Tuesday 17 December 2013

'Tis The Season To Fill Trolley

Pix: every supermarket!
 Here We Come A-Discounting... 

Ed Miliband has made mileage this autumn with his "cost of living for ordinary families" refrain, which has clearly stung the government, not to say panicked them.  As a campaign theme for late-2013 it may have saved his bacon, given the dreadful summer he endured.  As regards the next election I suspect he may have gone too early with it, because the coalition probably has the power to bear down on quite a range of prices and costs, and has been handily tipped off on the political need to do so.

In the very short term, though, I'd say its the retailers themselves that are doing most to reduce inflation.  This isn't the result of a scientific survey, but I have the very distinct impression that Christmas this year is costing less than 12 months ago, with a couple of very striking data-points to bolster the general observation.  Never mind stunts like 'Black Friday': there is clearly a deadly serious supermarket  price-war in progress.  The blizzard of vouchers and coupons can hardly be missed - and when even Poundland is doing £1-off-when-you-next-spend-£10, we know things have reached quite a pass.

Do others share this observation ?

Quite what it means for the longer-term is a bit conjectural.  Supermarkets going under ?  Inflationary surge in the spring ?  Who knows.  Meantime - stock up & drink up !



corncrake said...

I must admit I had thought the sales had come early this year with heavy discounting going on in both supermarkets and large retail outlets as well Nick.
However, there's discounting and supermarket discounting, as my daughter just observed out shopping this morning.
She picked up a 12 tray of pigs-in-blankets for £2, decided they were a bit on the small size, so was going to get larger ones advertized at two trays (10) for £5.
Then realized two trays of the smaller cheaper ones was better VFM.
So beware :-)

Ryan said...

The £ is rising steadily against the $ and Euro. I expect this to continue as foreigners buy into the UK recovery.

A strong £ will reduce both energy and food prices. By 2015 we will be back to normal. Milliband will be left a political irrelevance.

andrew said...

I think retail is 'hourglassing'

Here is my scientific basis for this opinion:
The range of really good quality cheese is (in waitrose and my local deli) not what it was in '07, and the prices are about 30%+ higher.
I just bought a not that unpleaseant usb powered illuminated plastic christmas tree from the 99p shop.

So 'really nice' things are getting more expensive.

Everything else is cheaper because the quality has been reduced.

I cannot really tell if a loaf of bread is a few grams smaller or slightly not as good as it used to be so I dont notice.

I do know the quality of supermarket wine has dropped, and something I perceive to be fairly constant - the wine socs own white burgundy has gone up by ~ 25% - but most of that is due to the exchange rate.

So there might be a price war, or maybe not.
If there really is a price war, wouldnt you see Sainsbury's shares underperforming the market?

Bill Quango MP said...

We haven't shifted very much of the higher end Christmas wooden and metal or fabric decorations at all. Will have about 2/3 left which is very poor indeed.

Only last year these were top sellers.

Of he lower Price items, much as usual with the exception being anything over about £3 is slow. That price point is normally £5 for us.

On balance, going to be about 25% lower sales than 2012, which may be unsustainable.

Toys are the biggest loser. Our toy sales have fallen to almost zero due to supermarkets and online. We shall not be continuing with them.

Nick Drew said...

'unsustainable' was what I feared

Last Man Standing is a dreadful game

Ryan said...

One other thing I would say that has had a big impact in the last two years is massive wage inflation in China.

We just aren't seeing the ridiculous bargain prices we used to see for Chinese unbranded goods usually on sale in Argos and ASDA. I know from my own work that wages in China have been rising about 20% a year for 2 or three years so that with the sinking £ has really put paid to cheap tat imports from China.

Nick Drew said...

"higher end Christmas wooden and metal or fabric decorations ... Only last year these were top sellers"

does this mean Miliband has been talking people into thinking they are worse off than is actually the case, Mr Q ?

Anonymous said...

Google Product Search being replaced with Google Shopping in March/April has reduced our traffic and sales by 25%.

A big chunk of the slack was picked up by growth in our Amazon channel but they obviously take a hefty 15% chunk.

We do spend on Google Shopping through Adwords and it does make a profit, but it just doesn't drive traffic like Product Search used to.

Blue Eyes said...

Not sure. One thing I have noticed getting cheaper is standard brand spirits such as Gordons and Smirnoff. These are always in the entrance to Tesco on the now-rare occasion when I go in.

Supposedly fruit and veg held down the inflation number in November. The £ has also been quite strong which explains the fall in petrol prices.

The thing I notice most about the "cost of living" is my huge tax bill. Now, I wonder if the "Tory-led" government might start doing something about that?

Nick Drew said...

Anon @ 4:27 - care to elaborate for those of us not in retail ? why have google changed this; & is the adverse effect an unintended consequence ?

what's in it for G ?

Anonymous said...


Google Product Search (aka Froogle back in the day) was a price comparison tool by Google. It was free to use for 11 years, easy to submit your products to, and your products appeared on Google search results pages.

Last year in the US, and this year in the UK, they replaced it with Google Shopping. Google Shopping looks very similar but is not actually a price comparison tool. As a customer you should be wary that the product displayed above the fold or at the top is not the cheapest, but is instead from the retailer who paid the most to be seen there.

It's pretty easy to just list all your products on Google Shopping for 1p per click, and it will make a profit, but it doesn't drive much traffic since Google Shopping is purposefully designed to benefit the highest bidder fewer customers know how to get to the price comparison.

Google seems very happy with the changes as they're now making lots of money from a previously free service. The big retailers who already had Adwords teams also seem to be happy, but you can find plenty of stories of small retailers losing almost all their business within a week.

Generally speaking, it's also very hard to make a profit using CPC on any product worth under $20/£15 (unless you treat it as a lead generator) and this seems to be where Amazon has stepped in now that these products have become less visible on Google.

Nick Drew said...

thanks - illuminating

Nick Drew said...

... and a timely piece in the DTel:

"More than 1bn wiped off the value of leading retailers over Christmas fears"

roym said...

'does this mean Miliband has been talking people into thinking they are worse off than is actually the case'

comparisons with greece, maxed out the credit card, britain is broke(n) - think gideon and dave are plenty guilty of talking down the economy themselves