We hate plastic bags. Those bags we carry out of supermarkets everyday end up accumulating in landfills and damaging our environment. Conservation groups have urged the government to discourage the use of plastic bags and are winning widening support from the public. One of their proposals is to introduce a tax on plastic bags, or plastax. That's a fixed amount of taxation for every bag consumed. To many, it sounds to be a good idea to affect the behavior of thrifty households. But i have a different theory.
What is a plastic bag? Why supermarkets give it for free?
Isn't a plastic bag a free gift a supermarket gives for customers' convenience? Obviously, negative. Business is anything but philanthropy. Take a convenience store as an example. The cashier almost always asks whether you need a bag or not. If your answer is negative, he is trained to please you with a loud slogan: "Thank you for caring the environment." Indeed, the owner of the convenience store thanks you for saving him a bag. In the supermarket, the cashier never asks that question. Neither does he say anything to encourage you to refuse a bag.
Why the convenience store and the supermarket take different attitudes toward a plastic bag? The answer is, from the convenience store, you seldom buy more than you need, whereas, from the supermarket, you do. In the convenience store, you grasp a bottle of soft drink and some snacks, and go, because you know if you need anything else, you may always find another convenience store within a few footsteps. The convenience store chain knows they cannot make you buy more than you need, except, an extra chocolate bar and that's it.
Supermarket business is a different game. We go to supermarket to buy anything. We do have a shopping list or some idea what we need in advance. But we often get more than we need. Some economists or business gurus attribute the excessive purchase to the successful marketing strategies and the tactics of store layout. But few people observe the pragmatic bottom line. "How are we going to carry the extra stuff out of the supermarket?" Have you ever asked such a question? i never.
Without plastic bags, the amount of stuff purchased is limited to the size of your own bag. And the size of your bag depends on what you plan to buy before leaving home. Now, fully accustomed to the infinite supply of plastic bags, free of charge, that question is pointless. Supermarket knows it. Plastic bags are not for you to carry the stuff you need. They are to carry the stuff you don't need. That's why, unlike convenience store, supermarket never praises you for "caring the environment".
Supermarket wants you to understand that you don't have to worry about carrying the extra stuff even though you are not prepared to carry them. Then, it wants you to walk proudly out to the street, carrying its bags.
Have you ever noticed that there are two different kinds of plastic bags in supermarket? The obvious one is that cashier supplies, on both sides of which is printed with big and bright logo of the supermarket. The less obvious, but as common, is the smaller one that wraps wet stuff like meat, fish and vegetables. This one is faceless, all white without any logo or graphic design. Why are the two kinds so different? The answer is the faceless one sits inside the bright one when you walk out to the street and doesn't show up.
If you believe that a labeled bag is for you to distinguish what being bought from where, you are wrong. Of course, the label does serve such a purpose, but it cannot be the reason for the label to exist in the first place. A labeled bag is for other people to see, for advertising.
Remember the last time you brought a T-shirt and received an oversized carton sack from the boutique. Nothing advertises better than showing someone else is buying. Take a gas station as another example. Gasoline is the least sexy product apart from electricity. Unlike the monopolistic utility companies, gasoline companies compete with each other, if not in pricing. There is no way to tell which car has had its tank filled up by which gas company. The "labeled bag" strategy cannot work because there needs no bag. However, the marketing people do a little trick.
Gas stations give out free boxes of tissue paper with their logos printed on it. Naturally, you put the little box behind the backseat. And, by doing so, you do the gas station a favor by broadcasting an advertisement about the gas station. The audience is all the drivers behind you.
When you walk out to the street carrying the plastic bag of the supermarket, you do the advertising for the supermarket. The more bags you carry, the more physically challenged you look, the better.
i buy more than i need. i help it advertise. Plastic bag and i cannot be separated. From supermarket's viewpoint, i am a plastic bag.
It is the supermarket, not the consumer, who loves plastic bags. Imagine the government launches plastax and the number of consumers who accept plastic bags drops drastically. What would happen in the supermarket? First, shoppers have to leave behind some of the stuff they otherwise would purchase because they haven't prepared enough bags of their own. Second, they all come out the supermarket without a single hint at whether they have bought anything. Turning the street corner, nobody even knows they have ever shopped at where. If you were one of the supermarket owners, would you let that happen?
Supermarkets will do anything to protect plastic bags. For example, they would bear the cost of plastax. They would give out bonuses or coupons to keep you using plastic bags. As long as the plastax is lower than the cost of those bags made of recyclable and environment-friendly materials, supermarkets will keep plastic bags. The bottom-line is you can buy as much as you want and help do the advertising.
Then, all parties are happy, except smaller grocery shops and the start-ups. These smaller competitors don't have the resources to bear the cost of plastax. Neither can they upgrade the bag materials. In the end, plastax will stop small shops from providing customers' convenience, but it cannot stop supermarkets from giving out plastic bags. i believe plastax is one of the many examples that laws and regulations create unnecessarily biased business environment against entrepreneurs and in favor of big firms.
