Friday, June 20, 2008

The turning point

The news articles in today's newspapers are telling us of a new phenomenon : despite rapid increasing prices for fuel, food and daily living expenses the average high street spending has increased to record levels last month, way beyond expectations. When the government expects people to tighten their belts and spending, many have gone out of their way to spend more and more. There are 2 possibilities : some people may feel that now is the time to buy as next month the item may be more expensive and others might use shopping as a way to make them feel better about the rising costs of mortgage, credit and life in general in defiance. Whatever the motives, the move is a different one than expected.

On a local level we are seeing a difference too. We are spending more time explaining to people what we can do locally so they do not need to travel to the nearest town and there is a change in buying patterns too as people reconsider travel journeys that can be avoided. A more worrying trend is that some suppliers are going into liquidation, i.e. voluntary bankruptcy as profit margins decrease and running costs and interest rates rise. This will wipe out some businesses that are influenced by these factors and will result in some smaller companies laying off staff, and an increase in local unemployment.

I personally believe that the trend will continue as with higher fuel costs, higher prices for food and commodities will continue too. What would then follow is a request for more money, i.e.salaries to increase to keep up with the cost of living and possible strike action. This is the turning point where a simpler life is no longer a voluntary option for many but one that is being forced upon people as a result of a changing global economy. I predict irrational behaviour as people begin to realise that they cannot have what they want instantly, they may have to wait as supplies and resources become scarce. The quest for fuel seems to be a primary focus based on the fact that fuel and oil availability will reduce in years to come. The laws of economy then mean that when a product becomes scarce, the price will go up. Thus if for instance rice is no longer exported by countries because they need it for their own use, the price of rice rises as its availability decreases.

A proactive approach is to look at alternatives and ways to maximise current opportunities :
  • For shelter - check what you can do to minimise the costs of your accommodation.
  • For food : plan what you eat, diversify ingredients, take lunch to work and buy some staples ahead of time.
  • For warmth : the cost of fuel will rise the nearer we get to winter so now is a good time to invest in filling your oil tank, building a log store for a wood burning stove and saving as much as you can on energy costs. What you save now you can use when you really need it.
Most papers will be full of tips on how to save money and short term savings can be made by cutting down on what is bought new, long term savings can be made by being focused on what you will need in the future and finding the right time to purchase that item. If you made assumptions about a budget at the beginning of the year it may need to be reassessed to take into account price rises.

As a sustainable business, we want to keep our prices competitive which has been successful in particular in the fresh produce section of the shop. Ice cream consumption is low due to inclement weather and chocolate consumption is up. Soup is in demand although this is completely unseasonal.

Life as we knew it is about to change.


ceridwen said...

Well...on the "how come people seem to be doing more shopping at the moment - in times like these" theme. I can only speak for myself - right now I am one of the ones doing more shopping. You want to know what I am buying - I am stocking up with basic essentials (food, etc) and buying garden stuff (containers to grow food in, waterbutt, etc), heaters that are cheaper to run (ie halogen), trying out on garden solar lights (hoping they will do indoors), survivalist type books.

In other words - I am stocking up for the duration and it could be that is what others are doing too. Even if they are buying conventional consumer goods - then that could be that they are doing so whilst they still can (as they sense these might become more costly to get in the future).

Shirl said...

Hi, I've just found your blog. Yes, I agree big changes ahead. I guess people are eating soup because it is cheaper but still nutritional. It certainly appears quite a lot on our menu plan!