Discounts fail to lift July sales

Lakey

And in our world?????

Generali

Lakey wrote: »

And in our world?????

Is that aimed at me?

If so, then prices have gone up substantially over the past few months and anyone who thinks otherwise is clearly deluded or an idiot. My points are:

1. Just as house prices couldn't continue to rise at 30% a year indefinitely, also the price of oil and food can't double each year. Once prices stop rising you stop getting inflation.

2. The price of the stuff that went up in price is starting to fall on wholesale markets. Pretty soon that'll cut the prices you pay in the shops. Once that happens you don't have inflation any more. My argument is that you'll have deflation.

3. Barring the Government going down the Zimbabwe route and printing vast sums of money, there isn't going to be any mechanism for price rises to feed into higher wages and thus into higher prices, forming a 'wage-price spiral'. As people lose their jobs, a pay rise is going to be the last thing on people's minds. Clinging on to what they've got's going to be hard enough.

ManAtHome

Generali wrote: »

I reckon we've got 3 months of rising inflation max. In a year the newspapers will be writing about the risks of deflation and people will be whinging about how the BoE kept rates too high for too long which means that they once again will have missed the point.

Dunno - there's still a lot working it's way through the system - producer input prices are up 30% year-on-year (despite a few whoop-de-doos from the usual suspects about the latest 0.6% month-on-month drop). This either has to come through as price rises or unemployment.

SingleSue

It's not all about easy credit though...

Yes it probably plays a very big part but then there are others around (like me) who didn't buy on credit be that finance, overdrafts or credit cards in the first place but are still feeling the pain of increases in the basics having a knock on effect in our capability to purchase the so called luxuries in the shops.... heck it's even had a knock on effect in buying the basics!

As a family, we rarely go on day trips now, not just because of the cost of entrance but also the fuel costs making it difficult to justify that coming out of our budget, it takes all that we have to do the barest minimum of surviving.

On our recent holiday (2 weeks in a private free let caravan in Yarmouth) we didn't visit anywhere that required an entrance fee, our time was spent on the beach and by the swimming pool...and you know what, the kids loved it!

WTF?_2

Generali wrote: »

What you say is true for July's CPI/RPI figures (food up 12% yoy, petrol up 10%, diesel up more like 15%, gas + electricity up double digits too).

But........

the average price for diesel they measured was £132.3p/litre. When I took the family to the coast on Sunday the price was £1.25 or £1.26 everywhere I saw except in one really rural garage.

record harvests in the US mean food prices are dropping quickly (corn down 1/3rd, soya down over 1/4, wheat down by more than 10%). As makers of bread etc buy their stocks in advance expect to wait until late autumn or even Christmas before prices start to come down but I reckon by December at the latest the news will be full of supermarket price wars.

Wholesale gas prices are down by over 30% since the start of July.

I reckon we've got 3 months of rising inflation max. In a year the newspapers will be writing about the risks of deflation and people will be whinging about how the BoE kept rates too high for too long which means that they once again will have missed the point.

In that case I look forward to super-cheap petrol/diesel, electricity, gas and food by the end of this year then..... :rotfl:

Not going to happen - except maybe for food which has more scope to come down faster in price due to better harvests and more investment in agriculture. Energy needs massive investment to deliver better supplies and in the case of fossil fuels isn't really possible at all.

Inflation could fall to as little as zero percent this time next year but even in that scenario the 5% increases we have seen over the last year are more or less 'baked in'. The cost of living isn't going to get relatively cheaper by any stretch of the imagination. All we can hope is that the rate of increase slows down or halts.

WTF?_2

Generali wrote: »

3. Barring the Government going down the Zimbabwe route and printing vast sums of money, there isn't going to be any mechanism for price rises to feed into higher wages and thus into higher prices, forming a 'wage-price spiral'. As people lose their jobs, a pay rise is going to be the last thing on people's minds. Clinging on to what they've got's going to be hard enough.

You forget that we're competing for food and energy on a global scale now.

Doesn't matter if we can't afford asking prices - if some other country can, then we go without or figure out some way to pay more. Simple as.

fc123

A lot of discounting in my sector (clothing) is fake. The discount is loaded into the retail price at the start.
I had a quick reccy of the Chain store sales (good research to see what didn't sell) and it was all very restrained..though the marketing of The Sale gives the impression to Ms Average shopper that there are savings to be made.....but the good stuff was all out at full price.