Quamnet column
2007/08/15
2007/05/05
你知道自己想要甚麼?
一般認識奧國學派在於其「無為而治」的施政理念，將之等同laissez-faire自由市場主導經濟政策，曾蔭權的書架上，據說也有奧派學者海耶克的著作。但奧派在學術界一向被視為非主流派系，普遍大學的經濟學課程隻字不提奧派。有人甚至將奧派與UFO人外來客之說以及據說Tom Cruise崇拜的科學教派混為一談，歸類為邪門異端。海耶克曾跑到經濟學馳名的芝加哥大學覓教職，竟被其經濟學系拒諸門外，於是他只得在芝大教社會學。奧派之所以被定為「邪派」，筒中「離經叛義」之處，在於奧派否定經濟學主流的根本假設 -- 你知道自己想要甚麼。
你有沒有試過很想吃一樣東西，例如乾炒牛河，到茶餐廳點菜時卻叫了叉燒飯? 心明明想要一樣東西，心猿意馬，但最後又選擇了別的。你大概對自己的工作不太滿意，後悔入錯行，入錯公司，想原先若選擇了別的就好了。甚至有個很流行的說法: 「你的老公/老婆，99%不是你最愛的人。」人總覺得，為什麼明明是自己的選擇，總不是自己想要的? 是選擇本身出了問題嗎?
經濟行為就是源於選擇行為，經濟學主流所謂「後經典派」主張，你在選擇的考慮過程中，腦中有條方程式，有晒圖表，經過一輪快速而精確的混算後，答案便出來。後經典派假設，你知道自己要甚麼，然後作出選擇。
奧派則反對這個假設，其堅持的原則，是你根本不知道你自己想要甚麼，直至你作出選擇。你可能以為自己知，但其實唔知。當你選定了，選擇的結果說明了你想要甚麼。這一套茶怪好buy。明明有乾炒牛河，你揀咗叉燒飯，說明你鍾意叉燒飯多過乾炒牛河。茶怪想，靠這個觀念，可以幫人掃除很多無病呻吟。
至於奧派怎樣將這個觀念引伸至「無為而治」? 就是即使科技再先進，沒有一部超級電腦可以計算出甚麼你最想要，從而平衡所有人的要求。問也沒用，問卷調查是錯的，包括消費者信心調查、商業信心調查、產品滿意度調查都不可能反映事實。最佳的經濟政策是靠市場運作，讓市場說明人們想要甚麼。
你有沒有試過很想吃一樣東西，例如乾炒牛河，到茶餐廳點菜時卻叫了叉燒飯? 心明明想要一樣東西，心猿意馬，但最後又選擇了別的。你大概對自己的工作不太滿意，後悔入錯行，入錯公司，想原先若選擇了別的就好了。甚至有個很流行的說法: 「你的老公/老婆，99%不是你最愛的人。」人總覺得，為什麼明明是自己的選擇，總不是自己想要的? 是選擇本身出了問題嗎?
經濟行為就是源於選擇行為，經濟學主流所謂「後經典派」主張，你在選擇的考慮過程中，腦中有條方程式，有晒圖表，經過一輪快速而精確的混算後，答案便出來。後經典派假設，你知道自己要甚麼，然後作出選擇。
奧派則反對這個假設，其堅持的原則，是你根本不知道你自己想要甚麼，直至你作出選擇。你可能以為自己知，但其實唔知。當你選定了，選擇的結果說明了你想要甚麼。這一套茶怪好buy。明明有乾炒牛河，你揀咗叉燒飯，說明你鍾意叉燒飯多過乾炒牛河。茶怪想，靠這個觀念，可以幫人掃除很多無病呻吟。
至於奧派怎樣將這個觀念引伸至「無為而治」? 就是即使科技再先進，沒有一部超級電腦可以計算出甚麼你最想要，從而平衡所有人的要求。問也沒用，問卷調查是錯的，包括消費者信心調查、商業信心調查、產品滿意度調查都不可能反映事實。最佳的經濟政策是靠市場運作，讓市場說明人們想要甚麼。
2007/05/01
「劏客」一問
五一黃金周又開始，相信繼續有很多內地旅客來港受騙，旅遊業界推出的保護旅客權益的措施，如延長退貨期和店舖黑名單，相信效力有限，要有效打擊「劏客」行為，茶怪想，第一是執法，海關應做他們的本分，掃蕩冒牌貨，嚴徵以假亂真的欺詐惡行，犯法固然要拉，至於大部分的「劏客」行為是「合法」的 -- 以超高賣真貨，這又怎麼禁?
