Archive for the ‘Politics and economics’ Category

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Is Britain really panic buying and hoarding?

March 22, 2020

Undoubtedly, as the Coronavirus pandemic bites, some people are panic buying and hoarding. And some are bulk buying with the intention of selling goods on at a profit.

But I suspect the shortages in supermarkets are mostly down to something else.

Over the past 15 years, with the increase in the numbers of supermarkets, the growth in cooked-chilled and convenience foods, and the rise of Just Eat and Deliveroo, most people in the UK have been buying tonight’s meal that day, or ordering in. There’s evidence for this. In 2015 Waitrose published a study, reported in the Guardian, that identified exactly this trend.

Over time the supermarkets have adjusted their supply chains to replenish this little-and-often shopping style. Then suddenly we’re all faced with the possibility of being stuck at home for first seven, then 14 days and today, according to the Sunday Times (£) some of us will be told to stay at home for 12 weeks for our own good. Just imagine what happens when we all start to buy seven or fourteen times what we normally buy each day. Plus while take aways are still available, all those people who would eat in pubs and restaurants now can’t. So they’ve also gone food shopping.

I’m old enough to remember the “weekly shop” when we used to go to the supermarket on the way home on a Friday night and buy enough to make meals and have other products for the entire week. But for most families this is a thing of the past.

As a result the demand on the supermarkets’ supply chains has suddenly and massively increased.

Helen Dickinson, chief executive of the British Retail Consortium, said there was “plenty of food” in the supply chain and that the industry was experiencing “a peak in demand “like Christmas . . . without the four-month build-up period”.

Sunday Times, March 22nd 2020

Then the mass media, and social media, haven’t been shy about publishing photos of empty shelves, encouraging those of us sanguine enough to buy what we need for a few days, to rush out and buy more, just in case it’s not available when we need it. They need to publish more of these:

bargain_1894744b-1

A well stocked aisle in a UK supermarket

I’m sure it’ll return to normal, eventually. When either we’ve run out of room at home to store food, or we run out of spare cash or hit the limit on our credit cards. Helen Dickinson (quoted above) estimates there’s £1Bn more food in our homes than there was three weeks ago. Surely we can’t store much more without it going off and being thrown away?

And the cost of food will rise, not only because wholesalers sense an opportunity, and because of shortage, but because the BOGOF* and multi-buy offers normally offered by the supermarkets will be stopped for the time being.

I also suspect (but I have no evidence) that given the logistical constraints on distribution, priority is being given to food products in preference to non-food items such as washing powder. So those items will run short too due to both stocking up and reduced distribution. I’ll leave the last word to former Sainsbury’s chief executive Justin King:

“Britain’s food supply chain is under short-term stress, not structural stress,” he said, “Probably 50% of customers are buying twice their usual shop and supermarkets can’t cope with that.”

I hope it all settles down soon, but in the meantime I’ve bought some vegetable seeds which I’ll be planting out over the next few days – well I have lots of time and I’m not supposed to go out unless it’s vital…

*Buy One Get One Free

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Black Friday – let’s leave it to the US

December 1, 2017

So it seems “Black Friday” has come and gone in the UK without it really stirring anything very much. The Daily Telegraph reports that Currys PC World in Oxford Street opened its doors especially early to let in the rampaging hoardes looking for a bargain – and there was one bloke outside who’d dropped by to pick up his pre-ordered laptop!

It’s no surprise to me. In fact I’m rather pleased that this particular US import isn’t getting much traction over here.

And nor should it.

Picture from The Sun of shoppers fighting over a flat-screen TV

The reason for “black Friday” is that this is how it was referred to by US retailers. The day in question is the Friday after Thanksgiving – which always falls on the last Thursday in November. For many of my American friends Thanksgiving, or “turkey day” as it’s colloquially known, is a much bigger family event than Christmas. The problem for US retailers was that after a day of scoffing Turkey and convivial drinking with their loved ones, most folks booked the Friday as vacation and slept in the next morning. So retailers didn’t sell very much on that particular Friday morning.

Hence it became known as “Black Friday”. Then some bright spark thought of the idea of having a discount sale, but one that ended at midday. So to get the great prices you had to get out of bed and go buy that TV, bike, carpet or whatever else, before lunchtime. I’ve been there on that day (in Boston, MA), and done it. And it’s quite fun, but a lot of people end up buying a lot of stuff they didn’t really want or need just because it was cheap, and the offer was time-limited.

That was it. And of course the UK doesn’t celebrate Thanksgiving, we didn’t have the dip in retail sales on that day, and “black Friday” meant nothing to us.

But the world’s moved on. We can now shop on the internet, so Americans can still sleep in and snap up those bargains without even getting out of bed. And, of course, anyone else in the world with an internet connection can shop from those US retailers. And, with US retailers owning UK chains (IIRC it was Asda, which is owned by WalMart, which originally introduced the concept of Black Friday to the UK some years ago) Black Friday has metamorphosed from a once-a-year, Friday-morning only sale in the USA, to a whole week of discount offers across half the globe.

I’m delighted to see that Marks & Spencer, Fat Face and several other major UK retailers are spurning the Black Friday farce – I believe they’re right when they say all it does is bring higher-price sales during December forward, and reduces the margin on them. It also encourages people to buy stuff they don’t really need. Time magazine suggests that in the US return rate of goods bought on Black Friday is significantly higher than for goods bought at other times of the year. It’s especially so for technology purchases. So the admin and restocking cost for the retailer is higher.

Please Britain, remember Thanksgiving isn’t something we celebrate, so let’s abandon this unnecessary US import.

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What recession?

January 28, 2011

In the last recession I worked out three measures to determine the state of the country’s economy, and how I could tell things were picking up.

The first was the number of people on public transport during the rush hour. My logic is that no-one in their right mind would travel into London during the rush hour unless they had to. And the primary reason they have to is because they have a job. The number of empty seats, or conversely the number of people standing, on the train in the morning is a good proxy for the number of people employed and therefore the state of the economy.

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Why MPs’ expenses are good for the economy

June 21, 2009

I think the current ongoing fuss about MPs’ expenses is good for the economic recovery of the UK.

What fuels the economy?

Well economic health is all about confidence. Traders, especially on the stock market, behave generally as a herd – if the herd takes fright they all run. So stories about economic failure, increasing unemployment, shops closing, firms going bankrupt and the size of the national debt all fuel the fear, both among traders and the general public. This fear breeds more fear, so people stop spending, firms stop investing, banks stop lending and it all heads for the cliff.

So how does MPs fiddling their expenses help?

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