10 Reasons To Love the Free Market
by Karen De Coster
by Karen De Coster
What makes my favorite business enterprises so extraordinary that I will continue to seek out their products and/or services over the long haul?
As a libertarian and market anarchist, I appreciate the high-spirited entrepreneurs who confront a maze of government impediments in order to start up a business they hope will be profitable in the marketplace. Entrepreneurs take on considerable risk because they have an ambition to provide products or services that are unique or better than the current choices available to consumers.
The reasons why we, as consumers, frequent certain producers, service providers, or retailers can vary, and thus at times it is constructive to reflect on why we are enthusiastic about a particular place of business. With this in mind, I decided to put together a short list that might bring some well-deserved attention to those market enterprises that have made my life easier, healthier, more robust, more productive, or just a lot more fun. I am not writing this on the basis of a company's political merits or lack thereof, nor am I considering the health of its balance sheet. This is written strictly from a consumer appreciation point-of-view. I have stayed away from local businesses that don't have a national or large regional impact.
1) It may be fitting that I start off with a company called Enterprise. I've always thought that Enterprise Rent-A-Car is unique among its peers. Business Week named Enterprise one of the "top five places to launch a career," and for good reason. I have frequented Enterprise often, and for many years. The reason I go to Enterprise is because the company provides a top-notch service environment. In my experience, the overall quality of the company's employees is what puts it ahead of its competitors.
Enterprise makes a habit of hiring college grads that are still contemplating their career choices and need a place to commence a livelihood. For instance, there are a lot of smart kids that go to college and get degrees that can sometimes be difficult to sell in a competitive market: general business, communications, marketing, etc. A great starting point for learning the needs and nuances of consumers is to deal with them, face-to-face, on a daily basis.
Enterprise, which hires about 7,000 college graduates a year, has a well-developed management training program that teaches employees how to run their own businesses. In fact, nearly 100 percent of Enterprise's current senior management — including the president and CEO — started as management trainees, learning the ins and outs of the business.
Accordingly, young and inexperienced people can obtain entry-level positions and have every opportunity to acquire business management skills and rise to executive positions. It's a real-world environment that serves to develop valuable business skills, because dealing with customers is never as easy as one may think. I have always found Enterprise employees to be young, articulate, pleasant, and well-schooled in customer service. Plus, Enterprise offers exceptional services: someone will pick you up or drop you off within limits that are inordinately generous; company managers will gladly exchange a car you don't like with no questions asked; and any mishaps on their part will get you a good deal on the rental. Thus the exceptional quality of people and service I have experienced at Enterprise puts them right atop my list.
2) LA Fitness is the next noteworthy enterprise to come to mind. Its motto is "Where fitness is a way of life." As someone who trains 8—15 hours per week, a good club stands at the very top of my list.
I visited LA Fitness clubs in past years when traveling to California and Arizona. In 2007, I visited a newly-opened club in Minnesota while staying with family. I had never seen a gym quite like it. This gym was the standard setup for an LA Fitness center at about 46,000 sq. ft., with glass racquetball courts, spinning room, and yoga room; a partial-glass basketball court; a glass-enclosed lap pool; a huge free-weight area; a massive machine section with all the latest high-tech equipment; and a beautiful mezzanine overlooking the whole place, loaded with nearly 200 state-of-the-art cardio machines. I noticed immediately that the visuals were splendid, and the environment was lively and contagious. In between workout sets on the machines, you can stand and watch five racquetball courts full of senior men — who are in fabulous shape — putting on a marvelous display of athleticism. I noted that even the locker rooms were profound. They were perfectly designed, with the shower, locker, and toilet areas all partitioned and temperature-controlled to perfection. The attention to minor details in the women's domain was exceptional. My only question to the club manager was, "Why are there no LA Fitness clubs in Michigan?"
