Competition in the distribution sector of Barbados: Good, bad or both? DISCLAIMER: Insert usual IANA-type (I Am Not A...) disclaimers here as I'm in a rush (going to see Hancock tonight) and I want to post this before I forget.

By distribution sector of Barbados, I mean the companies that import the foodstuffs, groceries, etcetera, that we see on the shelves of our major supermarkets as well as the smaller shops.

In some(?) cases, these distribution companies also own and operate the supermarkets (an example of vertical integration at work here, folks).

After watching a bit of the budget this eve, it seems to me that The Government, as a result of the high cost of living, appears to be receptive and open to the idea of allowing foreign competitors to setup shop in Barbados. In addition, ownership of these outfits is to be kept independent from local entities in an attempt to, perhaps, avoid collusion/cartels(?). The aim here is that by allowing foreign entities into the market, competition will ensue and therefore drive down prices, thereby giving Barbadian consumers a 'break' or an 'ease.'

Now I'm a consumer, and I'm all for a 'break' and an 'ease.' No harm at all, none whatsoever. Or is there? This measure, I think, could very well be a double-edged sword, one that must be wielded carefully (or how about: there are two sides to every coin, or two sides to every issue, or the lesser of two evils? LOL).

Very quickly (as I'm running late for the show at the drive-in):

The Good:

Foodstuffs et al should be available (in theory), at competitive prices and in a wider variety, to the average Barbadian consumer. I for one am always happy to pay less. After all, I'm a Barbadian, we like that sort of stuff, but not at the expense of quality ofcourse. ;-)

The Bad:

Existing distribution & supermarket entities now faced with stiff competition from overseas competitors (who enjoy economies of scale), may be forced to compete on price in one way by reducing their costs.

Labour is a cost. Local companies may be forced to lay-off, or reduce staff levels (i.e., Barbadian employees) in order to reduce their costs, which in turn will (hopefully) allow them to offer competitive pricing in line with the overseas players. Alternatives to lay-offs may involve: reducing their profit margins or finding ways to increase the efficiency of their businesses so as to drive down costs.

Another negative aspect of foreign entrants is that if these foreign entities are a hit with the Barbadian public, and they start to make a profit for their overseas owners, where do you think these profits are going ? I'm no expert, but I guess that our Government will probably see a 'little something' in the form of taxes, duties, etcetera, but I think that the bulk of it will be heading overseas, to a parent company somewhere.

I'm sure that there are plenty of arguements and counter-arguements to what I've said, but this is simply a little food (pardon the pun) for thought. Remember, what do I know? IANA... ;-)

In conclusion, if I may offer one slight, insignificant, tiny, suggestion from little ol' me: If you're going to allow these foreign firms to setup shop in Bim, make sure that the majority of all staff hired (even the Management team), are Barbadians.

Labels: Barbados, business, economics, food, life

6:04 PM