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The Age of Austerity

Wal-mart left.jpgThe world's major retailers, particularly Wal-Mart and Tesco, keep a very close finger on the global economic pulse.

They spotted looming recession 18 months ago - long before it became more widely apparent this year.

Yesterday, Wal-Mart's UK head went further, referring to "the dawning of the age of austerity". He added that "this won't be a recession where it is a blip, and then we are back to where things were". Instead, he forecast that "the era of conspicuous consumption is over. Saving money by cutting out waste of all kinds will be the priority".Tesco right.jpg

Wal-Mart's view is echoed by Tesco CEO, Sir Terry Leahy, who noted that "the main thing is that we have to reshape the business". Customers have "less money to spend" and "you can't just buck a downturn".

Wal-Mart President, Lee Scott, also told analysts last week that there was "very little visibility as to what the economy's going to do". Scott's view is that it is now critical to "position yourself as a company that saves people money so they can live better".

Chemical companies largely ignored last year's early warning from the retailers. They have paid for this oversight in Q4, as they have had to dump inventory at firesale prices. It is vital for the future health of the industry that companies now respond quickly to the emerging new trends being highlighted by Wal-Mart and Tesco.

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