When I came back to Michigan, I received a call from the Minnesota club manager. He told me the company was in the process of opening a new club in Michigan, so he gave me the contact information. It is close to where I live, so I promptly went down to the pre-sale office. A Senior VP of the company happened to be there at the time, and he was the person responsible for opening all of the new LA Fitness clubs in Michigan. Since I explained that I had already been to some clubs out of state, he was eager to discuss the company's business model and philosophy with me. He explained the attitude behind the infectious fitness environment of its clubs. Essentially, the company wanted to get away from the "gym rat" experience and open up a true sports club for functional athletes. The company wanted to create an ambiance that could appeal to the hardcore types as well as people on the margin. Since the Vice-President was about 50-ish, and an avid and very fit runner, he truly represented the company in good light. I was one of the first 200 Michiganders to sign up, and my club opens in about six weeks. I can hardly wait.
3) Bath & Body Works is next up on the list. This is a Chick Store. This enterprise was one of the first retailers to bring luxury women's products to the masses at affordable prices. Before Bath & Body, most female luxury items were found at Hudson's, Saks, Nordstrom's, and other high-priced retailers. Sales on luxury items were almost non-existent, and the ambience was too upscale for many middle-class shoppers. Bath & Body Works forged a phenomenal business by producing creative luxury items — for hands, face, feet, hair, and body — and sorted them by product lines in terms of quality and price range. This retailer exists to carry out sales, and those sales offer great bargains and few gimmicks. Prices at Bath & Body have consistently come down in the years I have been a customer, and its coupons offer ridiculous deals. Even so, product choice and variability keeps improving. Again, the customer service at this retailer is always outstanding. But mostly, Bath & Body gets on the list because it brings luxury products to the masses at affordable prices via gimmick-free marketing and solid business management.
4) Bed, Bath & Beyond is not just for ladies anymore. The guys love it, too. What's so special about this place? In a nutshell, selection and service. One unique thing about Bed, Bath & Beyond is this: there is always an employee out on the floor, somewhere near you, who is able to answer your questions of what and where. Good luck finding a human being on the floor at Best Buy or Home Depot. The product selection is massive, and this retailer carries stuff for all areas of the home. It's a one-stop retailer. Yet the retailer's prices are middle-of-the-road and affordable. This enterprise also offers some extraneous benefits that customers can truly appreciate. For one thing, returns are never complicated. "The customer is always right" applies here. Another service item that deserves a nod is its coupon policy. Bed, Bath & Beyond frequently sends out 20% off coupons — I have saved about two dozen of them. They never expire, and they save you a lot of money on large-ticket items.
5) REI is Recreational Equipment Incorporated. I'm an avid outdoors woman, and this is my outdoor store. The selection of outdoor/active equipment and clothing at a typical REI store is staggering. Whether you jog with the twins or want to climb Rainier, this is the place to shop. REI offers a $20 lifetime membership with dividends at year-end that are equal to 10% of your total purchases. REI is run as a co-op, which means that you get to vote for the Board of Directors. The return policy here is almost insane: they take back anything you want to bring back, whenever you want to bring it back, even if it's been worn to shreds. I've always wondered how they stay in business with this policy, but perhaps the retailer's outstanding reputation and quality products makes that policy little-used and therefore manageable. Some people consider REI to be a bit pricey, but its unique clothing and gear for outdoor types hardly comes on the cheap. In fact, another thing I like about REI is that it sells its own brand of clothing and gear, and at lower prices than the competitors' products.
In addition, REI offers tons of free workshops on various activities from snowshoeing and backpacking to rock-climbing, GPS systems, and bicycle touring. A climbing wall can be found in many of its stores. The company also has an extensive website that is useful for the beginning adventurer. The stores are always well-staffed and people are always courteous beyond expectation. One more notable fact about REI is that it carries a very large selection of women's clothing. REI was the first outdoor clothing retailer to offer such a large variety, even at a time when it was risky to stock inventory that was much less likely to sell. REI helped make a mainstream market where there once a very small niche market. REI also offers its lady customers almost every clothing item in a small and extra-small, meaning that even I can find clothes without entering a "junior" or youth department.
