Wednesday, October 15, 2008

The economy's new threat: Pantry deloading?

I don't normally listen to earnings calls by public companies, but I found myself tuning in to Pepsi's call last night for some reason.  Their sales are tanking, and their stock was rewarded with a healthy beating this morning as a result. But for all the depressing news, I learned something interesting - it's a phenomenon called "pantry deloading," and Pepsi execs blamed it in part for their slowing sales.

Simply put, in good times, we tend to over-shop. If something's on sale, we buy lots of it and store what we can (assuming it's not perishable, of course). Fill-up trips are bigger than they need to be, as each of us basically builds up a small inventory of frequently-used or sale-priced items.

Fast forward to today, where more people are trying to stretch out every last dollar. Instead of filling up (or over-filling), we're emptying out those stores of sale-priced items.  So instead of sticking another 12-pack of Mt. Dew in our cabinets, we're dusting off the old 12-packs that we so cleverly purchased and stored some time last year.  And when it comes time to replenish the dwindling stocks, some consumers will go back to the name-brand stuff, but others might be tempted to try cheaper private-label variants from their local supermarket or discount stores.  Still others will simply decide to do without altogether.

So there you have it: pantry deloading.  Any interesting phenomenon with real-world economic effects and a funny-sounding name :)

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