It often boggles my mind how ignorant some stores can be about the functioning of their supply chains. The worst of all are often clothing retailers. Not only are they never selling clothes during the seasons when they’re needed – you have to buy fall clothes in the summer, winter clothes in the fall and shorts in the winter – but they are also blithely ignorant on when and even whether they’re going to get any more stuff to sell.
Take one well known brand’s shoe store in Espoo, where I went to inquire about kids’ shoes that their website was full of. In the store, however, they didn’t seem to have any. Here’s the conversation:
Excuse me, do you have any kids’ shoes?
“Not at the moment, no.”
Well are you going to get any?
“Yeah, usually we do get kids shoes later.”
Okay.. when would that be?
I don’t know really. They’re usually fall shoes.
So they’ll be here in the next few weeks then?
Maybe yeah.. or months.
Sheesh! Are you kidding me? And I wasn’t even asking after any particular shoe! This is by far not an isolated incident. I mean come on! Clothes are manufactured a long time before they’re sold. The stores have also ordered the stuff they carry months beforehand – they should know exactly what they’re getting and when they’re getting it, but no.
How can you run a retail business like that?! Imagine if pharmacies did the same thing: “Yeah I dunno if we’re going to get that medicine anytime soon.. might not get it for months. Oh you’re sick now? Sorry, you should’ve bought it like five months ago.” Or grocery stores for that matter: “Bread? No, we don’t have any bread at the moment. Not sure about tomorrow either, sometimes we get it, sometimes not. Why don’t you check back in a few weeks?”
Luckily there are other exceptions too; like, of all places, Clas Ohlson, who were out of wall socket covers the other day, an essential baby-proofing item. They had changed suppliers but could still tell me the exact date and time when the new covers would be at their main warehouse and then available at the store, as well as the price.
If a place like Clas Ohlson can pinpoint the location of a little plastic doohickey out of their catalog of tens of thousands of products, why can’t a shoe store selling only shoes tell me whether they’re going to actually get some shoes?!
Every now and then it looks as if the market is nothing short of childish or naïve. It rides from one bubble to the next, then panics when they eventually – and entirely expectedly – burst. A cute little press release with little real impact can send a company’s stock soaring, while temporary setbacks are punished with vigor. Enter the fun and games of the quartile economy, which I doubt anybody anymore thinks is a good idea – but nobody has the willingness or courage to change.
The economic “fundamentals” are a funny bunch. In theory these basic rules lay the foundation for all kinds of economic theories, predictions and so forth. Consider the law of supply and demand; it’s taken for granted that increased demand will raise prices until there is increased supply. Only that theory is not working so well for things like oil and food, now is it?
Basically what is happening is that the markets are getting a reminder that most of the business in the world is still based on physical, by definition finite, things – for example, if we are running out of easily accessible, cheaply producible oil, that’s that. In the long run, the only thing that will bring down the price of oil is demand destruction. And mind you, expensive oil is one of the best things that has happened to this planet in a long time.
On food production, if the weather doesn’t co-operate, crops will not grow. Again, that’s that. if the prices are high, farmers will eventually plant more, as is happening – but whether or not that ends up with more being produced is completely up to the increasingly unstable climate.There is no current technological feat that would make large-scale farming immune to weather.
And don’t even get me started on the ingrained notion of infinite growth. There is no such thing. That ought to be clear to anyone who’s gone through elementary school and learned that the Earth is a relatively small planet. Keeping this in mind, I find it completely, utterly strange that economic press everywhere always proclaims almost the end of the world when the growth of growth slows.
With the economic crisis going on now, the nightmare of all economists is also present: negative growth. Consider this recent quote from NY Times – which, after all, is one of the more level-headed publications out there:
Another month of weak retail sales in July added to evidence that the spending power of American consumers has weakened considerably
[..]
Retail sales declined 0.1 percent in July
OH NO! Stop the presses! The retail sales, which have been growing at an incredible pace over the past years, have gone DOWN! By 0.1 percent! They’re all the way down to the level they were on like two weeks ago! Sell! Sell! Sell! Seriously though, since when is decline of 0.1% “considerably” after long, unprecedented growth? It’s as if the market doesn’t understand that the longer something continues to increase, to more likely a decrease is – not the other way around.
Now, even though this clip is old (from last year) and deals with only the subprime crisis, it’s the best explanation ever on how the market works:
An article in today’s Helsingin Sanomat again reminded me of the fact that there is not enough competition in Finland. It states that Finnish food is up to 70% cheaper in Estonia than in Finland. Even Finnish chocolate is 15% cheaper in Tallinn.
Most of the time we’re talking of the exact same products that the companies sell, even though the companies try to tell you otherwise. The same products, shipped further, selling for a lower price. I’m 100% convinced that these companies are still making profit from the stuff sold in Estonia, too, so that’s a pretty clear-cut case of too little competition in Finland.
Sadly, the same lack of competition applies to much more than just food here, keeping prices for everything absurdly high. Another excuse that the companies use to justify the price difference are strategic decisions.
Yeah? What kind of strategic decisions? One of price gouging Finnish consumers?
Seriously though, since when is decline of 0.1% “considerably” after long, unprecedented growth? It’s as if the market doesn’t understand that the longer something continues to increase, to more likely a decrease is – not the other way around.
