Monday, 18 May 2009

UK firms reduce inventories

Firms are emptying out their warehouses, offering discounts in order to expand sales.

This destocking will put downward pressure on prices, at least in the short term. But what happens when firms have cleared these unwanted stocks? Firms will start to push up price mark ups and prices will again begin to rise.


seema said...

A chart that fits neatly into your weekend article.

Anonymous said...

By the time the firms have "destocked", they will have collectively shed employees and reduced aggregate demand.
Where is their pricing power? And hence unemployment spiral.

Anonymous said...

Alice, you'll probably enjoy the speech that the chief executive of ASDA is supposed to deliver at the British Retail Consortium's inaugural Annual Retail Lecture on Tuesday (19 May). If you go to you'll see he is expected to say:

"There's been discussion about whether we'll see a new form of capitalism born out the current crisis. I think we will – and the shift could be as fundamental as the formation of employee power through the union movement was almost a century ago.

"…The consequence is customers are shaping businesses rather than businesses shaping customers."

So all that marketing talk about business producing what the consumer wants was hype? Looks like we're in for some big time destocking, since most of what's sold these days is rubbish.