如果每個內地旅客都清楚「市價」，那就沒有問題，如果業界能自律，那又不用多講，報章上的類似評論都是不設實際的「憑良好意願，一人行一步，令世界更美好」的空談，人人都要吃飯嘛。罪惡根源在於「回佣」制度，約定好了，旅行社便只會帶團友到指定的鐘表珠寶店，令旅客不能到不同店舖去比較服務水平和價格，以作出自由的購物決定，「回佣」制度是反競爭的。
叫同胞應提高資訊水平以求自保，是不負責任的說法，因為同胞要了解市場，最有效的途徑是親身走到市場裡看，收受回佣的旅行團根本不准許他們這樣做。
茶怪的疑問，是法例上有所謂合法和非法的回佣，究竟是怎樣介定的? 很多行業嚴禁回佣，例如股票分析員，他們推介某股份後，不准向發行該股的公司收取任何利益，地產經紀、建築工程招標也一樣，如有收受回佣者，屬「枱底交易」，廉政公署有咖啡供候，為什麼旅行社又可以有回佣? 回佣的合法性為何在不同的行業有雙重標準?
如果每個內地旅客都清楚「市價」，那就沒有問題，如果業界能自律，那又不用多講，報章上的類似評論都是不設實際的「憑良好意願，一人行一步，令世界更美好」的空談，人人都要吃飯嘛。罪惡根源在於「回佣」制度，約定好了，旅行社便只會帶團友到指定的鐘表珠寶店，令旅客不能到不同店舖去比較服務水平和價格，以作出自由的購物決定，「回佣」制度是反競爭的。
叫同胞應提高資訊水平以求自保，是不負責任的說法，因為同胞要了解市場，最有效的途徑是親身走到市場裡看，收受回佣的旅行團根本不准許他們這樣做。
茶怪的疑問，是法例上有所謂合法和非法的回佣，究竟是怎樣介定的? 很多行業嚴禁回佣，例如股票分析員，他們推介某股份後，不准向發行該股的公司收取任何利益，地產經紀、建築工程招標也一樣，如有收受回佣者，屬「枱底交易」，廉政公署有咖啡供候，為什麼旅行社又可以有回佣? 回佣的合法性為何在不同的行業有雙重標準?
2006/12/11
Consuming & Investing, Which Is Which?
How many times have you ever seen a movie that you didn't want to see at all? When i go out with a girl, i would watch whatever she wanted to and be glad to do so. Is going to cinema consumption? Yes, generally speaking, it is. No, it isn't, in that particular case. It becomes an investment. Don't you agree?
Everyone seems to think they can distinguish between consumption and investment. One can make clear that buying a car, going to the theater, karaoke and shopping are consumptions, while buying stocks, bonds and houses are investments.
Consuming is to buy what you want. Investing is to buy what you don't want.
That's why people find shopping exciting and investing boring. But why do people buy something that they do not want? The reason is that something will make money in the future (or at least, make you happy in the future, in the movie case).
Aunts used to say they bought gold jewelries for investing, hoping to resell them at higher prices. That makes little sense. They were seldom able to sell them at higher prices. The reselling hopes only lie on art works, limited version of jewelries, watches and other collectibles.
But investment is not confined to the meaning of "buy low, sell high". An investment is a foregoing of present purchasing power to future goals. Manufacturers invest in machineries and equipment, not in the hope to resell them at higher prices, but use them to make money in the future.
Some people buy suits in Hugo Boss for $10,000 each, while G-2000 across the street has similar offer for just $1,000. Are they nuts? The $1,000 suit is a consumption, value for money. The $10,000 suit is for investment, for winning a prestigious job or a business contract. Is it worth it? It depends.
That also applies to going to high-rise restaurants. For a $100-plus set lunch, you get a salad with two skinny sausages lying on top of it, as the main course. i can hardly imagine it is a consumption, except for those who hate money. But if it is a lunch with a potential business partner, you would enthusiastically pick up the bill in the end.
People buy awfully expensive wine, golf club membership and wear Rolex watches. i don't think they are all morons.
Consumption can be investment. And investment can be consumption too.
Take education. It is commonly believed that education is an investment. People pay tuition fees and get a degree, in the hope for higher income in the future. However, some elderly, retired, people take degree programs too. To them, education is consumption, rather than an investment. They buy what they want and enjoy it.
Investment guru Lam Sum-Chee, in his new book, built a strong case on how tricks of warrant issuers put warrant investors in disadvantageous positions. i believe retail investors should know more about what they invest in. However, i bet that even if they fully understand what is going on, many of them would continue to play the game and accept the handicap. Are they insane? Actually, they are not investors, not even speculators. They are consumers. They buy hopes as well as entertainment.
Hong Kong doesn't need a casino, as long as it has a stock exchange.
Some people pay fortunetellers $150,000 to foresee their whole lives. It could be a decent investment, if that helps make the correct business decision, or career choice. On the last day of my life, i realize that what the fortunetellers said 50 years ago were all wrong. Does that matter any more? His words have comforted my fears of uncertainties for 50 years. i should have enjoyed his great service, as a consumer.
