Tuesday, May 15, 2007

[retail] the freedom of choice conundrum

Very strange discussion today with the man from Apple, Volga Region. We were speaking of retail outlets and the constant conflict between the small retailer and the mega-chain.

More strangely, I was taking the view that for the customer, as distinct from the vendor, the mega-chain offered better choice and quality control at a lower price, offered one-stop shopping and better parking facilities and gave guarantees and back-up.

He disagreed and said that once a corner of the market is monopolized, the choice actually decreases. So you go to all the major outlets and the clothing on offer, for example, is the same at each centre.

As for the quality, the manufacture is increasingly outsourced to third world countries and it's just the label which keeps the prices high.

A bit like a pine tree forest, I added. The pines proliferate but all the undergrowth is poisoned out of existence.

Which leads to the conundrum - freedom of choice suggests that small retailers need protection from the mega-chains but this entails regulation, larger bureaucracy and restraint of trade overall.

On the other hand, completely free trade would see the small retailers Walmarted out of existence and monopolies ruling in each sector.

In other words:

Free trade inevitably leads to less choice for the customer, not more.

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