nytimes.com
October 21, 1999
Passivity Is the Word on Year
2000 Marketing
Most Big Companies Playing It Low Key
By BARNABY J. FEDER
onsidering the once-in-a-millennium marketing
opportunity that potential Year 2000 computer
malfunctions present, the nation's large manufacturers
and retailers of consumer products -- even many that
stand to benefit from fears of disruption -- have been
remarkably restrained.
"We are not going to exploit this," said William J.
Spain, a senior vice president for public affairs at Del
Monte, the largest producer of canned fruits and
vegetables. "We don't think that's responsible."
Even companies that have enjoyed soaring demand
from the limited ranks of consumers who appear to be
stockpiling goods in advance of what many now refer
to as Y2K have been strikingly passive.
"We have never mentioned Y2K on our Web site or in
marketing letters," said David R. Kauntarich, president
of Crown Point, a packager of ready-to-eat meals in
Mullins, S.C., whose main customer is the United
States military.
Mr. Kauntarich said he was happy to see commercial
sales for Crown Point, which is part of the Unaka
Corporation, rocket up from an average of about 7,000
cases a month to a peak of 42,000 in March, mostly on
the strength of Year 2000 advertising by independent
distributors. But he did nothing to try to reverse the
subsequent slide back to the current level of about
12,000.
"We don't want people to say we were fanning the
flames, and I don't want to be labeled as a Y2K
product," Mr. Kauntarich said.
To be sure, legions of entrepreneurs at
the fringe of the economy have avidly
promoted products like dried foods and
home power generators that might help
people through potential disruptions.
And a few subsidiaries of major
companies have been aggressively trying
to persuade consumers -- or at least the
retailers that sell to them -- that the
potential for Year 2000 disruptions
justifies loading up on their wares.
"Y2K is a marketers' dream, an
opportunity created by the media and a
date change," said Edward C. Brice,
director of business development for
Sony Media Solutions, a unit of the Sony
Corporation that is based in Oradell,
N.J., and makes data storage products. Mr. Brice says
he has been working with wholesalers and retailers to
"get Y2K on people's minds."
And in recent weeks, some big names like Staples Inc.,
the nation's largest office supply chain, and the
Eveready Battery Company, the Ralston Purina unit that
makes Eveready and Energizer batteries, have begun
promotional campaigns highlighting how their services
and products can help protect consumers from Year
2000 troubles.
Such steps are still unusual, though, and most
companies with Y2K-linked promotions have been
careful to make it clear that they are not predicting how
the transition to next year will unfold.
Among those taking this low-key approach is Giant
Food, a supermarket chain that serves the Washington
and Baltimore areas. The company, a subsidiary of the
Dutch supermarket giant Royal Ahold, has sponsored
radio messages proclaiming its readiness for Year
2000 and is providing customers with lists of items the
American Red Cross recommends for Y2K
preparedness, like batteries and bottled water for use in
the event of utility failures.
"We're not telling people to buy it now, but, if you're
worried, it's available," said Barry S. Scher, Giant
Food's spokesman.
The Year 2000 problem stems from the inability of
many computers to handle year 2000 dates.
Preparedness advocates argue that an accumulation of
foul-ups, most of them tiny, could shut down some
crucial services like electrical power and gum up
others next year. The risk of last-minute panic buying,
these advocates say, increases as major companies
shun aggressive marketing of products that consumers
might want in the event of shutdowns.
"People aren't going to panic
if they are prepared," said
Paloma O'Riley, a
preparedness advocate
based in Louisville, Colo.
Consumers are more likely
to stock up gradually and
sensibly if retailers raise
Y2K awareness, she said.
Perhaps, but there is scant evidence of that so far. The
Hannaford Brothers Company, which has 155
supermarkets from South Carolina to Maine, began
adding inventories of items on the Red Cross
preparedness list this summer and displaying them at
the ends of aisles with preparedness information.
"It came in handy when Hurricane Floyd hit," said
William L. Homa, Hannaford's chief information
officer. But aside from the run on such items in the
North Carolina stores when the storm struck last month,
sales of such items have not significantly increased.
That could change if the number of reported computer
failures involving dates rises noticeably this fall, a
development that consultants like the Gartner Group in
Stamford, Conn., say is likely.
For now, even though many companies are preparing
contingency plans for serious disruptions, betting on
such trouble looks like a no-win situation to many
corporate marketers. Most agree with the Government's
current view that the computer date problems are
unlikely to produce more than minor, short-lived
problems around most of the country. That makes
pushing the sale of preparedness products seem like a
high-risk strategy.