A little advertising here. If you see Quam's paid services as consumption, they are quite pricey. The subscription fee for the full advisory service is about $300 a month (20 working days). That's $15 a day. They are much more expensive than newspapers. But if you see the subscription as an investment, frankly, it is quite worth it.
Thanks for readers' suggestions about the reason tea restaurants have a $2 surcharge for cold drinks. SM shared his real-life experience in running a tea restaurant saying that the ice will add 20 to 25 cents per serving and the electricity will cost another 20 to 30 cents. Wastage can also be high on ice as it melts rapidly in the summer. Another reader ".." added that the syrup used in cold drinks is much more costly than sugar in hot drinks. Then, the surcharge seems to be quite reasonable. Thank all for your inputs.
Everyone seems to think they can distinguish between consumption and investment. One can make clear that buying a car, going to the theater, karaoke and shopping are consumptions, while buying stocks, bonds and houses are investments.
Consuming is to buy what you want. Investing is to buy what you don't want.
That's why people find shopping exciting and investing boring. But why do people buy something that they do not want? The reason is that something will make money in the future (or at least, make you happy in the future, in the movie case).
Aunts used to say they bought gold jewelries for investing, hoping to resell them at higher prices. That makes little sense. They were seldom able to sell them at higher prices. The reselling hopes only lie on art works, limited version of jewelries, watches and other collectibles.
But investment is not confined to the meaning of "buy low, sell high". An investment is a foregoing of present purchasing power to future goals. Manufacturers invest in machineries and equipment, not in the hope to resell them at higher prices, but use them to make money in the future.
Some people buy suits in Hugo Boss for $10,000 each, while G-2000 across the street has similar offer for just $1,000. Are they nuts? The $1,000 suit is a consumption, value for money. The $10,000 suit is for investment, for winning a prestigious job or a business contract. Is it worth it? It depends.
That also applies to going to high-rise restaurants. For a $100-plus set lunch, you get a salad with two skinny sausages lying on top of it, as the main course. i can hardly imagine it is a consumption, except for those who hate money. But if it is a lunch with a potential business partner, you would enthusiastically pick up the bill in the end.
People buy awfully expensive wine, golf club membership and wear Rolex watches. i don't think they are all morons.
Consumption can be investment. And investment can be consumption too.
Take education. It is commonly believed that education is an investment. People pay tuition fees and get a degree, in the hope for higher income in the future. However, some elderly, retired, people take degree programs too. To them, education is consumption, rather than an investment. They buy what they want and enjoy it.
Investment guru Lam Sum-Chee, in his new book, built a strong case on how tricks of warrant issuers put warrant investors in disadvantageous positions. i believe retail investors should know more about what they invest in. However, i bet that even if they fully understand what is going on, many of them would continue to play the game and accept the handicap. Are they insane? Actually, they are not investors, not even speculators. They are consumers. They buy hopes as well as entertainment.
Hong Kong doesn't need a casino, as long as it has a stock exchange.
Some people pay fortunetellers $150,000 to foresee their whole lives. It could be a decent investment, if that helps make the correct business decision, or career choice. On the last day of my life, i realize that what the fortunetellers said 50 years ago were all wrong. Does that matter any more? His words have comforted my fears of uncertainties for 50 years. i should have enjoyed his great service, as a consumer.
A little advertising here. If you see Quam's paid services as consumption, they are quite pricey. The subscription fee for the full advisory service is about $300 a month (20 working days). That's $15 a day. They are much more expensive than newspapers. But if you see the subscription as an investment, frankly, it is quite worth it.
Thanks for readers' suggestions about the reason tea restaurants have a $2 surcharge for cold drinks. SM shared his real-life experience in running a tea restaurant saying that the ice will add 20 to 25 cents per serving and the electricity will cost another 20 to 30 cents. Wastage can also be high on ice as it melts rapidly in the summer. Another reader ".." added that the syrup used in cold drinks is much more costly than sugar in hot drinks. Then, the surcharge seems to be quite reasonable. Thank all for your inputs.
The Trend Of Retailing
The future trend of retailing is to sell things cheap. Thanks to sourcing of component supplies and production processes, things have become very much alike. Price has become the most important parameter when consumers make decisions. The question is how retailers can press prices further down, after outsourcing production, logistics, customer services and technical supports to the cheapest possible corners in the world. The answer is to outsource to YOU and ME, the customers.
Selling cheap makes billionaires
I've heard the story about how Karl Albrecht, the world's third richest man according to Forbes' 2004 ranking, after Bill Gates and Warren Buffett, built his supermarket empire in Germany. If the reports are correct, boxes of canned foods and personal care products are spread on the floor at the Aldi supermarkets. Aldi hires few workers to put the goods into the shelves. That's said to be one of the cost-saving tactics that allow the supermarket chain to sell at cutthroat prices, and hence expand its market share. Ironically, selling cheap, the company still makes a good fortune.
