Food retailer enlightened: Putin serious about slashing prices
Published: 26 June, 2009, 09:19
Edited: 04 March, 2010, 08:33
A surprise visit to a food chain store by Prime Minister Vladimir Putin prompted critical remarks from the PM, causing the retailer to drop its prices the very next day.
You Russians are lucky to have such a president.
People should read the article properly, there is nothing wrong with anybody pointing out the margins involved in the industry, this is quite a legitimate thing to do, it is consumer education. In Russia food retailing is changing, as it did in many other countries as they moved to supermarket based selling. In the beginning, the Supermarket can always offer an advantage of greater ramge and one stop shopping, whilst even increasing on the type of margins that the smaller outlets need to employ to survive, because Supermarkets have the advantage of economies of scale. It is the supermarkets choice, to offer this customer proposition, and maintain prices as long as possible until competition from other supermarkets, forces a donward competitive correction of prices. There was no mention of prize feezes at all, which of course try to buck the market, and will always fail. However, the situation, is not as simple as it seems. The model above works providing there is a true free market, free of the type of western supermarket cartels and free of our organised crime and corruption that controls the ability for competition to exist. Then market forces can kick in properly and regulate the market for the consumer and also the supplier. Without this the customer looses and the supplier losses. This is what is happening today in both the west and the east, but for different reasons. Now we can't buck the market, but we should ask ourselves what food do we want, do we want to go down te cheap, fattening, rubbish cheap food route of the west. or do we want to try to develop a more healthier, fresher, more local product, that mainatins peoples health, and has more overall benefit in the overall cost funtion, by removing resulting health costs associated with the rubbish sold in the west at knock down prices. This is where standards and government can have a role to play. Then we avoid the sub optimsed cheap today, expensive tomorrow cycle of rubbish western food and the health costs associated with it.










NZ had a Prime Minister (Rob Muldoon) in the early eighties who instigated a "price freeze". He was annoyed at increasing prices, as was everyone then with inflation. Rob Muldoon was popular at the time for this. He had a very strong persoanlity - people were afraid of him due to his undoubted intelligence and quick thinking. Must admit I voted for him. Subsequently, he proved to be the downfall of the NZ economy at the time, and today, with the benefit of hindsight, his price freeze is considered foolish. Matters of inflation are "controlled" outside the political arena these days. muldoonism,, as it is now called, is bit of a joke these days. What the producer gets for a primary product (eg. meat) and what it sells for at retail is an issue here today too. Eventually the market will sort itself out. There are better ways to deal with these matters than some behaving here like Putin has.