IT IS TIME FOR BUSINESSES TO FORMULATE STRATEGIES TO
MARCH 18, 2006
EDWARD HARRIS AT LARGE
IT IS TIME FOR BUSINESSES TO FORMULATE STRATEGIES TO
HELP CONSUMERS WITH THE HIGH COST OF LIVING?
I take this opportunity to extend condolences to the Rapier family on the passing of Mr. William Rapier. The business community has lost a leader and a friend.
As I write this article, the world observes World Consumer Day. Everyone is a consumer and at some point comes face to face with the injustices that are meted out to consumers. The observance of this day could not be more relevant than at this juncture where consumers everywhere are reeling under the cost of fuel. While the oil magnates are heaping up billions of dollars in oil profits, the people are suffering. The inflationary prices due to the fuel cost has affected every economic sector, manufacturers, distributors, retailers, service providers and the end users of goods and services. Oil is at the root of all the ills in relation to high prices for consumer supplies.
Today’s businesspersons need to apply empathy and ultimately restraint in maintaining mark ups that will further aggravate the high cost at source. The reality of the moment will create a void for reasonably priced goods and services and push manufacturers to go offshore seeking out low cost producers and distributors to explore the Far East/Asian markets for cheap supplies especially in the area of foodstuffs. This could be disastrous for local and regional manufacturers. This situation demands reasonableness on the part of all operators of businesses.
Manufacturers should embark on an aggressive campaign to sensitise distributors and retailer to employ strategies that will keep manufacturing entities in the region in business. If the manufacturers ever needed the distributors and retailers, it is now. We can be heading down a road that could see radical changes in mark up structures that will almost force small retail outlets to close shop. It could be quite possible to see the introduction of discount stores with markups of ten to fifteen percent across the board. This would be the region’s response to dollar stores in the U.S.A. The emphasis would have to move from markup to sales volume. This can also set off an era of inferior goods with distributors seeking to achieve cheaper goods.
However, it is the small businessperson who should be more flexible and no one is better equipped to deal with times of hardship than the small businessperson. This is the time for market niches where with the right connection, the businessperson with no distributorship contractual relationship could source staples and other demand products within a specific range, for example:- napkins, paper towels and bathroom tissues. With a good location, a small retailer could move a few 40ft containers per month. Here is a suggested theme for such a business, “Everything for the Bathroom and the Laundryâ€. Proctor and Gamble, truck load offers could be an option. Do you know that you can buy truck loads cheaper than quoted on many companies Export list prices? Trinidad led the way in this type of small business, Barbados has followed with the small vendor road side sales from trucks or under a tent. It is time for more of us begin to use internet based search engines to follow trends and get information on businesses and products.
I don’t have to itemize the negative impact of fuel prices on our everyday lives. It is everybody’s business to survive the onslaught of high prices in every area of our existence. The unfortunate thing is that when prices go up, they seldom go back down. It is for this reason why it is necessary to make an appeal for restraint. In the meantime, consumers should get together and purchase their essential consumer supplies in bulk making use of wholesale prices.
While the prices are moving up, there is going to be a need for financing for businesses to cope, especially the manufacturers whose raw and packaging materials are increasing with every shipment, and other expenses that put pressure on their cash flow. In preparation for this article, I spoke with a manufacturer who has a local distribution network and exports to Caricom Member Countries and beyond. He has singled out the cost of moving freight in and out of his operation as the most difficult item to cope with as on both sides of the situation freight increases cost. In our discussion he gave me some examples: Less than Container Loads (LCL) Inbound from Miami, before the oil increases was US$2.75, now it is US$4.75. Outbound US$2.85, now US$5.85. Containerised Cargo from Miami, US$1.300.00 per 20ft, now US$2,100.00. US$2,300.00 for 40ft, now US$3,500.00. Outbound freight to the Caribbean increased by 55% while to international destinations as much as 55-60%. Inputs into manufacturing have risen 35-40%. Oil related raw and packaging materials have increased 55-60%.
These are very difficult times generally for all operators in the private sector.
The Chamber of Commerce, Industry and Agriculture held its first Business Mixer last Tuesday for the year and the turn out was encouraging. Mr. Ernest Hilaire, Managing Director of Cricket World Cup addressed the group and though he could not share information deemed restricted, persons present were given an update on developments which were considered satisfactory. He was not impressed with the response of the business sector to date and encouraged them to be more creative in finding ways to generate business from the opportunities that Cricket World Cup 2007 will present. I am anxious to see the introduction of presentations by entrepreneurs seeking start up capital or expansion of existing businesses. We need to get passionate about succeeding in our business in spite of the prevailing difficult circumstances.
The Blog I introduced last week is now ready for your participation. You can now visit www.blog.thestlucian.com and register to begin making your contribution.
Keep the faith, God is in charge!
Edward Harris Email: eaharrisdestiny@gmail.com