The Walton family that controls Wal-Mart and Ingvar Kamprad, a founder of IKEA, are among the world's richest people. All of them run retail businesses and play tough on pricing.
The DIY tradeoffs
My last visit to IKEA was unforgettable. It was so tiring. i grabbed a ruler at the entrance of the Causeway Bay store and a shopping cart. And i was on my own. i read lines after lines of the product descriptions all printed on porker-card-sized tags attached to the furniture. i did the measuring with the ruler provided. i could hardly find any staff for further inquiries. Virtually no one is ready to help. There were long queues waiting at the information desks. i was not supposed to get any suggestion on the matching of colors and styles. i got the quarterly brochure for free, which shows me how things will look like when combined together. i moved the furniture that i bought. i paid at the cashier. That's where i saw a friendly smile. Then i cut some ropes and wrapped the cargos. i tested the light bulbs that i bought with devices provided.
Americans like the idea of DIY. i can think of many explanations why it works in the U.S. but not in Hong Kong, yet. Americans have the time and space to work on things they like. They even develop the tasks into hobbies. They spend their leisure time on house improvement and gardening. They take up the responsibility to tank up their automobiles at gas stations. They clean their food trays at McDonald's. In Hong Kong, in contrast, many people cannot afford to manage their own laundries and do their cooking. The absence of minimum wages in Hong Kong is another reason for the supply of helpers. The shopping culture could possibly change slowly, i suspect, when consumers find that prices are low where they have to serve themselves.
The psychological process sometimes works backward. Consumers tend to feel that things are cheap when they are scattered around in a mess. Look at mountains of clothes scrambling at boutiques. Retailers do not need to spare staff to fold the clothes or hang them up orderly. They create the visual effect. The "mountains" are built in shops of Bossini, Baleno, Giordano and occasionally Esprit. IT outlets have the same display setting, but those clothes are not exactly as cheap as suggested by such an arrangement.
Service counts
Mirabell bucks the trend. i enjoy nice service there. Their salespeople are knowledgeable and ready to help. They give me suggestions and compare different shoes. Mirabell must have done a lot to train and motivate its salespeople. When a company treat its staff well, that company is unlikely in too bad of shape.
i don't mind paying a little more for better service. But i definitely hunt for the cheapest possible bargains where i serve myself alone. Even if DIY is a mega trend, i don't think all service-oriented shops will become extinct.
Gift vouchers
As a shopper, sometimes, i buy things for my own use and sometimes as gifts. i have never thought of "outsourcing" my shopping time and efforts when i am shopping for someone else. Gift vouchers, or gift certificates, make it possible. They have become very popular in the U.S. and are gaining popularity in Hong Kong.
Send your friends and relatives gift vouchers for Christmas or possibly more urgently their birthdays. They will take the vouchers to the department stores or retail chains that issue those vouchers and select what they want.
This is a pleasant deal for retailers because: 1) retailers can spread more widely their shopping seasons and better control their inventories; 2) voucher-holders tend to buy items of more than the face values of the vouchers, generating extra sales; 3) retailers have better cash inflow as there is a time gap between the sale of the vouchers and the redemption; and 4) some vouchers will be lost or simply left expired.
Your friends or relatives like it too. They don't always like what you select for them. With the vouchers, they are free to choose what they want, except for the choice of retailers.
You like giving gift vouchers. You don't need to bother what to buy.
But when you outsource the selection process for a gift, you would have probably left behind sense of understanding, sharing and caring, which are very worthy.
The value of gifts
How do we price this? A gift item carries a premium over the value of the practical functions it offers. Think of the price difference between a birthday card and a personal memo pack. Both are for people to write down messages. On a per-message basis, the price of a birthday card could be several hundred times that of a memo.
A voucher-giver purely gives purchasing power. A gift of mere purchasing power is still sweet. Who doesn't like purchasing power? Who doesn't like getting Lai See? Consider that the sense of understanding, sharing and caring could very possibly be mispriced. Think of how often you receive something that you don't like.
That's another way retailers price down
The ultimate victims are the retailers, although they are enjoying a temporary boost. They will be losing the price premiums on gifts, as demand for gifts declines. Again, that's another way retailers price down.
Feb 16, 2005
Copyright Quamnet
Selling cheap makes billionaires
I've heard the story about how Karl Albrecht, the world's third richest man according to Forbes' 2004 ranking, after Bill Gates and Warren Buffett, built his supermarket empire in Germany. If the reports are correct, boxes of canned foods and personal care products are spread on the floor at the Aldi supermarkets. Aldi hires few workers to put the goods into the shelves. That's said to be one of the cost-saving tactics that allow the supermarket chain to sell at cutthroat prices, and hence expand its market share. Ironically, selling cheap, the company still makes a good fortune.
The Walton family that controls Wal-Mart and Ingvar Kamprad, a founder of IKEA, are among the world's richest people. All of them run retail businesses and play tough on pricing.
