Saturday, April 18, 2009

Retailing is a blood sport.

Bank of New Zealand economist Stephen Toplis puts that down to the impact of the sharp drop in the kiwi dollar last year, which makes imported goods more expensive.

"Retailers can't keep discounting for ever," he said

Now that is a line I can't agree with.

Being at the cutting edge of capitalism, retailing is a blood sport and retailers do whatever it takes to make a sale. If that means discounting to survive, then that is what will happen, now and forever more.

And what exactly is discounting anyway? It assumes an original fool price or rrp, which is a meaningless concept as the old adage says something is only worth what someone is prepared to pay for it. Sure there are some people out there who are prepared to pay a full rrp and good luck to any retailer who can cater to that market and survive.

But there are many more people who want a deal. If you don't believe me go to your local DressSmart and see retail discounting in all its glory. And remember that the middle class has already reached peak shopping ( in my opinion anyway).

The retailers who survive are the ones who can evolve with the times, control their overheads and are prepared to accept lower profits from time to time.

Which reminds me that lowering taxes is also a valid way to increase profits. (please take note Bill English)

For retailers, living to fight another day is a more preferable option than death.

No comments: