By Claire Hollier – Public Policy Consultant
One basic economic law, that of supply and demand, stipulates that these variables pull against each other until they meet to establish a market price equilibrium.
Keeping this in mind, a strong business venture is also measured by the ease of response and adaptation to change. In other words, the survival of a business venture, in an ever-changing context, depends on its flexibility, and instant response. The medium/long-term viability of business operations is gradual change to adapt, or better still, anticipate changes in demands. Lest not forget, the only constant is change.
It would be responsible to predict that post-pandemic, market demands will differ from those pre-pandemic – to a significant degree. This can be attributed to shifts in societies’ priorities and the probable exponential increase in unemployment levels worldwide.
Looking at the situation in Malta, I still feel that the retail trade sector has not yet set up itself professionally – digitally and online. Professional online platforms are non-existent, whereas many still rely on cash payments as opposed to digital money transfers. Furthermore, logistics are lacking. Pre-pandemic, delivery services were only limited to some few sectors, say the super-markets, upon minimum expenditure of €70. For some reason or another, there was limited investment in IT solutions.
Call it survival instinct, amid this crisis, many have turned to social media to notify they are taking orders and deliveries may be arranged. There is even an initiative to create an online platform, listing those operators, by sectors, who are providing and delivering goods and services. This indicates, that entrepreneurship is not about selling what you want but providing a solution to a problem – my inclination in believing that the economy is more demand-driven than by supply.
Lets, at this point acknowledge, socially-conscious entrepreneurs who, in crisis time, deployed what was necessary to assist the community, safeguard jobs and be of service – even if it meant closing outlets before the mandatory directives by the authorities. In Malta, we have seen landlords slashing or postponing rents, restaurants providing free meals to those in need and vacant hotels offering shelter to healthcare workers.
At EU level, firms switched output to meet changing needs. Personal care brand Nivea declared it would supply 500 tonnes of disinfectants to public services, whilst luxury goods company LVMH switched to provide hand sanitizers for as long as necessary. Several hotel chains have offered their empty rooms to the NHS. Giovanni Rana brand in Italy, gave its employees a 25% pay rise coining ‘COVID-19 insurance’. The list is endless.
Notwithstanding the socially conscious self-employed, there are also those few, who take economic theory by the letter. True, it makes perfect economic sense, but it lacks social consciousness. It is bad taste and morally repulsive, in these vulnerable times, to make stratospheric, instant gains on indispensable items such as hand sanitizers and face masks. The President of the Malta Chamber of Commerce, Enterprise and Industry reminded the business community that it has an important role to play, and whilst it is within its right to safeguard its operations, the business community should also act responsibly towards its patrons. The Chamber has called on businesses to practice the highest ethical standards when it comes to pricing. Similarly, on an internationally, Amazon, eBay, Walmart and other online platforms are having a hard time stopping sellers from making excessive profits from public health crisis.
An enterprise in Denmark came up with a smart price trick. Attempting to stop sanitizers hoarding, Rotunden Hellerup Foodmarket priced 1 bottle of santizer at 40 Danish Krone. It then priced 2 bottles of the same product at 1,000 Danish Krone! Nicely played indeed.
What next? Post-pandemic, when all of us will be eagerly seeking some sort of respite, routine and normality, when businesses will be striving to recuperate, let us all keep in mind who, in hard times went the extra mile, was driven by high ethical standards and made available one’s services at the disposal of the community.
It is high time that community grabs the notion of conscious spending. The goal of conscious spending is not to limit anyone, but to increase awareness about the implications of their spending traits. From a strict economic point of view, it adds value to direct one’s spending power towards the local economy. It stimulates local enterprises and encourages enterprises to sustain and increase employment level. Furthermore, recalling Malta as an EU Member State, directing purchases towards Malta and EU goods and services as opposed to third country commodities, does not only support EU industries and jobs, but also preserves the high standards present in the EU related to health and safety, labour rights and the environment. Standards are undoubtedly costly, yet in the long-term there is a higher price to be paid on acting cheap.
Claire Hollier – Public Policy Consultant
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