£1 or 99p – which is cheaper?

Over the past year, the four largest UK grocers have been swapping their 99-pence price tags for round-pound sales. In bad economic times, consumers may just be willing to fork out an extra penny at the till. But why?

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United looking for plane bargain

The US’s third largest airline, United, is asking rival plane makers Boeing and Airbus to prepare bids for an order that could total 150 jets.The carrier is hoping to take advantage of the recession to get a better price for the deal that could be worth $10bn dollars.

Metro

BBC Magazine has an interesting article on the Metro newspaper which is ten today.

The Metro newspaper, which accompanies millions of commuters across the UK as they make their way to work, is 10 years old on Monday. Part of its success is down to its unique readership.

Who are they?

When a certain newspaper man, Jonathan Harmsworth, boarded a tram in Stockholm in 1998, he noticed dozens of young, affluent Swedes engrossed in a newspaper called Metro.

What impressed him was the way a social group traditionally resistant to buying newspapers was so wedded to one that was freely distributed.

Ten years after first hitting the streets of London on 16 March 1999, Metro is now in 30 cities and towns across the UK and Ireland.

An estimated 3.3m people a day spend an average of 27 minutes on their way to work reading bite-sized chunks of news, culture, local leisure reviews and sport, with a healthy sprinkling of technology and quirky stories.

…and another one!

BBC reports

The womenswear company Viyella, which was founded in 1784, has become the latest long-established British company to call in the administrators.

The company has annual sales of about £30m and operates 40 stores, 64 concessions and four clearance outlets.

Of course like other retailers mentioned in this blog, only Woolworths has actually closed, the others are “only” in administration, but more often then not this can lead to at a minimum closure of lots of stores.

Even retailers not in administration are feeling the pinch and closing stores. BBC also reports on Marks and Spencers who are closing stores and cutting jobs.

Marks and Spencer plans to close 25 of its small Simply Food stores and another two of its regular stores.

The closures will mean the loss of 780 jobs. The retailer is also planning to cut 450 head office jobs.

The retail sector which weathered the last few recessions has been hit very hard by this one. The difference this time, is that margins are tight so it doesn’t take a large drop in sales for it to have a major impact on the profitability of the retailers.

Sony Ericsson to axe 2,000 jobs

BBC reports on the decision by phone giant Sony Ericsson to cut two thousand jobs.

Mobile phone maker Sony Ericsson has said it will shed 2,000 jobs worldwide over the coming year to cut costs.

This article demonstrates the impact that the economic downturn can have on a business and organisation, and cutting costs (by axing jobs) is a response to the decrease in sales and revenue.

Sony Ericsson said

it was aiming to cut operating costs by £300m a year

The article places the blame on the state of the economy, specifically the credit crunch.

Consumer demand has been hurt by a credit crunch that has prompted banks to withdraw many loans and mortgages.

As a result, many consumers have had less money to spend and have had to cut back on their outgoings.

Are Brits becoming ’shopping tarts’?

Are you the kind of shopper that supermarkets love, the type who always shops at the same supermarket on a regular basis?

Tesco, Morrisons, etc… love you, as you are often more loyal to them then your employer or even your family!

Well the BBC reports that in these times of economic turmoil, the days of the loyal supermarket shopper may be coming to an end as we become more price sensitive.

Many supermarket-goers are wedded to their brand of shop. But as people begin to draw in the purse strings, some are starting to see benefits in being a more promiscuous consumer.

Evidence suggests once loyal shoppers, who in the past have been faithfully wedded to a single supermarket brand, are starting to experiment with younger, cheaper models.

However will these changing habits last? According to the article, no.

…as shoppers have more money again they will revert to old habits.

These surveys are a great demonstration of how changes in income effect the demand for groceries. As incomes fall (due to increased costs), the demand for luxury goods (ie Waitrose or Marks and Spencers) will fall (shift to the left); whilst the demand for basic (cheap) goods (ie lidl or aldi) will rise (shift to the right).

We can also use demand and supply analysis to explain the recent rise in food prices, by shifts in the supply curve.

More links on supermarkets.

River Cottage 0-1 Tesco

Following on from my earlier post, found an interesting article in the Guardian about Hugh Fearnley-Whittingstall’s attempts to change Tesco’s chicken policy.

The campaign to improve the welfare of chickens sold in Tesco stores, led by celebrity chef Hugh Fearnley-Whittingstall, hijacked the company’s annual meeting yesterday, drawing groans from the pensioners and standard bearers of middle England there to pose a question about their local store or to take advantage of a spot of free lunch.

Well worth reading.

Profits over welfare

Hugh Fearnley-Whittingstall, he of River Cottage fame, has alas failed in his attempt to get Tesco to change their chicken policy.

The BBC reports on his attempt at the Tesco shareholders meeting.

Tesco shareholders have not backed proposals to improve welfare standards for chickens championed by TV cook Hugh Fearnley-Whittingstall.

The chef wanted investors to adopt new standards for rearing birds, but the plan got fewer than 10% of votes at its annual general meeting in Solihull.

Read more.

Though this is a setback for Hugh’s campaign, a lot of consumers are changing their own buying habits at the supermarket. Over the last few years virtually all of the chicken I buy has been organic for me the main reason has been flavour and concerns about chemicals used.

I have noticed recently in both Sainsburys and Morrisons the amount of shelf space they give free range, organic and RSPCA Freedom chicken has really increased.

However with the continuing economic pressures on consumers, will price give way to quality and taste? According to an article I read in the Guardian, the answer is no, as what goes first with an economic downturn is going out to restaurant.

Biscuits can secure the deal

You are organising a meeting and you order coffee and tea, do you order biscuits?

Well of course you do.

However if a survey is to be believed then you should take extra care in which biscuits you choose.

About four out of five UK businesses believe the type of biscuit they serve to potential clients could clinch the deal or make it crumble, a survey says.

BBC reports on this:

About four out of five UK businesses believe the type of biscuit they serve to potential clients could clinch the deal or make it crumble, a survey says.

The outcome of a meeting could be influenced by the range and quality of biscuits, according to 1,000 business professionals quizzed by Holiday Inn.

The chocolate digestive was deemed to make the best impression followed by shortbread and Hob Nobs.

Lawyers were most impressed by good boardroom biccies, the survey added.

The chocolate digestive allegedly is the best biscuit.

Photo source.