6) Columbia. Gertrude Boyle's father, proprietor of Columbia Hat Company, died in 1964, leaving her husband Neal Boyle in charge. Neal died just a few years later, propelling this housewife to the head of Columbia Sportswear Company. Thirty-five years later, Columbia is one of the world's largest outerwear manufacturers.
Columbia outdoor wear is made of the same high-tech materials and designs as brands such as Marmot or North Face, yet it offers far better bargains than its more uppity competitors. Whereas the others are marketed intensely and thus are perceived as being of better quality, this is not true. In fact, product innovation is Columbia's specialty. It has grown its family of brands and manufactures high-quality clothing that is offered at conventional sporting goods stores and discount retailers for low prices. It also offers lower-priced sportswear and shoes that are in demand among the non-outdoors types who are attracted to the style and price of the products. Thanks to Columbia, the great looks and quality of outdoor wear has become popular among urban, suburban, and rural customers, and not just outdoor adventurers.
This excellent company was among the first to peddle great Gore-Tex products. Also, Columbia was one of the first manufacturers to make real women's clothing for real women who engage in something more demanding than aerobic classes. Women? Out-of-doors? Until Columbia, you would think that was impossible. Before that, you borrowed Dad's hunting jacket and your big brother's pack boots.
And, oh yeah, I know I promised not to do this, but as a bean counter I could not resist pointing out this very healthy balance sheet from Columbia. This is a sign of a very well-run company.
7) Harley-Davidson deserves a mention on this list because of its unique products and commitment to growing its consumer base via very slick marketing, along with dedication to its product culture and historical past. Clearly, Harley has one of the most identifiable logos on the face of the earth.
Harley-Davidson motorcycles have come a long way: they went from being the choice of street punks and gangs to being a product for which the average buyer is in his or her late 40s and has an income greater than that of the US median. Most interestingly, the technology found on Harley-Davidson motorcycles can be vastly inferior to that of its competitors (Honda, Yamaha, BMW, etc.), but Harley has something that no other manufacturer else has: mystique, retro coolness, and historical grandeur. Harley boasts what is perhaps the sexiest product on the planet. That is why people who don't own Harleys wear Harley gear and plaster Harley stickers on their vehicles. Most everyone admires Harleys or wants a Harley. One's "cool factor" is said to rise by virtue of being on a Harley.
In addition, Harley has made a mint by marketing its logo, name, and famous color scheme. One can buy Harley wall clocks, desk calendars, wastebaskets, beach blankets, dog wear, and even golf balls. The Harley clothing line is huge and spectacular. Product styles are rotated constantly, and its selection of women's clothing is intoxicating.
Harley meticulously grew its consumer base over the years by offering family-friendly biker clubs, organized road trips, women's chapters, and safety/performance classes. Harley-Davidson, with its ability to market "cool," has been very adept at enticing middle-age non-riders — including women — to buy a Harley and ride. The US motorcycle market has seen massive growth for about the last fifteen years, with much of that growth due to the upsurge in female buyers.
8) Trader Joe's knows we have to eat and it shows. This great, privately-owned company has branded itself "your neighborhood grocery store." With its casual, laid-back demeanor and friendly staffers, the company that once catered mainly to the granola-conservationist crowd has caught on with middle-class America. Its stores offer everything from good-quality, cheap Spanish wines to a host of organic food items. The company doesn't spend a lot of money on elaborate interior décor, but that's how it offers such unique foods at very competitive prices.
9) Whole Foods is perhaps the best food chain in America. It's an upscale version of Trader Joe's, only it doesn't try to be so simplistic or conventional. Whole Foods strives to reach out to the food consumer whose budget is a little bit more flexible when it comes to maintaining a natural, healthy diet. CEO John Mackey has grown this business from a neighborhood market to a $4 billion, Fortune 500 company.
