There's Always Somebody On the Other Side of Every Trade

Let's say you're interacting with a food company or consumer products retailer, and you don't see eye to eye on a price, a purchase or a customer service issue. How easy is it to assume the company is stupid (or evil, or greedy, or run by jerks), shake your fist at it, and carry on, delusionally confident in the correctness of your position?

Pretty darn easy. For most consumers, this is a default behavior pattern.

Here's the thing though. When you consider interactions with the food industry purely from your standpoint as a consumer, you only see part of the picture. There may be things happening outside of your perception that you're totally unaware of.

There's even an old expression from Wall Street that relates to this: There's always somebody on the other side of every trade. (This expression is one of the few investment chestnuts that actually doesn't make me throw up in my mouth--unlike, say, markets are efficient, or past performance does not guarantee future returns.)

Uh, okay. What do I mean by saying there's somebody on the other side of every trade?

Well, think about it this way. When you buy a stock, you're probably highly confident that it's going to go up, right? Otherwise, you wouldn't buy it.

But here's the problem: for every buyer, there has to be a seller. If you're so confident buying this stock, and if it's so clear it's going to go up, then why is that guy selling to you? It bakes your noodle just to think about it.

What does this have to do with food and consumer products? Well, how many of us have entertained thoughts like these:

1) Couscous should not cost $2.95 for a six-ounce box! Those greedy bastards!

2) I only buy organic foods. They are obviously a good value, and they make me feel safer.

I'd bet most consumers would understand and sympathize with both of these statements. But after a just few minutes of considering these statements from a store's standpoint, a few rather important puzzle pieces fall into place.

For example, once you learn that organic foods are an important source of incremental profits for grocery stores, you might realize that they may not offer quite as much value as you thought. Likewise, that greedlicious couscous price might be an indirect function of the unprofitable economics of grocery store retailing. That price simply is what it is, and you can choose to buy or not, depending on your needs and wants.

I'm not at all telling you to take the store's side or the food industry's side. This is not about taking sides. I'm merely suggesting that if you dispassionately think through the business logic behind the various actions of the food and consumer products industry, you will become a savvier and far more empowered consumer. Furthermore, you'll be in a much better position to figure out your options and alternatives--without being sidetracked by pointless irritation or anger.

And then you can very calmly and rationally put down that overpriced box of couscous--and run screaming out of your grocery store.

Related Posts:
The Economics of Wasteful Foods
Death of a Soda Tax
The Pros and Cons of Restaurant Calorie Labeling Laws
Let That Other Guy Pay! Saving Money in Two-Sided Markets


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