I am intrigued by the continuing decline of the big supermarket chains. Leave aside Tesco's accounting problems at the moment and the impact on share prices and go deeper. What is this really all about?
First, and most obviously, this is about declining living standards. This is a fact for many.
Second, there appears to be a rejection of brands in what is happening. That is enormously powerful if true. People are showing themselves willing to ignore hype and will substitute products and vendors to get value having realised that much of what they are being asked to pay for is, in many cases, the froth of advertising.
Third, there is an increasing awareness of local being not just welcome, but good. People want shops in their communities. That's really important.
Fourth, there seems to be a desire to cut waste. I thought it was just our household doing this (we've had a real thing on this for some time, and have changed shopping patterns quite significantly as a result), but it isn't. It's obviously general. The reality is that buying less more often pays in this way, and can also be more creative. All of that is good.
And, fifth, and at least as important, there is a rejection of choice in this move. People are overawed by the big supermarket, it seems. I am not surprised, but I would not have assumed my own considerable distaste for them might be more general until the trend had become apparent. The fact is, it seems, that people are actually put off by being presented with too many options and too many alternatives. They have neither the time, nor inclination, to make so many complicated choices and are realising that in far too any cases the cost of choosing is in any case too high: simply assembling the information is an exercise they do not want to undertake. So they go somewhere that has done the job for them by setting a criteria (price) as priority and has an offering set against that sole criteria where limited options are then put to them. People can handle that, and like it.
All this, though, has enormous implications for the economy far beyond the fate of the share price of Tesco and Sainsbury's. Take for example the whole philosophy of New Labour. It was all about choice. So people had to, for example, choose and book in the NHS and this government is insisting GPs must provide an alternative private option to patients. But patients never wanted that alternative. They wanted a good local hospital.
And patients do not want their own care budgets. They can't handle all the data required to make the resulting choices. They want care.
The same is true with railways. People don't want a choice of train operating companies. They want trains that work.
This list could go on, and on.
But it also says that the green, localisation agenda is now becoming real, not because of the political sell in of the idea, but because of the fact that it is now so clear it works, on the ground, in reality.
And the rejection of brands is also significant. If that really takes off more widely - and I am not so confident on this one - then the impact is massive for everything from GDP to the state of the media, which is wholly dependent on advertising to survive. If the idea of a brand is rejected then the advertising budget goes with it. What then?
The potential for a change in direction in the economy is more widely implicit in this rejection of the giant consumer shed than is at first obvious. This suggests that my theory of the cappuccino economy has much going for it.
In that theory I argue that the foundation of a cappuccino is strong black coffee - an espresso. That, in my metaphor, is the state. It is the foundation on which the private sector economy — the hot frothy milk — can be built. And right on the top, whether chocolate or nutmeg, is the topping that is used to persuade us that all the exciting things in life come from the frippery only the private sector delivers, and which does, therefore, apparently justify the view that only it adds value.
Right now I suspect, quite strongly, that a lot of people are rejecting the chocolate or nutmeg and not just because they cannot afford it, but because they do not want it. And I also think that the Scottish referendum clearly showed a desire for a different type of economy: the mixed economy where the milk and espresso are not separate elements, but combine constructively without the need for the topping of an artificial froth to make things appear something they're not.
If that's true then it's also unsurprising if people are alienated from the neoliberal parties, because they aren't talking to people, and especially the young, any more. I may be wrong, of course, but I'm not so sure I am. I think something very significant is happening and that increasing incomes will not change it, because we have changed. We no longer want coffee offered using a pile of names most of us still think purely pretentious. We may want, at least in this metaphor, to go back to the days when you ordered a coffee and the choice was black or white.
I stress: I'm not saying they want a bad, instant coffee. They want a really good coffee. But they don't need every thrill in life to be supposedly implicit within the coffee and its marketing. They know that there's much more to the coffee (life) experience than that. That's why locality is important, for example. Life is about living in community in this new world.
But what it all means is that a new economy may be closer than you think.
There's more on this idea in Chapter 5 of The Courageous State.
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Richard, I think the aspect you are missing is that the market process is a discovery process. We don’t know what people want until they have chosen it. Wanting branded soup was for a longtime something people wanted, and now it seems they are not so bothered (perhaps because quality is more consistent, or perhaps because own brand is in itself a brand?). But regardless, we have to go through a market process to know. Obviously, had the current state of the world as at 3 September 2014 been known in 2010, then the state could have brought it into being. But we didn’t know until it happened. And as things constantly change we can’t know what the next change will be and we can’t hold things in stasis. So the market is perhaps the caffeine which gives the cappuccino the kick and is an information processor.
Sorry: if you really think marketing is about meeting needs rather than creating wants then you are seriously deluded as to its purpose
What may be happening is that people are rejecting marketing itself
Yes, and drug companies spend more on marketing than research giving the lie to “we have to charge huge amounts for drugs because they cost so much to develop”
Are you suggesting that people wouldn’t have diverse preferences if there were no marketing? It suggests people are incapable of deciding what they want independently. It is a bleak and patronising view of humanity which I don’t share.