The DIY tradeoffs
My last visit to IKEA was unforgettable. It was so tiring. i grabbed a ruler at the entrance of the Causeway Bay store and a shopping cart. And i was on my own. i read lines after lines of the product descriptions all printed on porker-card-sized tags attached to the furniture. i did the measuring with the ruler provided. i could hardly find any staff for further inquiries. Virtually no one is ready to help. There were long queues waiting at the information desks. i was not supposed to get any suggestion on the matching of colors and styles. i got the quarterly brochure for free, which shows me how things will look like when combined together. i moved the furniture that i bought. i paid at the cashier. That's where i saw a friendly smile. Then i cut some ropes and wrapped the cargos. i tested the light bulbs that i bought with devices provided.
Americans like the idea of DIY. i can think of many explanations why it works in the U.S. but not in Hong Kong, yet. Americans have the time and space to work on things they like. They even develop the tasks into hobbies. They spend their leisure time on house improvement and gardening. They take up the responsibility to tank up their automobiles at gas stations. They clean their food trays at McDonald's. In Hong Kong, in contrast, many people cannot afford to manage their own laundries and do their cooking. The absence of minimum wages in Hong Kong is another reason for the supply of helpers. The shopping culture could possibly change slowly, i suspect, when consumers find that prices are low where they have to serve themselves.
The psychological process sometimes works backward. Consumers tend to feel that things are cheap when they are scattered around in a mess. Look at mountains of clothes scrambling at boutiques. Retailers do not need to spare staff to fold the clothes or hang them up orderly. They create the visual effect. The "mountains" are built in shops of Bossini, Baleno, Giordano and occasionally Esprit. IT outlets have the same display setting, but those clothes are not exactly as cheap as suggested by such an arrangement.
Service counts
Mirabell bucks the trend. i enjoy nice service there. Their salespeople are knowledgeable and ready to help. They give me suggestions and compare different shoes. Mirabell must have done a lot to train and motivate its salespeople. When a company treat its staff well, that company is unlikely in too bad of shape.
i don't mind paying a little more for better service. But i definitely hunt for the cheapest possible bargains where i serve myself alone. Even if DIY is a mega trend, i don't think all service-oriented shops will become extinct.
Gift vouchers
As a shopper, sometimes, i buy things for my own use and sometimes as gifts. i have never thought of "outsourcing" my shopping time and efforts when i am shopping for someone else. Gift vouchers, or gift certificates, make it possible. They have become very popular in the U.S. and are gaining popularity in Hong Kong.
Send your friends and relatives gift vouchers for Christmas or possibly more urgently their birthdays. They will take the vouchers to the department stores or retail chains that issue those vouchers and select what they want.
This is a pleasant deal for retailers because: 1) retailers can spread more widely their shopping seasons and better control their inventories; 2) voucher-holders tend to buy items of more than the face values of the vouchers, generating extra sales; 3) retailers have better cash inflow as there is a time gap between the sale of the vouchers and the redemption; and 4) some vouchers will be lost or simply left expired.
Your friends or relatives like it too. They don't always like what you select for them. With the vouchers, they are free to choose what they want, except for the choice of retailers.
You like giving gift vouchers. You don't need to bother what to buy.
But when you outsource the selection process for a gift, you would have probably left behind sense of understanding, sharing and caring, which are very worthy.
The value of gifts
How do we price this? A gift item carries a premium over the value of the practical functions it offers. Think of the price difference between a birthday card and a personal memo pack. Both are for people to write down messages. On a per-message basis, the price of a birthday card could be several hundred times that of a memo.
A voucher-giver purely gives purchasing power. A gift of mere purchasing power is still sweet. Who doesn't like purchasing power? Who doesn't like getting Lai See? Consider that the sense of understanding, sharing and caring could very possibly be mispriced. Think of how often you receive something that you don't like.
That's another way retailers price down
The ultimate victims are the retailers, although they are enjoying a temporary boost. They will be losing the price premiums on gifts, as demand for gifts declines. Again, that's another way retailers price down.
Feb 16, 2005
Copyright Quamnet
Limited Resources, Unlimited Wants, No Longer!
One basic economic problem is how to use limited resources to meet unlimited wants. Today, it seems that the problem is not as serious as before. We are faced with excess global production capacity, while we who are living in urban areas no longer worry about our daily living needs. Interestingly, suppliers are teaching consumers what to desire.
Consider consumer electronics, one of the most exciting corners in department stores and shopping malls. Gadget suppliers roll out tons of advertising to sell their edgy state-of-art TVs, mobile phones, Hi-Fi's, all trying to convey a message that consumers using them will start a new life, or even a new romance. i still have a problem imaging myself enjoying a 90-minute movie on a 3" screen of a mobile phone. Some friends of mine have bought 3G handsets powered with video conferencing functions only because they want to see their dogs and infant babies before getting home from work. i got a few days of excitement when i got my first camera phone, but no more.
Deflation of gadgets understated
Electronics manufacturers have more than a few headaches. A few years ago, i bought a Sony phone, before Sony and Ericsson formed a joint venture. It was a black-and-white screen, camera-less clamshell. The greatest feature of it was a built-in fishing game. That phone cost me about $2,500. i stuck to it until a few months ago when i bought a Sony-Ericsson phone for roughly the same price. This phone carries countless functions, but most of them are useless to me. Assuming that this phone is as durable as my old Sony, the real price has fallen substantially. In most countries including the US, as far as i know, statistics departments count a mobile phone as a permanent commodity and do not take into account various features it carries. They tend to overstate inflation, or understate deflation.
i would be equally happy to live with my old Sony, should there not be peer pressure, including that from my mom that i should change my mobile phone. Otherwise, i am told, i would be looking like an "Uncle" by grabbing a three-year-old model.
Recently, when I moved house, I bought a Konka 29" TV for just $1,799 in Gome. (The courageous PRC-based retailer locates its Hong Kong shop in Mongkok, one of the most competitive districts for electronics. Will it be the next Sa Sa or Bonjour that cannibalizes their mum-and-pop rivals in Mongkok?) i was tempted to buy a plasma TV or an LCD TV to better match my contemporary interior designs, and/or simply to look good. But eventually, i told myself that what makes a great TV is the contents of the shows. The primary objective of the TV for me was to watch English Premier League.
A $12,000 Plasma TV for Free...
When i walked around in Fortress (Fortress' Peking Road shop doesn't carry any thick TVs), i thought of one reason why thin TVs have become so popular. From my amateur point of view, thinness is the major advantage of thin TVs. Hong Kong's new flats are sold at $3,000-$6,000 per square foot. Two square feet cost from $6,000 to $12,000, depending on the value of the apartment. For those who live in The Belcher's, installing a $12,000 thin TV and getting in return two squares of free space, the TV comes absolutely free of charge!! If the apartment appreciates in value in the future, the value of the free space goes up. The buyer would be virtually getting a rebate.
What a convincing marketing punch! Of course, that is based on an unrealistic assumption that the TV lasts as long as the apartment does.
What makes the difference if the new TV displays the same primetime dramas from TVB? The exterior design has changed, but the contents remain a love-triangle story line, unchanged ever since the 1970's when i became conscious.
Fairy Tales are Eternal
That also tells you something about the harshness facing electronics manufacturers. A successful story line could be run over and over again for 30 years. People just love watching it. All TVB needs to do is to change the castings from Chow Yun-Fat, "DoDo" Cheng Yu Ling and Simon Yam Tat-Wah to fresh and young faces. That love-triangle story plot, among other routine programs, however, delivers $400M-plus earnings for TVB year after year. The broadcaster is expected to report a net profit of $630M for 2004 as advertisers desperately bid for the limited supply of its prime-time slots.
It's Hard to Promise New Ideas, One after Another
In contrast, manufacturers have to keep investing in machinery and molds to produce new models that sell for one to two years. Last week, Sony Corp. said its sales fell 7.5% YOY to 2.15 trillion yen (~HK$164B) for the last quarter of 2004, and operating profit fell 13% YOY to 138B yen. The TV division, which contributed 21% of Sony's electronics revenue, saw sales rise 5% YOY in the quarter, but its operating profit slid 75%. Sony's once-innovative Trinitron picture-tube sets are no longer selling, while its thin TVs aren't making money amid stiff price declines. The electronics giant would have bigger problems should there not be robust demand from the US.
Locally, contract manufacturers have boosted production capacity substantially, just to maintain a similar level of net profit.
Values that GDP Ignores
Electronics leaders Sony, Samsung and the likes sell, through enormous educational efforts, to consumers things they have never asked for. That contributes to global GDP. But is that actually improving our living standards? Do i often keep in touch with friends and relatives over mobile phones? Or do i just regard them as fashion accessories? Am i fully appreciating the value of my gadgets?
i was quite surprised to learn that Hi-Fi makers are making 7.1 sound system home cinemas, adding two speakers to the big-hit 5.1 systems which already come with five speakers. To my amusement, an ordinary person has only one pair of ears. Besides, a living room staging such a system would be clustered with wires. i felt like i upgraded my Panasonic mini Hi-Fi while playing Jacky Cheung's latest album -- Jacky Live Performance. It is a delight for those who enjoy smooth and relaxing canton pop.
No offence for fans, or users, of plasma TVs, projection TVs, 3G handsets and other high-tech gadgets. Indeed, congratulations to them for living in a parade where they can choose what they want.
Feb 2, 2005
Copyright Quamnet
Consider consumer electronics, one of the most exciting corners in department stores and shopping malls. Gadget suppliers roll out tons of advertising to sell their edgy state-of-art TVs, mobile phones, Hi-Fi's, all trying to convey a message that consumers using them will start a new life, or even a new romance. i still have a problem imaging myself enjoying a 90-minute movie on a 3" screen of a mobile phone. Some friends of mine have bought 3G handsets powered with video conferencing functions only because they want to see their dogs and infant babies before getting home from work. i got a few days of excitement when i got my first camera phone, but no more.
Deflation of gadgets understated
Electronics manufacturers have more than a few headaches. A few years ago, i bought a Sony phone, before Sony and Ericsson formed a joint venture. It was a black-and-white screen, camera-less clamshell. The greatest feature of it was a built-in fishing game. That phone cost me about $2,500. i stuck to it until a few months ago when i bought a Sony-Ericsson phone for roughly the same price. This phone carries countless functions, but most of them are useless to me. Assuming that this phone is as durable as my old Sony, the real price has fallen substantially. In most countries including the US, as far as i know, statistics departments count a mobile phone as a permanent commodity and do not take into account various features it carries. They tend to overstate inflation, or understate deflation.
i would be equally happy to live with my old Sony, should there not be peer pressure, including that from my mom that i should change my mobile phone. Otherwise, i am told, i would be looking like an "Uncle" by grabbing a three-year-old model.
Recently, when I moved house, I bought a Konka 29" TV for just $1,799 in Gome. (The courageous PRC-based retailer locates its Hong Kong shop in Mongkok, one of the most competitive districts for electronics. Will it be the next Sa Sa or Bonjour that cannibalizes their mum-and-pop rivals in Mongkok?) i was tempted to buy a plasma TV or an LCD TV to better match my contemporary interior designs, and/or simply to look good. But eventually, i told myself that what makes a great TV is the contents of the shows. The primary objective of the TV for me was to watch English Premier League.
A $12,000 Plasma TV for Free...
When i walked around in Fortress (Fortress' Peking Road shop doesn't carry any thick TVs), i thought of one reason why thin TVs have become so popular. From my amateur point of view, thinness is the major advantage of thin TVs. Hong Kong's new flats are sold at $3,000-$6,000 per square foot. Two square feet cost from $6,000 to $12,000, depending on the value of the apartment. For those who live in The Belcher's, installing a $12,000 thin TV and getting in return two squares of free space, the TV comes absolutely free of charge!! If the apartment appreciates in value in the future, the value of the free space goes up. The buyer would be virtually getting a rebate.
What a convincing marketing punch! Of course, that is based on an unrealistic assumption that the TV lasts as long as the apartment does.
What makes the difference if the new TV displays the same primetime dramas from TVB? The exterior design has changed, but the contents remain a love-triangle story line, unchanged ever since the 1970's when i became conscious.
Fairy Tales are Eternal
That also tells you something about the harshness facing electronics manufacturers. A successful story line could be run over and over again for 30 years. People just love watching it. All TVB needs to do is to change the castings from Chow Yun-Fat, "DoDo" Cheng Yu Ling and Simon Yam Tat-Wah to fresh and young faces. That love-triangle story plot, among other routine programs, however, delivers $400M-plus earnings for TVB year after year. The broadcaster is expected to report a net profit of $630M for 2004 as advertisers desperately bid for the limited supply of its prime-time slots.
It's Hard to Promise New Ideas, One after Another
In contrast, manufacturers have to keep investing in machinery and molds to produce new models that sell for one to two years. Last week, Sony Corp. said its sales fell 7.5% YOY to 2.15 trillion yen (~HK$164B) for the last quarter of 2004, and operating profit fell 13% YOY to 138B yen. The TV division, which contributed 21% of Sony's electronics revenue, saw sales rise 5% YOY in the quarter, but its operating profit slid 75%. Sony's once-innovative Trinitron picture-tube sets are no longer selling, while its thin TVs aren't making money amid stiff price declines. The electronics giant would have bigger problems should there not be robust demand from the US.
Locally, contract manufacturers have boosted production capacity substantially, just to maintain a similar level of net profit.
Values that GDP Ignores
Electronics leaders Sony, Samsung and the likes sell, through enormous educational efforts, to consumers things they have never asked for. That contributes to global GDP. But is that actually improving our living standards? Do i often keep in touch with friends and relatives over mobile phones? Or do i just regard them as fashion accessories? Am i fully appreciating the value of my gadgets?
i was quite surprised to learn that Hi-Fi makers are making 7.1 sound system home cinemas, adding two speakers to the big-hit 5.1 systems which already come with five speakers. To my amusement, an ordinary person has only one pair of ears. Besides, a living room staging such a system would be clustered with wires. i felt like i upgraded my Panasonic mini Hi-Fi while playing Jacky Cheung's latest album -- Jacky Live Performance. It is a delight for those who enjoy smooth and relaxing canton pop.
No offence for fans, or users, of plasma TVs, projection TVs, 3G handsets and other high-tech gadgets. Indeed, congratulations to them for living in a parade where they can choose what they want.
Feb 2, 2005
Copyright Quamnet
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