The risks are partly a matter of corporate reputation. If
a last-minute wave of panic leads to food hoarding,
runs on banks or other chaotic behavior, companies
with advertising programs reinforcing the climate of
fear will be branded as reckless and greedy. And
consumers faced with bare shelves might focus their
blame on companies that had advertised themselves as
sellers of Year 2000 preparedness.
Many companies say that financial considerations also
point to a cautious approach. Consumers may well stay
calm and leave merchants who fill their shelves with
Year 2000 goods choked with inventory at the end of
December, when taxes on everything they own are
calculated. And most retailers do not want to do
anything that adds to the seasonal problems of handling
Christmas exchanges.
"What if customers load up on Y2K merchandise in
December and then bring it back in January?" said
Janice R. Drummond, a spokeswoman for Sears,
Roebuck.
Sears recently began telling purchasers of home
generators that they will have to pay a "restocking fee"
of 20 percent of the sale price if they return the
generators next year.
Returns are a major concern for smaller retailers.
McGuckin Hardware, a family-owned store in Boulder,
Colo., has sold several hundred kerosene heaters so far
this year, up from just a handful two years ago. The
heaters and other big-ticket Y2K items like generators
carry "no refund, no return" stickers.
"There is no way I can take hundreds of heaters back,"
said Harry Ransom, the assistant store manager in
charge of McGuckin's Y2K program. The store has set
aside a Y2K section with ready-to-eat foods, heating
and lighting equipment and even theme T-shirts.
Reluctance to exploit Y2K fears does not mean that
retailers and manufacturers have not thought long and
hard about how consumer behavior might change as the
rollover approaches.
Some are taking the approach of banks, which have
made arrangements to refill automated teller machines
more quickly than usual if consumers begin
withdrawing large amounts of cash as the New Year
weekend approaches.
The bottled-water businesses of Nestl‚, including
brands like Perrier and Poland Spring, have begun
increasing production and shipments to handle
post-Christmas sales that some in the industry expect to
surge 25 percent, to peak summer levels. But a rival,
Groupe Danone, maker of Evian, is still searching for
signs that such a demand spike is coming.
"Behavior assumptions can be very tricky," said
Michael J. Neuwirth, a spokesman for Danone's North
American water operations.
Wall Street is certainly not expecting any spectacular
financial returns as a result of Y2K-inspired
consumer-goods purchases. The industry leaders for
many of the products on popular preparedness lists are
units of large, diversified multinationals. A major jump
in end-of-year disposable diaper sales, for example,
would not move the Procter & Gamble battleship much.
The same might be said of the Gillette Company and its
Duracell batteries or Eli Lilly & Company and insulin
for diabetics. In addition, analysts expect that most of
the extra purchases in 1999 will reduce demand for
such products early next year.
Still, some major companies are beginning to back
modest marketing efforts. Last month, Staples
announced a program for both Y2K preparations and
"sound record-keeping practice at the end of every
year." Staples, which is based in Framingham, Mass.,
is waiving fees through Dec. 31 for downloading and
reading computer files that small- business owners and
home office workers send to its copy centers for
backup.
And Eveready recently sponsored advertising inserts in
newspapers to start an $11 million campaign
highlighting the advice by the American Red Cross to
set aside three days' to a week's worth of supplies --
including batteries -- for Y2K, treating it like a major
storm. It is also donating $100,000 worth of batteries to
local Red Cross units.
The working assumption for most merchants is that any
surge will begin after Thanksgiving and hit hardest after
Christmas. A few companies say they are gearing up
already to court such business. The 7-Eleven Company,
which normally runs monthlong advertising promotions
for its 5,000 stores, is currently leaning toward
introducing banners promoting Y2K preparedness
products along with its New Year's party goods on
Dec. 26. It has also added Sony Walkman radios to its
inventory in part because portable radios are on most
Y2K preparation lists.
"It's a great opportunity to deliver on our promise of
convenience," said Margaret A. Chabris, a
spokeswoman for the company.
Much of the planning is mere guesswork, though. After
all, American business has little incentive to do much
research.
"There's no ongoing return for learning how to do this,"
said Robert C. Blattberg, a marketing professor in the J.
L. Kellogg Graduate School of Management at
Northwestern University. "It's a one-time event." |
