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The 1-2 Phenomenon

It seems everything in business, politics, even religion is based on what I call the 1-2 Phenomenon.

In business, most industries have two key players. Coke-Pepsi; Caterpillar-Deere; Boeing-Airbus; McDonalds-Burger King; M&M Mars-Hershey; Duracell-Eveready; Costco-Sam's Club; Kroger-Safeway; CVS-Walgreens; Proctor & Gamble-L'Oreal; Best Buy-Circuit City. And the list goes on.

There really isn't room for #3. Sure, #3 exists in most markets but usually the top two control at least 80% of the business. Some #3's that come to mind include Ray-O-Vac, 7UP, Arby's, Rite-Aid, Dillard's, and Chrysler.

Which brings me to the Michigan market for beauty supplies. We are #1 and Maly's is #2. But the public/private equity group SBH which owns both Sally stores and BSG which runs its Cosmoprof stores opened in Michigan more than a year ago. So there are three players of which only two can dominate and survive. Who is going to be the odd-man out?

GM, Ford and Chrysler have the same issue. Only two can survive. Lately, it seems even the 1-2 leaders are having troubles. Circuit City is close to filing bankruptcy and is closing stores to cope. Big changes are coming at L'Oreal as their U.S. sales are plummeting especially in the pro beauty category.

Today it's about politics and the Republican and Democratic parties. Oh, there are many others, but these two have led the way for as long as we can remember. I think the great thing about voting for judges is that they aren't affiliated with any party.

And with Christmas around the corner, the focus will shift to religion. One of our top radio stations is already playing Christmas music full time. Starbuck's red cups are out. Soon tree farms will be sprouting in parking lots. The 1-2 religions love this holiday (as do the malls and shopping centers!).

It's good to be #1, the view always changes in front of you. Avis will always be #2 and sometimes that's not too bad either. For Obama and McCain, being #2 after today sucks. And being #3? Forget about it!

Happy Tuesday!

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