Besides its legion of organic produce, meat, and packaged products, Whole Foods offers the best food bar I have ever witnessed. The food bar is packed with fresh, natural foods, and it titillates the consumer with unique recipes. In addition, the Whole Foods deli counter offers even more avant-garde foods that are sensational. The food is always fresh and it's the kind of cuisine you typically wouldn't make at home. For many customers, the opportunity cost of making the stuff at home makes the prepared version a bargain. Finally, the meat counter is stocked with all the usual meats, and then some. They sell a variety of raw meats in the form of marinades, meatballs, pre-seasoned patties, etc. — and all of the items are distinct. It's a great place to let someone else do the food preparation.
Probably the best draw at Whole Foods is the fact that if you visit on a weekend, you are bound to come across an entire store full of food samples, from marinated vegetables to cooked meats to all of its home-baked desserts. I use this as an opportunity to eat lunch while I'm there, and of course I have been introduced to many new items that I have since purchased often. They hand out recipe cards for the meals they allow you to sample. Over by the cheese section they'll be warming cheese and handing it out to customers. This is great marketing, and it's one of the things that keeps me coming back. Lastly, the Whole Foods website is top-notch. The company posts much of its recipes, and the website even offers you a homepage to sort and store your favorite recipes.
10) Waffle House is listed last, but it certainly isn't a bottom dweller. Some of the best moments can be had in a Waffle House restaurant. Alas, the restaurants are not in all states, so some people know nothing about the chain. Waffle House, however, is always predictably good, as well as cheap. They are all open 365 days, 24 hours per day. As you walk in you are greeted by no less than 2 or 3 "hello" chants, as this is one of the company's signature practices. Sitting at the counter at a Waffle House is the perfect ideal. Service is immediate and you'll be called "sir" or "ma'am." You'll usually find a jukebox right behind your seat and it's likely to be loaded with Patsy Cline, Johnny Cash, and Hank Williams, Sr. Also, you can order your scrambled eggs about 6 or 7 different ways, and you can have breakfast anytime. Whether I am on a road trip or just trying to get from here to there fairly quick, I look for that yellow sign.
The business enterprises above are just a small sampling of the wonders I encounter each day of my life. Every day I look to entrepreneurs to provide me with affordable basics and new samplings, whether it is organic food, hiking gear, feminine foot crèmes, or a quick waffle at 2am. By and large, product differentiation is crucial for the aforementioned business enterprises. Whether it is women's x-small clothing, a Gore-Tex breakthrough, a sexy 2008 motorcycle that runs on 1950s technology, or a college-educated service representative that goes the extra mile, capitalism and the free market offer consumers countless choices to alleviate their uncertainties about tomorrow and beyond. Somewhere there was some heroic entrepreneur who had an idea, and he put a financial stake in that idea and brought it to the market. When the entrepreneur and his ideas profit, we are all better off for it.
Of course, every individual is going to have his or her own preferences. But that's the glory that is capitalism — there's something for everyone, and these days, we don't have to look very far to find it. In fact, we are so fortunate to live in a world where we can just Google it.
February 4, 2008
Karen De Coster [send her mail] is a Certified Public Accountant, has an MA in Economics, and works in finance and accounting in the securities industry. See her website and her blog. She is by no means a shop-a-holic, and in fact she considers herself to be decently frugal. Yet she openly admits to going to Bath & Body Works or REI to buy things that aren't absolutely essential at the moment. She's good at excuses, such as "it was on sale at the lowest price I've ever seen," or "it was a closeout clearance item," or "I'll never find it in this size again, so I'd better get it." She favors the tofu selections at the Whole Foods food bar. She rides a Harley and is more than happy to ride 82 miles to the nearest Waffle House in Toledo, Ohio.
Copyright © 2008 Karen De Coster