Tag: british

British retail strategy

Right under where I currently live, there’s a Waitrose. Next door, there’s a Tesco Express. And a little down the road, there’s a Sainsbury Local. The day I got here, a week ago, I drove myself nuts trying to figure out which of these stores is the cheapest.

And after one week of random primary research, I think I have the classic economist’s answer – it depends. On what I’m looking to buy that is.

Each of these chains has built a reputation of sourcing excellent products and selling them to customers at a cheap price. The only thing is that each of them does it on a different kind of products. So there is a set of products that Tesco is easily the cheapest at, but the chain compensates for this by selling other products for a higher rate. It is similar with the other chains.

Some research I read a year or two back showed that while Amazon was easily the cheapest retailer in the US for big-ticket purchases, their prices for other less price-sensitive items was not as competitive. In other words, Amazon let go of the margin on high-publicity goods, and made up for it on goods where customers didn’t notice as much.

It’s the same with British retailers – each of their claims of being the cheapest is true, but that applies only to a section of the products. And by sacrificing the margin on these products, they manage to attract a sufficient number of customers to their stores, who also buy other stuff that is not as competitively priced!

Now, it is possible for an intelligent customer to conduct deep research and figure out the cheapest shop for each stock keeping unit. The lack of quick patterns of who is cheap for what, however, means that the cost of such research and visiting multiple shops usually far exceeds the benefits of buying everything from the cheapest source.

I must mention that this approach may not apply in online retail where at the point of browsing a customer is not “stuck” to any particular shop (unlike in offline where a customer is at a physical store location while browsing).

Variable pricing need not be boring at all!

Why Brits talk so much about the weather

One stereotype about British people is that they are always talking about the weather. In the absence of any other topic to talk about, they get back down to talking about the weather.

Having lived here for a day after a half after moving here yesterday, I can offer one explanation about why Brits talk so much about the weather – the high information content. In the last day and half, the weather here has been so volatile that the information content in statements about the weather can be rather high.

Most places in the world have rather predictable weather. Delhi has hot summers and cold winters. It almost always rains in the tropical rain forests. It almost always rains in Mumbai during the monsoon. And so on. And when the weather is predictable, the information content in describing it is rather low.

For example, if there is a 90% chance that it will rain in Mumbai one monsoon day, a statement on the presence or absence of rain contains only 0.47 bits of information/entropy (-0.9 log 0.9 – 0.1 log 0.1). If the probability that a summer day in Delhi will be sunny is 99%, then the information content in talking about the weather is just 0.08 bits.

The thing with London weather, based on my day and half of observation, is that it is wildly volatile. This afternoon, for example, there was a hailstorm. And only a couple of minutes later there was bright sunshine. And then there was another hailstorm. I can see heavy rain from my window as I write this now.

Crow and fox getting married in London

A post shared by Karthik S (@skthewimp) on

So given how crazy and volatile the weather in London is, the information content in talking about the weather is rather high. As I write, there’s sunshine streaming through my window, and heavy rain outside. And I’m chatting with a friend who lives not very far from here, and whatever I tell her about the weather here is “information” to her, since it’s not the same there.

It’s this craziness and high volatility in weather in Britain that makes it worth talking about. The information content in a statement about the weather is always high. And this is not the case elsewhere in the world. And so people elsewhere get annoyed by Brits talking about the weather.

PS: What does it tell you that I’m blogging about the weather a day and half after landing in Britain?