Obviously, fashion is fickle and the dud lime green smock that is reduced from £30 to £5 could be someones bargain, but I noticed this season the least ammount of clearance for a long time.
Companies are keeping stock levels low and capitalising on repeats of good sellers with a quick re-order (imports are generally flown in now so one can turnaround a repeat from FarEast in 6 wks).

Things don't sell BECAUSE they are cheap anymore...that is now history from the past 10 years. Some companies rely on their 'Cheapness' as their USP (unique selling point) and times are changing.

For the past 2 years. we launch our No Sale event at the same time as the chains around us launch their sales.
I have red posters emblazoned with NO SALE and we always do really well with non sale customers. If I am doing my job properly, I shouldn't need to mark down continuously to clear styles that are dud.

PS; we are busy busy at the mo. The Arabs are in town plus vistors and though, still down on last year, it's not looking too critical (saving that feeling for Jan 09)......plus the other venture ticking over nicely.

PPS; many of my regular Arab customers own seafront flats that are empty all year except when they visit for 1 month in August. One was about to buy a house in Rottingdean (outright for £500k) just for her month in The UK. Some populations aren't crunched at all.

SingleSue

Hehe, I don't buy unless things are heavily reduced...oh and of course, are what we actually need and want.

My mantra to the children is "If it's full price, it's a no go"

Suppose that explains why my clothing amount per year for a family of four is less than £30...for all of us combined! Mind you, it will be higher this year as middle son's school tells me I can only buy from their specific shop for exhorbitant prices....remains to be seen if I actually do.

dopester

fc123 wrote: »

PPS; many of my regular Arab customers own seafront flats that are empty all year except when they visit for 1 month in August. One was about to buy a house in Rottingdean (outright for £500k) just for her month in The UK. Some populations aren't crunched at all.

Interesting tales.

If you're talking Saudi Arabs, I know Saudi has its own problems. I always found it quite a where the elite would encourage quite an anti-Western belief (Wahhibism) amongst their own people, but at the same time indulge themselves so heavily with what the Western world has to offer. Thankfully they've taken measures to try and tone down the radicalism - which also became a danger to themselves.

Also despite the vast wealth on show and in the hands of the ruling elite (not all Saudis are millionaires), Saudi has their own problems to deal with, although perhaps they'll deal with it in the same way power has often dealt with it.

http://en.wikipedia.org/wiki/Saudi_Arabia

In spite of the recent surge in its oil income, Saudi Arabia continues to face serious long-term economic challenges, including high rates of unemployment (12 percent of Saudi nationals), one of the world's fastest population growth rates, and the consequent need for increased government spending. All of these place pressures on Saudi oil revenues.

Saudi Arabia's young population has nearly tripled since 1980

dopester

fc123 wrote: »

Obviously, fashion is fickle and the dud lime green smock that is reduced from £30 to £5 could be someones bargain, but I noticed this season the least ammount of clearance for a long time.

Money spent of clothing, accessories and jewellery plunged by more than 50 percent in the 1930s. Personal spending today for clothes is many times higher in 1929. Spending on personal care items fell by 40 percent in the 1930s - another area which is hugely multiplied in today's terms. Same for gadget and gift items - which won't be a good business to be in.

Restaurants will be hit much harder in the near time to come. Brand loyalty at a premium price evaporates (although we're seeing this with more and more people heading to Lidl ect and proud of it).

And when demand falls in a recession/depression the competition for remaining customers intensifies (although this time with deflation ahead - it would seem likely to strain the system to near breaking point).

When the depression began, for example, gasoline was sold from tankers at railheads. Crankcase oil was scooped from large drums. There was practically no service. Within a few years this was totally changed. New stations were designed. Service attendants ran to greet each customer. They washed windshields, checked oil levels, and put air in their customers' tyres. They also offered repair facilities, "service with a smile" ect. As gasoline retailers sought to outdo one another, they invested large sums in marketing and capital improvements. Oil company advertising costs alone in the mid-thirties amounted to 20 percent of the value of the gasoline purchases.

In light of this experience, another depression should be viewed as an opportunity to compete. Depressions are periods where brand loyalties in practically any product line are up for grabs. Coca-Cola's lock on the cola market, for example, was challenged in the depression by Pepsi, which originally was a low-cost competitor. Companies with big names but weak balance sheets, may not survive. Brands that do not go hand-in-hand with superior products will not be worth premium prices.