable way.

Actions of consumers and small businesses are now re-evolving at the most dramatic clip in many, many years, actions speak volumes, and actions tell us all that we are in for one hell of a downturn, and it's only just begun.

This is as accurate an economic barometer as UPS shipment volumes, and maybe more so...

http://www.bloomberg.com/apps/news?pid=20601109&sid=a3F0ZxI8iGfY&refer=home

Sam’s Club Coaxes Small Business Sales With Coffee Cups, Soap
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By Chris Burritt



April 29 (Bloomberg) -- Sam’s Club, the second-largest U.S. membership warehouse club, is using a promise of $270 million in savings to draw small-business customers during the worst recession in a generation.

In a three-month blitz to grab new patrons and bring back old ones, Sam’s says it has contacted more than 63,000 small businesses so far and reviewed their purchases of napkins, beef patties, soap and other supplies. Sam’s is part of Wal-Mart Stores Inc., the world’s largest retailer.

Restaurants, daycare centers and even churches “are hunkering down, cutting out unnecessary expenses and trying to manage their cash flow,” Catherine Corley, Sam’s vice president of small business, said in a telephone interview April 24. “With revenue falling, lowering their costs is really the only thing they can control right now.”

Sam’s, based in Bentonville, Arkansas, has been contacting small businesses since mid-February and has come away with the view that many are cash-strapped and riding out the recession, said Corley, 47. Efforts to provide price quotes to 100,000 businesses will go through May 22, the end of National Small Business Week.

Independently owned companies that have fewer than 500 workers employ about half of all private-sector employees and pay nearly 45 percent of total U.S. private payroll, according to the Small Business Administration. Sam’s targets companies with 5 to 10 employees, spokeswoman Susan Koehler said.

Coffee Cups

For example, a real estate office in Tulsa, Oklahoma, was paying 5 cents apiece for 12-ounce foam coffee cups, Corley said. Sam’s price was 2 cents, helping the company save more than $13,000 a year, she said. A restaurant in Prescott Village, Arizona, will save $2,475.66 a year buying 4.5-ounce chicken breast fillets from Sam’s, she said.

As people dine in more, restaurants are among the hardest- hit small businesses, Corley said. Some have stopped paying extra for Sam’s to deliver food and other supplies, she said.

“They are coming in more often and they’re buying less each trip,” Corley said. “They are trying to manage cash. They’re struggling to stay in business.”

The findings by Sam’s, which attracts more than 600,000 small-business owners and employees a day to its 600 U.S. stores, bolster the view that the recession won’t bottom for another few months, said Adam York, an economist for Wachovia Corp. in Charlotte, North Carolina.

Car Dealers, Restaurants

Retail sales in the U.S. unexpectedly fell 1.1 percent in March as soaring job losses forced consumers to pull back. Car dealers, electronics stores and restaurants led the decline, the Commerce Department said April 14.

“No business, small or large, is escaping this downturn,” York said April 14 in a telephone interview.

Staples Inc., the largest office-supply retailer, also is targeting small businesses and people who work at home, said Don LeBlanc, senior vice president of marketing strategy. It offered free tune-ups of personal computers March 2 through April 4, waiving its normal charge of $29.99 for customers seeking to postpone buying a new machine.

From April 26 through the end of May, the Framingham, Massachusetts-based company will take 50 percent off the price of boxes of printer paper, a small-business staple, in an annual promotion.

‘Belt-Tightening’

Sam’s generated $46.9 billion in revenue in the 12 months through Jan. 31, trailing Costco Wholesale Corp., the biggest U.S. warehouse-club chain, which had sales of $71 billion last year excluding membership fees.

Costco customers are spending less on discretionary items, such as coffee makers and other small appliances, sporting goods and lawn and garden items, Bob Nelson, a spokesman for the Issaquah, Washington-based company, said in an April 23 interview.

Costco routinely contacts small businesses, both existing and potential members, and isn’t taking special steps related to the recession, Nelson said.

“Not only are small businesses not expanding, they are also laying off workers,” said Chad Moutray, chief economist and director of economic research in the U.S. Small Business Administration’s Office of Advocacy in Washington. “You’re seeing a lot of belt-tightening.”

Some daycare centers are buying less as parents lose jobs and stay at home with their children, Sam’s Corley said. Churches, which buy office and cleaning supplies and food, are struggling because of declining donations, she said.

Other businesses are growing, she said. Automotive shops are doing repairs for people keeping their cars longer and real estate offices are benefiting from lower mortgage rates. Federal stimulus funds for road building and other infrastructure may create jobs and, in turn, help convenience-store sales, she said.

At Sam’s, employees have learned to call businesses before visiting them.

“In these times, you don’t know if that prospect is actually still in business,” Corley said. “A lot of them aren’t.”

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at 1348 or cburritt@bloomberg.net.

Last Updated: April 29, 2009 00:01 EDT

 

I recently talked with a Costco manager... he said, "the foot traffic at our stores has increased, but the average check-out is less".

More people trading down and limiting discretionary spending... purchasing essentials, only.

 

Nice try Sam, saving 3 cents on a 5 cent cup is chump change when business gets hit with various increases in the hundreds and thousands of dollars in state and local fees, taxes, health care, liability insurance premiums and the list goes on.

Of course, it's better than doing nothing.

 

And as tax revenues shrink from slowing economy and increased unemployment (all the while governments at all levels resist downsizing), anybody who's still got any money will see ever greater tax increases.

 

So some half-assed re company is saving $13K/year by buying coffee cups for $.03 less per cup. That's a lot of freaking coffee. I'm going to have to call BS on that one.

 

good catch! that's about 432900 cups of coffee or 1229.83 cups per day. why not just use ceramic cups? most of this material is total BS.

surf

 

As the story says "... HELPING the company save $13,000 per year..." perhaps the savings on coffee cups is only part of their cost-cutting effort.. ??

 

ha, your right. those pesky journalists--sensationalize everything!

 

When you go to a restaurant...any restaurant...look at the condiments on the counter. They seem very sparse to prevent customers from taking them. Many Dunkin Donuts are placing their sugar packets behind the counter where as before they were putting them out.

It has gotten that bad where folks are stealing condiments from these stores.

 

At MCD they had a list on the drive thru on the number of dips you could have based on the size of the order.