Friday, August 20, 2010

Vegenomics 101

A very common gripe among those involved in retail is the constant threat of a price war with your competitors. On the short term this may benefit the consumers and those who gladly cut their prices, but on the long run this may make the business too competitive and many players will exit altogether. The retailers who remain may find that while they have the volume, their margins are so pitiful that they wonder why do they still want to do whatever they do. It is usually the retailer with the deepest pockets that will survive. As for the consumers, there are less shops for them to choose from and maybe they have to drive further to find the things they want.

But wait...if you think retail is tough - have you been to a market?

I was at the Kundasang Market a few days back and it really got me thinking - how do they survive? If you see the picture below, the 3 red arrows are the same items being sold but by 3 different stalls. The same goes for the blue arrows. Yes - the stalls are really that close to one another.

So lets say the average space between two tiangs (columns) can accommodate 2 stalls. From the picture all the way to the end I can see around 8 tiangs. Given that I took this photo somewhere in the middle of the long market, there are probably around 25-35 stalls in that one long stretch of road. All selling more or less the same thing. *Gulps*

To their credit, most of them offer the same pricing. There were some who after peeking over their shoulders to see if their neighbors were listening, quoted slightly below market rate. There were a few that were more enterprising and sold additional items that the rest did not - flowers, cacti, etc.

However, I should not judge them based on all my preconceived ideas. They may seem to have many challenges, but who knows they do make a lucrative living and are very happy with what they do. The latter one being what I consider as an invaluable resource.


pharmalogik said...

maybe the whole market working under the same boss?

or the easiest way to sell is they get together and cooperate. at any time, only one stall can sell at lower price than the others.
then after he finishes, the process is repeated with another seller. if u see a stall selling at rm 7, while the rest sell at rm 8, sure the buyer will buy more thinking he got a bargain.

Ted said...

I suspect that some of them have the same boss as well. Definitely suppliers are more or less the same coz all the things look similar. Not all of them bothered about making a sale so i guess some of them were paid just to sit there. I was told (not sure whether its true or not) in a talk recently that the prices in a pasar malam were enforced by ppl carrying guns. And if cant sell finish the perishables, the price will all drop across the whole market at a certain agreed time. So then it all comes down to service and customer preference. I think this is a better model... I volunteer to go around pharmacies carrying a gun!