May 7, 2003

Austrian Economics in American Retail

There’s a very good General Nutrition Center (GNC) store in Superior, Colorado. And the Great American Tire Center up in Erie is a great place for an oil change.

I don’t have the readership to sell advertising. I don’t even have verbal permission to mention these firms, much less encouragement. I bring these institutions up because each in its way validates my belief about economics and politics. Theory in a book is debatable, history is subject to interpretation, and real life has too many variables to stand up to rigorous proof. Yet I see proofs on a macro level, all the time.

The GNC in question is about 15 miles from my house. There are at least two GNC stores closer and I literally drive by one on the way. But the store in Superior (I will not be going for the pun in this article, you can keep waiting or move along slowly…) has a good stock of Atkins® products and other low-carbohydrate foodstuffs.

Being an Atkins-disciple, I have purchased the GNC Gold Card, entitling my entire family to a 20% discount on the first through the seventh of each month. Though it seems odd that a company would encourage you to wait until next month to purchase products, I ask no questions. I show up on the first.

A comprehensive selection and adequate supplies are important for these monthly shopping excursions, I think my great-grandparents probably went 15 miles to buy supplies every month; it’s just a low-carb return to my roots. Mysteriously, the other GNC stores are not well stocked on these products. They are ascending in popularity and the suppliers are unable to keep up. The Atkins section of the closest store looks like a fresh fruit display in the winter. That would be the winter of ’43. In the Soviet Union.

I complimented the manager last week. He thanked me and made some comment about the company stores’ having a tough time. He said that these products are tough to get and that he expends serious effort to keep supplied. Visions of Hayek, Mises, and Adam Smith danced in my head all the way home.

I about dropped the flaxseed granola when I remembered the lady from the other store saying that she begs the buyers on conference calls for more of these products. Aha! The good store has the knowledge of his customers’ needs (Hayek – distributed knowledge), makes his own purchases (Mises – sphere of influence), and buys those things that will make him the best profit (Adam Smith – the invisible hand). The corporate store is centralized command and control, shipping the same package to each of its stores (I’m thinking Lenin here, but I am no expert).

In the end, I get the products I want, the wise and industrious store manager earns profits above his corporate neighbors, and the manufacturers are incented to produce a greater variety of muffins and candy and syrup. After a few months it all makes sense -- now if I only knew what they put in that low-carb pancake mix...

Next week: State Coercion Every 4,000 miles.

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