Sunday, June 30, 2013

The Poor Shouldn't Be in Retail

I believe the poor shouldn't be involved in retail business. Not because of being financially handicapped, but they are the most responsive to price change and rumours (including other factors of production). Probably more responsive than the stock market. The effect of such responsiveness is unprecedented price increase.

Living in Lagos open consumers to this harsh reality. Economic activities at the retail level is being run by those at the bottom of the financial ladder. Where a slight increase in bus fare, fuel, and garri price directly hit their profit and loss. The domino effect is an immediate price increase of what they sold. It could be pure water, pepper, tomato, or the price to grind pepper. The end result is inflation.

A customer that shops in big retail stores like Shoprite or Mr. Price will notice increase in other factors of production doesn't reflect in price of goods. Even an increase in fuel price will not be immediately noticed. These companies enjoy economies of scale and it's a benefit to consumers.

That's why I suggest, probably controversial, people with low income should not be allowed in retail businesses especially of widely consumed goods and services.

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