A sign of the times in Portugal

Our local supermarket is going bust. It\’s an Intermarche, which is, I think, a franchise, rather like Spar. And our local one is going bust. He\’s run out of working capital I would say.

The meat and veg counters stay stocked, but nothing else does. The shelves are gradually emptying out of everything else.

Shops go bust all the time of course. But there\’s two interesting additional points to make about this.

Firstly, this is the only supermarket in a town/freguesia of about 10,000 people. Quite why he\’s going bust I\’m not sure. If it\’s the general shrinking of the economy then that\’s one interesting thing to know. Or if it\’s that he\’s screwed up in some manner but no one is willing to either finance him or buy it out then that\’s another. Times must obviously be pretty hard whichever way round it is.

The other is seeing what it is that has a decent turnover and what doesn\’t. What\’s left on the shelves is obviously the stuff with low turnover. The shampoos and the cereals and the health foods really. All of the animal food, sauces, canned goods, coffee, pasta and so on have gone.

No particular point to this, it\’s just interesting to see the ribs of a business in this manner.

20 thoughts on “A sign of the times in Portugal”

  1. I’m intrigued. With populations of less than half your freguesia our two local towns support a couple of Spar-type establishments per locale. Do your neighbours shop at an out of town superstore, at local greengrocers/butchers, or do they grown their own?

    Tim adds: That’s an interesting one. While it’s a franchise, like a Spar, it’s rather larger than that. There’s a couple of places that more directly map onto the sort of size we might think a Spar is.

    There are local butchers, there is a market open every day. No greengrocer (other than the market).

    There are indeed superstores…..but 20 odd km away which in this part of Portugal isn’t going to be a regular thing for many. We are also very definitely seeing more grow your own. One of the local farmers has a half acre of potatoes down this year for example: first time we’ve seen that since arrival 6 years ago.

  2. Putting to one side the theory that the owner made some catastrophic decision and no one will bail him out, what’s interesting to me is that 99% of the time he is paid immediately on sale, or possibly with some slight delay where a credit card is used. Which suggests, in a low margin business, not a problem with income but a problem with costs – specifically overheads and perhaps with tax.

  3. Remarkable, especially the return to people growing their own. But for a place with 10,000 souls in it, wow.

  4. Do you know that he has not simply fallen foul of his franchise terms? Or something else? Totally different situation but my nearest convenience store suffered the same de-stocking a couple of years ago. I thought it was a really bad sign of a decrepit economy, but it turned out that the site had been bought by Tesco to open a new and improved shop.

  5. Due to an ongoing argument I’ve been having with one of the “supermarkets are a horrible capitalist monopoly ruining our lives & destroying the planet” community, been giving considerable though to their structure.
    I wonder if the big supermarkets are shops in the usual sense of the word. A shopkeeper buys stock, then hopes to sell it to his customers. It’s speculation. He’s working on his past experience of his customers & anticipating what they might buy but it’s rather information diffuse.
    A big supermarket chain doesn’t really work like that. A lot of the business is devoted to information processing. They harvest customer data in enormous quantities with as much quality as they can achieve. Why they’re so keen on promoting loyalty cards. It’s not just customer loyalty but customer identification they’re after. Their information is very dense. There’s very little speculation about what’s put on the shelves. Very little of it stays there very long. They already know from buying patterns it’ll be headed straight out the door. In a sense, then a big supermarket outlet isn’t a shop but the front end of an information processing & transport system.
    So why’s Tim’s supermarket gone bust? The franchisee is unlikely to have much input into what goes on the shelves. he just provides the premises & labout support for the front end so maybe he’s made a monumental FU of that. Or maybe the information processing of the actual supermarket chain is being corrupted. It depends on customer predictability. How predictable are customers when the economic situation they’re shopping in is unpredictable?Big supermarkets just may not be viable in that environment.

  6. The same de-stocking happens whenever one of the village pubs changes hands.

    The tie makes them keep buying in a certain number of barrels of bitter every week right to the end, so it is not a problem for me, but other things run out.

    And yes, similar to what Tim saw; you see what is popular because it runs out, leaving us with a few bottles of mild and two thirds of a bottle of peach schnapps (I suspect the same ones each time).

  7. And I suspect Tim’s supermarket is closing for the same reason my village pub keeps changing hands.

    It is not cashflow; as Edward Lud said, both buy goods largely on credit and sell largely for cash.

