Thursday, January 27, 2022

THE PRAIRIE EDITOR: An Age of Disintermediation?

The word “disintermediation’ is a mouthful, and a fancy term

used usually by academics and economists, but it seems the 

right word to describe some significant behavior of American

consumers in these volatile times.

The word is employed in a discussion of how consumers make

their purchases in the non-traditional way of “cutting out the

economic middlemen,” and purchase goods more directly from 

the producer or manufacturer.

The word seems to have first appeared in the 1960s when the

government’s actions changed some of its policies, causing

some banking customers to purchase bonds and some

other investments directly without the agency of the banks.

By the 1990a, the word had become applied to any direct

transaction which bypassed traditional middlemen such as

distributors, wholesalers, and/or retail stores.

The rise of the internet in recent decades has accelerated

the practice, providing both a platform for disintermediate

transactions, and the transparency of pricing often previously

unavailable to consumers to provide incentive to bypass

traditional supply chains of products.

Innovative manufacturers and retailers began to employ

more direct transactions with customers, Walmart and 

other very large retailers were able to buy large enough

quantities of goods to bypass distributors and wholesalers

and thus offer them at lower prices to their customers,

as did Amazon. Manufacturers such as Apple and Dell

sold their products through their own retail stores, and

now Tesla is doing the same selling cars from its own 

outlets without large on-premises inventories.

Distributors, wholesalers and retailers add to the cost of a

product, but they also provide necessary services in

getting a product to a customer, including advertising,

transportation, stores, sales and other personnel. If a

manufacturer or producer wants to eliminate the

middlemen, it must replace most of their services with its

own, and thus raising its costs.

Some firms abandon direct customer sales, thus producing

reintermediation or a reversal of the otherwise growing

commercial trend.

There is also an age-related aspect to more direct consumer

transactions. Older persons, used to traditional retail stores

and less accustomed to shop on the internet, are more 

reluctant to be disintermediators, and younger persons,

having grown up with computers and the internet, are more 

likely to embrace new economic practices.

Whereas FDiC limits led to early disintermediation by bank

customers half a century ago, today banks see diminished

savings accounts because of low interest rates. In the short

term, interest rates are set to rise, but the need for traditional

banking services is in long-term decline, and banks are

expanding into new areas in order to survive.

Supply chain disruptions primarily caused by the response to

the pandemic are also causing economic uncertainty, and

consumers, in order to obtain the products they want, now

have incentives to try disintermediation strategies.

The economic future is always uncertain, and is especially

so as the nation and its economy go into a post-pandemic

mode and more political turmoil — with even more impact

on how and where consumers obtain their goods


Copyright (c) 2022 by Barry Casselman. All rights reserved.


Wednesday, January 12, 2022

THE PRAIRIE EDITOR: Restaurants Are Back, But.....

[NOTE: The Prairie Editor, from time to time

asks the food writer Leo Mezzrow to comment

on food issues and trends, restaurants, and

dining out. Here is his newest commentary.]

by Leo Mezzrow, guest columnist

Following the nadir of the 2020-21 global and national 

health crisis and its disastrous impact on dining out, the

restaurant industry is making a recovery, but still facing

challenges of staff employment, food supply, national

economic inflation and diner psychology.

As I have suggested might happen in past articles, there

are noticeable changes, innovations and lingering

questions about prospects. Many restaurants have closed

permanently (but most of their restaurateurs will stay in 

the business), and others, temporarily shut down, have

reopened in stages from take-out only to dining-in.


Menus are generally smaller, wait service often reduced or

eliminated, and prices are up.  Some restaurants no longer

use printed menus, and rely on smart phone ordering or

ordering from a counter. Kitchens are open fewer days 

and fewer hours. How these changes will be received 

over the long term is unknown, but many of them are

irreversible for the majority of restaurants if they are to


A positive sign is a surge of new restaurants, some of 

them by those who had to close down their old ones. 

Dining out is now a vital part of American culture and its

economy. Lockdowns, shutdowns, customer restrictions

and inconveniences are not going destroy this important

industry, but the pandemic has already changed it.

For those with neither the time nor the inclination to cook

at home, there is a new appreciation for going to their

favorite nearby restaurants for take-out or delivery. Those

with budget limitations, and lots of children, will go back to

family fast food restaurants — although they probably 

will find that their prices, too, have gone up.

Perhaps most of all, however, we might be entering a

period of the home amateur chef, not only including wives,

but also husbands and singles who previously took their

daily meals for granted. If you have the can serve

at home some superb meals that would cost  a great deal

more in a fine restaurant — especially for those who enjoy

wine with meals (most restaurants mark-up wines


Hone cooking devices and ware should see new consumer

interest. One pot and crockpot recipes, always popular,

likely will surge, as will soup and baking recipes. Cookbooks,

always a bookstore staple, will be in even more demand.

Notwithstanding the inevitable increase in home cooking, the

restaurant experience will continue to be part of daily U,S,

life. How long pandemic limitations will linger is anyone’s

speculation, and how permanent its adaptions will be is  

unclear, but it seems certain that the U.S. restaurant

industry has changed and will not be quite the same as



Copyright (c) 2022 by Barry Casselman. All rights reserved.