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From the Independent today:

A draft law on the “modernisation of the economy” unveiled yesterday threatens, according to its supporters and some of its critics, to revolutionise shopping in France. Other critics suggest the draft law is too timid. Large French shops will mostly remain closed on Sundays. Little effort will be made to diminish the regional domination of French supermarket chains.

The draft presented by the Economy minister Christine Lagarde will make it simpler to build medium-sized supermarkets. That should encourage “hard-discount” chains such as Lidl and Aldi, which have a relatively small share of the French market.

If approved by parliament, the law would also abolish the existing complex rules which, in theory, forbid sale below cost and force manufacturers to provide goods at the same wholesale price to hyper-markets and village shops.

With inflation gathering pace and wages stagnating, the law is intended to help to fulfil the President Nicolas Sarkozy’s promise to increase the purchasing power of French people.

The federation of large shopowners predicted that the law would reduce prices of food and basic household goods by 2 per cent. Serge Papin, head of the Système U chain of supermarkets, predicted price cuts of up to 3 per cent.

Michel-Edouard Leclerc, head of the Leclerc chain, said the law would “cut inflation in half” by allowing shops to refuse the “excessive price rises” demanded by manufacturers. He predicted a “vast spree” of price-cutting from September, if the law is passed.

Yes, it will slightly cut inflation doubly. On the one hand, grocery prices will go down slightly. On the other hand, massive numbers of workers and owners of small groceries will likely be put out of work and either stay out of work or accept the low wages offered by the hypermarkets that walmartized their shops out of existence. We’ve seen this before – back during the boom in the US the greenspanites couldn’t stop talking about the fact that Walmart singlehandedly kept inflation at safe levels. What they didn’t discuss much is the fact that this is in part accomplished by the proletarianization of the workforce.

The French ban on loss-leaders always seemed to me an incredibly sensible piece of law, one that at once supported employment and consumer convenience and urban vitality. Prices at hypermarkets may go down some, but it seems to me the net effect has to be that prices at small shops will simply go up.

As if we needed to be reminded that each crisis – whether deflation or inflation, whether demand failure or food crisis, poor farmers or expensive food, too-expensive houses or too-cheap ones – will always be met with the same set of responses: deregulation, lower taxes, and the dismantling of the social state.

Written by adswithoutproducts

April 29, 2008 at 12:07 pm

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