The growth of dollar/pound stores is astounding
If there is one thing that separates me from most people who write about the economy and markets, it's my steadfast belief that we are living in a disinflationary, if not deflationary, era.
Globalization and free trade have made it viable to move production anywhere. The moment a company begins to feel wage inflation, it can move production. Economies can export inflation to places with a nearly limitless supply of cheap labour.
To compound it, information technology makes it easier every day to hire from abroad in higher value jobs. The virtual office is already here. I've worked with the guys at ForexLive for years and we've never met.
Have you been to a dollar store lately?
The selection of goods and, in some cases, even the quality is astounding. The things they can manufacture in China at extremely low prices are amazing.
Customers have noticed. Part of it is surely a squeeze on low-income consumers but part is also competitive and evidence of deflation. The prices of goods are so low that margins are still decent selling things for $1 or £1. The FT writes today:
"Nearly 1,000 pound shops selling food, toiletries, party products and even plants have appeared on Britain's high streets over the past five years - a 51 per cent net rise, according to the Local Data Company."
The next frontier is moving up to higher end goods. I bought another Ergotron the other day to set up another 4 monitors. They retail for $600. There is absolutely no way that's in anyway reflective of the cost of manufacturing. Amazon sells decent, Chinese-made stands for $77.
