Friday, December 16, 2016

Why the PLCB will never be anything but 2nd class

Business, not some funny-money state-owned monopoly business but real business, is driven by being able to supply consumer wants and needs before your competition. Being first to market with innovative marketing and products, seeing a demand and then filling it before somebody else does. That's how business succeeds.

Here in Pennsylvania, we get none of that from the PLCB; we get wine kiosks. They were innovative only in the sense that some bizzaro administrator convinced a board of political donor lawyers with no business acumen, that people really want to blow into a tube and pirouette in front of a camera just to get a bottle of Barefoot. Lesson learned: not all innovation is good.

The PLCB, by its very nature, can only follow. The board, with no experience in the industry, follows the recommendations of the PLCB directors...who in turn also have no real experience in the industry. It's a classic case of the blind leading the blind.

Buy more Baaaaaarefoot!
They can't lead on new trends, because nobody has told them what those trends are yet. They have to be offered products; they do not have the ability or knowledge to search out new things. Even once they are told, there are months of delay while products are submitted and maybe (or maybe not) approved. Does that sound like striving to fulfill consumer wants? Or being a sheep and following the herd?

The PLCB got an award from the control state "business association" (it is to laugh!) this year for being the second first place awardee for the licensee online order system; somebody beat them to it last year. Since there are only seventeen control states left to choose from, and the PLCB got skunked on every major award last year, well, it was their turn this year. But it isn't innovation when you're doing something after it has already been done.

The PLCB only has one goal; to keep the PLCB open. That's what "flexible pricing" is all about. It will allow the agency to keep the lion's share of any price reduction from producers, just to keep its bloated carcass afloat, and "prove" it is good for the state; a "cash cow" as the defenders say. In real business, cost reduction is usually applied to the item for sale to gain an advantage over competitors. No reason to do that here, because in Pennsylvania, there are no competitors. The PLCB says they won't take advantage of this but since there is NO oversight, NO required item reporting, and NO indication to the consumer in the board minutes...How will we know? Wait a year and see that the gross margin went up from 45.46% to 50% or 55%, and realize that every point of that came out of our pockets? What recourse does that give us?

A monopoly with no competition, no need to advertise, with a workforce over 40% part time, and it can't survive on a 45% markup? Walmart's gross margin is 38.2% and Target is 36.1% and they seem to make money just fine. And they have to compete not only with each other but with all the other stores out there. Sounds like the American way of shopping: multiple retailers offering the consumer a choice, trying to get their business by offering lower prices or added value or both. Does that even remotely sound like the State Store System?

Remember: the only way the State Stores can make that extra $50-70 million is if they take it from your pockets, by raising prices, and by not giving you what every other real business does — a choice.

When something doesn't work, or work that well, you replace it.  Pretty simple, really.


No comments: