Wednesday, November 12, 2008

The right way to lower down price

Generally it is a BAD idea in economy sense for a goverment to influence hypermarket to lower their price ( more on that here ).

Because the ultimate great thing that can happen in our market is FREEDOM to trade.  Whoever smarter will think of better ways to save cost and therefore lowering their sale price, those who are not will not survive.  Eventually all the creative ones remains and we will have 'smart' business men in our society.

Hypermarket doesn't really care about slashing prices.  Because it doesn't hurt them at all.  Its their suppliers who are affected.  First of all hypermarkets don't pay suppliers cash.  Second, hypermarkets don't pay suppliers in full.  Third hypermarkets don't hold responsible for lost and damage goods.  

Imagine a supplier barely survive getting pay check 3 months after the goods are sold and now due to price slashes, the supplier receive only part of the payment.  So at the end, the remaining ones are the ones who did not give discount ?  Or those who already monopoly the market remains stronger ...

However, out of all these smoke screen ... some lights do shed.  Air Asia slashing their fuel surcharge mainly to counter MAS recent 'Net Price' advertisement, not so much of  because minister said so.  Like wise, BAT who started cigarette price war are purely business competition oriented.  These 2 are great price reduction examples, compare to the terrible hypermarket price reduce.

Has your daily lunch price reduced yet ?