In our fridge we have 3 different mustards, to reflect different preferences in our household. I’d be gobsmacked if you couldn’t point to similar examples in your own home.
And yet we are all subject to the same marketing.
Maybe it reflects the fact we are different people who like different things.
I am suggesting that a great many ‘wants’ are not ‘needs’ and that we could happily live without them
And cognitive psychology research (Dan Ariely et al)) has indicated the we are less satisfied with the choice we make if there was a lot of choice and more satisfied if there was much less choice.
Agreed
The classic test was on jams, wasn’t it?
“I am suggesting that a great many ‘wants’ are not ‘needs’ and that we could happily live without them”
Well, yes. Beyond food, water, shelter and medical care, we don’t really ‘need’ much at all. Societies have existed for thousands of years on this basis (and there wasn’t much medical care).
That’s a heck of a lot of industries you are suggesting we’d be happier if we shut down.
There is strong empirical evidence that three mustards don’t make us that much happier, yes
And that the tradeoffs with other aspects of life are not worth the sacrifices made for the sake of a lot of conspicuous consumption, yes
And that it is the enormous spending on advertising that keeps us hooked on this treadmill, yes
“There is strong empirical evidence that three mustards don’t make us that much happier, yes”
I am not sure that’s relevant.
All that’s relevant is that there is a supplier and customer willing to trade. The extent of my ‘happiness’ derived from my favourite mustard is a matter for me to decide, not ’empirical evidence’, whoever that is.
For someone who is otherwise so keen to stimulate the economy, you sure want to close down a lot of activity. You’re entitled to your opinion, but it does seem confusing.
I am delighted to stimulate the economy
But not at cost to the earth and not at cost to the well being of those enslaved by current markets
Please read The Courageous State for more. I explain this at length there
Richard, on the “wants and needs” question, it was Gandhi, I think, who said that there was quite enough in the world to meet everyone’s need, but not everyone’s wants. Our consumer culture, strenuously assisted by marketing, PR and big business, peddles the untruth that everyone’s wants CAN be satisfied, deliberately diverting their gaze from the incontrovertible truth thatcwe would need 3 or 4 planets for eeveryone to live at the consumption level of the USA. Of course, we only have ONE precious planet, and a new economic system is not just desirable, but essential if mankind (not to speak of numerous endangered species) are to see in the 22nd century.
There is an issue on what growth means ion the context of what you say
I think it is growth of the person
Not their girth
(And I could do with losing a pound or two)
Richard, I was referring to the market process rather than marketing. These are not the same thing. The market process is the process by which we discover what people want by the market experimenting and offering different things. For example, you have pointed out that more people are demonstrating that they want: value products, local community shops, smaller more frequent shopping trips. My point is. How do we know that’s what people want? Only via a market process can we discover these preferences. These things are just as much part of choice and marketing as their alternatives. You can’t say we don’t need a market process now that we know what people want because it was the market which gave us that data, and this will need to continue unless you believe in a static economy.
Nonsense
Markets are rigged by advertising and marketing
And by denying access
And, unfortunately, state welfare to large companies
And more
Yo think that markets tell the truth in the current environment is absurd
How is it you know that people want value products and to shop locally then? You can’t say that when consumers make choices you approve of the market is not manipulated but when consumers choose other things then they have been brainwashed by marketing.
People rejecting marketing is not indication that they are brainwashed by it
I am not sure how you think it is
“But not at cost to the earth and not at cost to the well being of those enslaved by current markets”
So that’s the end of anything with metal. No ceramics or plastics. No oil, gas or coal for energy. No solar or wind energy (you need metal). No bricks or stone for houses. They all come at a cost to the earth. All materials we would use would have to come from plants or animals.
It’s viable (Australian Aborigines survived for 40,000 years this way), but pretty darn basic.
And if you say ‘we can allow some use of these resources’, then for which purposes? As decided by central planners (with all their foibles) or by willing buyers and sellers?
And your apparent solution to enslavement from markets is to reduce the ability of people to interact in them. How does that free anybody from anything?
This is so tedious
Are you really so polarised that you think the world is either / or?
Of course what I am saying what you interpret it to mean and only a fool would think it did
Even you might be able to interpret that
“The fact is, it seems, that people are actually put off by being presented with too many options and too many alternatives. They have neither the time, nor inclination, to make so many complicated choices and are realising that in far too any cases the cost of choosing is in any case too high: simply assembling the information is an exercise they do not want to undertake.”
I think the PRC government just said something like that to the people of Hong Kong.
I could rely on you to make such a crass comment
Please don’t waste my time again
Richard, When I was Vice-Chair of the Barnet School Organisation Committee I got written into the School Organization Plan (a SOP – dreadful acronym!) the statement that “the only real choice a parent wants is knowing that their local school can meet the particular needs of their son or daughter”. Of course, the SOP was re-written when the Tories won back power in Barnet in 2002, but I stick by what I said – “choice” is largely a chimaera, even a mirage, especially in education where you may “choose” to send your son to a school on the east of the city, and your daughter to a school on the west of the city, and so spend morning and afternoon rush hours, gnashing you teeth in a traffic jam, when they could both have walked to the local school. And AS your local school, and part of your community, you would have a real stake in its presence there, and in the quality of its educational offer and delivery – something which, along with real leadership, REALLY helps schools to improve, rather than this bogus “competition” between schools that we know have, with adverts, and prospectuses, and open days, and all the paraphernalia of private schools which really DO need to attract fee-paying students to survive.
