IN my mind he is one of the best. His understanding of trends as they form are remarkably accurate.
FRUGALITY AND ITS DEFLATIONARY IMPACT
We mentioned this article yesterday but can’t emphasize how important it is to read it and re-read it – the front page NYT article titled In Hard Times, $1 Items Lure Shoppers, and Retailers Scramble. Basically, the major dollar chains are now taking market share away from the Wal-Marts of the world because middle-class households are now shopping at the discount outlets. Read these snippets:
“The dollar stores have found creative ways to keep their prices low. When commodity costs rose for suppliers, for example, the dollar stores asked them to decrease the number of sandwich bags in a box or pushed them to come up with a cheaper version of the products.” Indeed, this is how the link between commodity prices and final consumer goods and services inflation breaks down.
“In the last couple of quarters, Wal-Mart tried aggressive discounts on items like milk, but the price cuts did not attract huge traffic.” Talk about turning Japanese – households holding out for more price cuts … for milk!
The company said that shoppers are “cherry picking” discounts and get this – “promotions that have grown popular in recent years, such as offering 10 items for $10, are becoming less effective in driving sales”. Talk about turning Japanese. Furthermore – “The change in shopper behavior hit ConAgra’s consumer-foods segment particularly hard. Despite heavier discounting, which helped drive down prices on average by 1%, the segment sold 3% fewer pounds of food”.
by: David Rosenberg ‐ Gluskin Sheff + Associates
www.saveriomanzo.com
About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog http://saveriomanzo.com/ and http://saveriomanzo.blogspot.com/. I also provide true and tested financial planning and wealth advice. Most recently, over the past few years, I have become socially conscious and have been attempting to practise ways in which I can live my life more environmentally friendly. Along with some truly exceptional friends, we provide consulting and business development for small-medium sized businesses. In addition, I truly believe in being philanthropic, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from Barry Ritholtz of The Big Picture, David Rosenberg and what Warren Buffett of Berkshire Hathaway is up to behind the scenes, as an example.
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