Beginnings of the European realisation that austerity is mis-timed

Austerity has an encouraging family responsibility and belt-tightening feel to it. An analogy that is entirely misguided when it comes to national finances. Watch the PIIGS chase their austerity tail into a depression.

Meanwhile, the Dutch and some other European countries, former supporters of the ridiculous 3% deficit rule, are starting to question that “wisdom”.

Coffee as the thin edge

Pick n Pay is starting to gain some useful insights into customer behaviour and purchasing decisions at different stores. They’re using coffee as a key product to better understand who buys what, where and when.  They’re tossing out (more likely de-emphaszing) LSMs as a method of categorising customers and moving to more sophisticated measures (including whether the purchaser has children or not, but also I’d expect location, purchase frequency, average basket size, mix of goods etc.)

Pick n Pay had to spend a fortune on the Smart Shopper system and has ongoing expenses in terms of rewards and analysis. The curious thing for me is how many loyalty cards incur the system and reward costs for retailers, but without gaining the full benefit of analysis and thus insight into customers.

I don’t get tailored book suggestions from Exclusive Books. They also haven’t tried to entice me back to their stores since I started buying first from Bookfinder.com and then almost exclusively ebooks from Amazon. They’ve basically lost a customer and haven’t done anything about it.

Even my friend’s St Elmos offers sweet deals to customers who haven’t ordered in a while to entice them back. Pick n Pay turned sub R100 pm customers into R350 pm customers (at least while the special was one) by specifically targeting customers that are familiar with Pick n Pay but need a push to become regular, high-spending customers.

I haven’t had a movie card with Ster Kinekor in a while, but I always use the same email address and credit when I purchase tickets online (which I do almost universally). There have been periods of several months where I haven’t gone to the movies, but no attempt from Ster Kinekor to woo me back with free popcorn or a careful movie recommendation.

Retailers are missing a trick to get an edge over their competitors.

 

We can’t all be Germany

Some interesting thoughts on what drives Germany’s apparent success.

The article does understate the problem that Germany’s success is significantly export driven – not everyone can export for obvious reasons.

Also, the author notes that consumption has grown more slowly than economic growth without understanding that is exactly the source of an export-encouraged boom. Growth in consumption will also grow imports!

Digital currencies and more

Bitcoins are a bad idea.  I’ve put this forward from multiple directions already.

What’s interesting is the range of new, government-sponsored digital currencies that are in development. Digital currencies might also be a little bit of a stretch, they’re still more like digital payment methods. Unlike Bitcoins, there is much to recommend about low-cost, high-security, electronic digital payment platforms.

Japan is toying with slightly different ideas. Rather than using a traditional ATM card to withdraw cash, you might simply use your palm. It really is only a matter of time before the ubiquitous plastic card disappears into a cellphone, embedded chip, retina scan or something.

Sweden is moving towards a cashless economy, with one of the driving factors being security – as in personal safety. Maybe I’ve missed some news stories (or not read Dragon Tattoo enough times) but I wouldn’t have thought that Sweden would be first in the world at worrying about personal safety.

To be clear, there are several wide-scale advances in this area around the world already.  These aren’t specifically digital currencies, but rather different, more efficient methods of payment.  The UK Oyster card is a good example of a wide-scale contactless payment system that works well for small payments in a fast-speed transaction environment. The precursor of the UK’s Oyster is Hong Kong’s Octopus card, which is actually used or micro-payments on transport systems, many parking areas and even vending machines.

Google and PayPal have systems allowing small digital payments that are cost-effective, but still linked to an account so your account information is linked directly to the transaction. One of the apparent virtues of Bitcoins is their anonymous nature. Now for the most part most individuals aren’t particularly bothered by anonymity, but it is a genuine concern. Do you really want a vending machine company to know when and where you buy your Coke and Vitamin Water from their vending machines? Would you want this information to be aggregated with your online purchases and fuel purchases and airline ticket purchases? Very soon the information that Google currently stores on you would be a drop in the information ocean from these real world movements and transactions.

So Canada’s proposal for an anonymous, digital currency is really interesting. Government backing is one good way of giving credibility and scale to a system that many competing system will not be able to manage.

For me, one of the most interesting aspects of the story was the Canadian Mint’s IPO of an exchange traded listing for gold receipts for gold stored at the mint. This is basically the oldest form of gold-backed currency – receipts of gold on deposit at an institution where the receipts were tradeable and allowed “gold” to be used for transactions more conveniently and safely that gold bars and coins.

What once was old is now new.