Additionally, a great deal of choice – and I think this lies behind the trend you are commenting on in your Blog – is actually what I call “soap powder” choice = EXACTLY the same formula soap powder just packaged differently, and advertised differently, AS IF different, but actually produced by the same manufacturer but presented differently to different market segments, a process on a par with a stage con juror using sleight of hand.
We agree, as usual
Four and five are not particularly compatible.
4. People choosing to cut waste often by buying little and often. (PS this may reduce food waste but increase packaging waste and time and fuel wasted travelling to the shop.
5. Price is the sole criteria. In which case they won’t care about waste and will also be prone to bulk buying less frequently.
Take for example the website mysupermarket. It gives you the choice of the full range of products from all the big supermarkets and tells you where your shopping basket will be cheapest and gives you all the latest offers. What this gives you is not the end of days for supermarkets, but the end of days for any sense of supermarket brand loyalty, which does fit with your second point.
I’m not sure I can agree with your final conclusion either, again, due to the internet. The web has allowed us to pursue our wants and needs to ever more niche locations. Just this morning I had a conversation with a colleague in which we marvelled that we now had at our fingertips a dozen different variations of a chemical we require from a dozen different suppliers. 15-20 years ago we would have been stuck with what the distributer in the next town had on their shelf and the price they demanded for it.
Similarly, if you want a steel toe capped, non-slip, anti-static, chemical resistant wellington safety boot in your corporate colours, you can get one. In such a short space of time (and despite about half of that time period being since the start of the financial meltdown) we have become so accustomed to our niche choices that short of a worldwide catastrophe significantly greater than the credit crunch I can’t see the trend reversing any time soon.
Do you need a boot in your corporate colours?
I am not sure you have grasped one bit of what I was saying
According to my boss, yes.
You offer 5 possible reasons for the decline in the big supermarkets, though presumably you don’t include the Aldi with their €75bn worldwide revenue.
Individually any of those reasons may be valid but probably with little consistency. Some people will have different preferences to other people. One person may have different preferences on different shopping trips. One person on one shopping trip may have different preferences from product to product.
eg I would buy my custard creams based primarily on price, though my cornflakes will only ever by Kellogg’s, but that might just mean I’m an unprincipled tart.
As to your fifth point, the essence of which is “in far too any cases the cost of choosing is in any case too high: simply assembling the information is an exercise they do not want to undertake.” Mysupermarket addresses this issue perfectly, technology has overcome the problem entirely, it only remains for the public to catch up.
People don’t want to catch up with the technology
Yet again you just don’t get it
People are overwhelmed by choice. Mysupermarket just makes the whole process so much more onerous
PS I just looked at Mysupermarket. If it is not a definition of hell, what is?
Tesco. What can I say. Their own-brand soup is not far from the price of the leading brand of soup.
Shopping at Lidl/Aldi can save, literally, 20 quid a week on a family shop. Even with the 20p-off-a-litre-of-fuel offers. (note that diesel has dropped 5p/ltr in a day)
Times are hard, if the conservatives win the next election, they will get very much harder (on those under 25K/yr).
Not that I´m saying they will get better if labour win.
Thank you Richard – you have hit the nail on the head and summed up a very potent undercurrent around the ‘tyranny of choice’ and the ‘choice fatigue’ it creates.
I speak to more and more people who are frazzled by bogus choices in supermarkets and who get home with a mass of plastic packaging and think; ‘ I’ve still got nothing to eat!’
personally, I would like to see the demise of the supermarket and the return of smaller shops specialising in different produce. Once you taste bread from a local craft baker you realise that the supermarket stuff is packaged sawdust! The problem, as Rowbotham points out in ‘The Grip of Death’, is that in a debt based economy with flatlining wages people cannot afford better quality food so the race to the bottom is on in food quality and we’ve got there.
As you say, the era of hype might be meeting its nemesis -let’s hope so!
I have a policy of trying to buy locally
Not obsessively, but when I can
As a result I am a bit of a cult follower of Norfolk beer….
If advertising is so bad, why not just ban it in all its forms? Presumably you would make an exception for public information purposes, medicine etc, but for all forms of commercial advertising, why not just follow your logic to its conclusion and ban it?
I have suggested no tax relief for it as a start in The Courageous State
Neal Lawson is also good on this
i really don’t see any shift towards consumers becoming anti-brand, anti-choice or even anti-marketing. i think it’s more a combination of:
a) consumers becoming better informed – a more highly educated society with greater access to information and ability to organise themselves (via the net) making it far harder for companies/governments to manage consumers/electorates to buy/vote in ways that are not in their interest.
and b) greedy rent-seeking elites squeezing the wages of the little people to the extend they can no longer afford to use companies that make monster profits for said elites.
basically, society can no longer tolerate or afford parasites.