Wednesday, Nov 26, 2008
Retail Deflation ahoy!!!
The Telegraph: Woolies collapse to provoke price war
"The prospect of heavy discounting in the run-up to Christmas will send shock waves through the beleaguered retail sector which is already facing its worst Christmas for more than a decade."
Posted by titaniccaptain @ 11:37 PM (650 views) Add Comment
8 Comments
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1. planning4acrash said...
ehem, err, not really, Woolies gave very good prices. Less competition usually means less inovation and higher prices. The only chances of deflation here is a firesale of their retail units and better organized businesses taking over. Unfortunately, bailout money will probably just find Tesco's via Goldman Sach's to buy up all the sites and shore up the grocery dictatorship. You think they'll let that land get in the hands of the sheople?! Pull the other one!!!
2. little professor said...
Wow, I agree completely with a p4ac post - that must be a first!
3. Mad Max said...
I think the point here is that now Woolies is in administration, the administrator will need to realise the best price for available assets. Given that a big chunk of Woolie's assets are in stock, they will try to sell off all stock in a short timeframe (ie. before Xmas) at real knockdown prices. I think it's fair to say we can see a 75% off sale over the coming weeks, what effect will this have on other (struggling) retailers?
As for the longer term prospects for high street retailers, in the words of Fraiser from Dad's Army, they're all DOOMED! Neither Tesco nor anyone else will be looking for new sites in this economic climate, most supermarkets already are lumbered with potential 'development' land!
4. drewster said...
Yep my thoughts precisely! In a recession the game is to cut prices to kill off your competitors, then raise them back up again. Soon we'll be paying cinema prices for our pick-n-mix!
I doubt they'll let Tesco's grow any further though. The Competition Commission realise it was a mistake to let Tesco grow this far.
5. theboltonfury said...
I need a sit down - I agree with P4AC too.
He must have watched 'I'm a celeb' last night and has awoken with a new outlook on life
6. titaniccaptain said...
Sorry must of posted article on wrong site everyone here seems to have eaten the little book of calm this morning for breakfast
7. it_is_going_with_a_bang said...
Hmmmm. But Woolworths is everything Tesco's is not as far as location of business is concerned. So don't expect any of the grocery retail giants to step in any time soon.
Although I agree in the medium to long term prices will go up. The bottom line is they have to because it is fairly obvious the business model they are using to 'make a profit' is way off the mark.
The online business and distribution business parts of Woolworths will get bought up - leaving the hugely expensive retail premises leases, huge pension blackhole and current staff costs.
Maybe Gordon Brown would like to nationalize Woolworths? Strangely..... I would find that rather easier to accept than stupid banks :-)
8. planning4acrash said...
Note that it was the banks that pulled the plug on Woolies. This was an act of economic warfare. You agree with that? I can always push the boundaries that little bit further! Not sure that I feel comfortable with people agreeing, I must be missing something, think I just lost my mojo!!