    The problem is usually insufficient turnover to generate enough profits to cover the overheads (especially if it’s a large shop for the number of people).

    It certainly is in the pub, exacerbated by the goverment which first gouges VAT and (indirectly) alcohol duty out of the turnover and then whacks up the overheads through rates and the minimum wage.

  8. M0 (base) is too low throughout the eurozone. I suspect at this stage it is too late to print, so expect to see more and more businesses shutting their doors in the periphery of the eurozone.

  9. Intermarche says on its website that it tries to combat the problems of what it calls “Desertification” by opening small 2000 sq m stores in rural Portugal. The Algarve Resident (ex-pat paper)has a big feature on “Human Desertification” which stresses links between the decline of health centres and schools in rural areas and the flight of the young into town to find work all of which the EU has plans to attempt to alleviate. But as you don’t believe in the EU or plans in general but in brute market forces ,you’ll have to lump it. Can’t be much good for property prices either. That’s the thing about public sector spending on infrastructure: puts up house prices.
    But you don’t believe in public spending on infrastructure. Not if you have to pay taxes for it(most of which you’ll get back in improved services and enhanced property prices).

  10. As we (some of us anyway) believe in free markets we don’t believe there is such a thing as being good or being bad for house prices. There are simply, house prices. And if public sector spending on infrastructure puts up house prices, that’s a cost not a benefit.

  11. And yes, similar to what Tim saw; you see what is popular because it runs out, leaving us with a few bottles of mild and two thirds of a bottle of peach schnapps (I suspect the same ones each time).

    Reminds me of our annual university funded pissups when I was a graduate student. Some regulation required we serve light beer, so we bought a (330 mL) bottle for the first one and faithfully toted it along every year. Some idiot actually drank it after about seven years.

  12. So Much For Subtlety

    The other is seeing what it is that has a decent turnover and what doesn-t. What-s left on the shelves is obviously the stuff with low turnover. The shampoos and the cereals and the health foods really. All of the animal food, sauces, canned goods, coffee, pasta and so on have gone.

    But that is probably not just turnover, but the Portuguese beginning to feel the bite of recession – they are cutting back on purchases of non-essentials. Health food, obviously, not being anything other than a luxury good designed to indicate status.

  13. So Much For Subtlety

    John B // May 14, 2013 at 12:34 pm

    Intermarch

    11DBC Reed // May 14, 2013 at 3:44 pm

    Intermarche says on its website

    Oh my God – John B is DBC Reed!

    Rural Portugal-s problem with schools is because they have stopped having children. The European Union has preached this vision of Pornotopia where everyone gets to have all the sex they want with anyone they like, but no one has children. It has lead to children being groomed in Oxford as families break down. And of course the closing of schools in countries that are below replacement rate.

    You cannot blame a lack of government spending.

  14. The European Union’s influence is behind girls being abused by men in Oxford? On another thread you are saying the British car unions were being controlled from Moscow. Seriously mate ,get some help.

  15. So Much For Subtlety

    DBC Reed – “The European Union-s influence is behind girls being abused by men in Oxford?”

    Absolutely. All part of a Federalist plot. A group of Muslim men abuse homeless girls. There are a lot more homeless girls because of the sexual revolution of the Sixties. Which as it happened the EU did not need to push in the UK because we did it to ourselves. But they did have to push it in Portugal. It was a price of the reforms they had to carry out to join the EU.

    “On another thread you are saying the British car unions were being controlled from Moscow. Seriously mate ,get some help.”

    Jack Jones was the head of the Transport Workers Union that walked out causing the Winter of Discontent. He was also a long time veteran of Soviet causes having volunteered to fight with the Communists in Spain. He took money from the Soviets for documents from the Labour Party.

    It is not unreasonable to assume someone who dedicated his life to the Soviet cause, and was paid by them, was actually working for Moscow.

  16. SMFS – Prof Brian Harrisson in the latest edition of the Oxford History of England opines that the trade unions in the UK were more concerned with maintaining pay differentials in a world of high inflation than by class warfare. And by pay differentials you are talking about subtle differences between workers’ skill levels rather than the generic toiler and manager. And since most strikes in the n70s were by individual elemtns of a workforce rather than by a union as a whole, i find his argument compelling. Moscow did not tell car-door workers to strike to maintain a pay differential against seat-coverers.

  17. It’s all becoming clear. The problem with the EU is that it doesn’t force women to have children against their will. I demand a referendum now.

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