BETTER COMPETITORS MEAN BETTER BUSINESS

Every business is far better off when it faces rational competitors, and food retailing is no exception. To pick just one example, double or triple couponing enters a market only when one competitor is so desperate, or has so impoverished an imagination, that no other competitive alternative comes to mind.ellers and a bit of an economic slowdown is doing the same to the mass booksellers. In consequence,

Every business is far better off when it faces rational competitors, and food retailing is no exception. To pick just one example, double or triple couponing enters a market only when one competitor is so desperate, or has so impoverished an imagination, that no other competitive alternative comes to mind.

ellers and a bit of an economic slowdown is doing the same to the mass booksellers. In consequence, price points are rising in the book-selling business and many independent book shops are heaving sighs of relief.

And that brings us back to food retailing. Food retailers have been under similar price pressures for a couple of years now, namely that Web-based retailers could sell products at nearly as extravagant a loss as they liked, only to go to the capital markets and obtain a new round of financing to support more of the same. But now the party's over. As Priceline found out in recent days, the capital markets won't continue to fund a money-losing proposition in perpetuity. Priceline isn't alone. Others such as Peapod, Streamline, Webvan and many more have remained viable only by selling off portions of their businesses, attenuating unsupportable rollout plans or pledging that profitability is now king.

The last is particularly good news for conventional retailers: When the capital markets gushed cash, Web-based retailing presented a challenge to conventional retailers that was difficult to confront. After all, if Web merchants could sell goods -- and deliver them -- at price points not much more than what conventional stores could command, what could conventional retailers do? And what did that say to consumers about the value proposition delivered by conventional retailers? But if Web-based retailers now must generate a profit margin, their price points are likely to climb at a rapid clip and rationality will be restored to the entire marketplace.

Maybe the best news for conventional retailers has been the withdrawal of Priceline from grocery sales. That model was not only destructive to brand equity, but also made retailers co-conspirators. Retailers joined in for the same reason they are sometimes led to doubling coupons: Everyone else in the market did it, so no one could resist. It became the price to play. What conventional retailers can do to deliver themselves from the threat of mass merchants selling groceries is another topic.

And for more on that topic, see the second column below.

New Look

Now let's move to the obvious: The new look of these editorial pages. The new look represents quite a step in the evolution of SN. Since SN was founded in 1952, we've adhered to the editorial-page look that you've come to know, namely we've always put the editor's column in a space on Page 2. So why open the presentation to two pages? The editors decided to do so to give room for more voices. The second column on this page is written by David Orgel, SN's editor-in-chief. The space below this column will rotate, on alternate weeks, among the section editors of SN. That will make it possible for more pointed opinions about products, merchandising and technology to be delivered to SN readers. We may also ask guest columnists to contribute from time to time, and we'll make space for letters to the editor too.

This is also a good place to underscore the fact that SN welcomes letters to the editor, as has always been the case. Our previous page design didn't admit to a permanent home for letters, so they tended to crop up in a variety of pages. But from now on, we'll find a home for letters on these editorial pages to highlight your ideas and your reaction to SN news articles and editorials.

Let us know how you like this new approach.