Starbucks v Dunkin': how capitalism gives us the illusion of choice
American culture valorizes the small. Small-town life is overrepresented and romanticized on the screen – think Hawkins in Stranger Things – a form of escapism in a country where 80% of people live in a city, but two in five say they’d prefer a rural or small-town home. Likewise companies: US adults are three times as likely to have a “very favorable” view of small businesses as they are of large enterprises (59% v 17%), according to a 2018 survey from the Public Affairs Council.
The nostalgia for small-town life and “mom and pop” stores stands in stark contrast not only to an urbanized population but the power of large companies. Capitalism is an engine of choice-making and competition, but very often the competition is between
brands owned by the same company, or between small numbers of large economic players. Smallness rules the imagination; bigness rules the high street.
From the moment we wake up to eat our cereal and brush our teeth, our consumer choices are dominated by a handful of large companies.
7.30am
You brush every morning, right? Good. And there are so very many pastes to choose from. But most of these are produced by one of the three companies that dominate the market: Crest (20%), Colgate (21%) and Sensodyne (12%).
8am
A meal created by modernity, cereal has become a staple of western diets (unfortunately, but that’s another story). And it does not come artisan crafted from down the road, but from huge companies: Kellogg and General Mills have virtually carved the market up between them, accounting for almost a third of sales each.
8.30am
Most Americans drive to work, and most do so in a car manufactured by one of four companies: General Motors, Ford, Toyota or Fiat Chrysler. Together these four account for 60% of car sales. That said, the next five companies account for 30%: Honda, Nissan, Subaru, Hyundai and Kia. Here at least there seems to be some pretty robust competition, not least from overseas. But let’s see if that lasts.
9am
Grab a coffee on the way to the office? Chances are it will either be from Starbucks (40% market share) or Dunkin’ (22%). When it comes to caffeine, not much choice across companies is required, it seems.
10am
The first things millions of Americans do when they sit at work, maybe coffee still in hand, is logon. Seven out of ten will do so via Microsoft Windows, another 20% using the Apple OS operating system.
1pm
Unless blocked by company policy, there is a good chance of visiting some social media sites during the day. For all its travails, Facebook remains the big daddy, with a 37% market share, followed
Calling a friend for after-work plans? That will be with an iPhone, most likely (55% market share): or perhaps a Samsung (25%). Either way, the chances are it will be using either Verizon or AT&T, who between them control two-thirds of the wireless market.
Big companies dominate consumption. This is not a bad thing in itself. Companies get big by winning customers, and they win customers by providing a good product and/or service, which is the whole point of consumer markets. Different divisions of large companies may compete against each other; consumers are often unaware that they are choosing between two products owned by the same company. The problem comes if success leads to incumbency, with large, powerful companies able to use their power to shape regulations to suit them, rather than assist their competitors. Being market-friendly is not the same thing as being business-friendly, a confusion common to politicians. Big is neither beautiful nor bad, so long as regulators remain faithful to consumers, rather than the companies serving them.