Cyprus-Forum.com

[devil]

I don't believe that Micky D is a good example. a) It is a franchise and the local holders are quite dictated to by HQ as to what they can and can not do b) a lot of the merchandise is actually bought from MacD's own factories or from other factories that are licensed by MacD c) it addresses a minority clientèle, mostly low income, so that they could easily price themselves out of their niche if they exaggerated.

The big supermarkets would be a better example as they address themselve to a wide range of families. I'd guess that a member of 60% or 70% of families in Cyprus goes to at least one of them at least once per month, probably more often than not once a week.

Let me tell you something about them. Bonus cards. Most people think that they are there as a means of effectively getting an indirect discount, a kind of fidelity scheme. Nothing is further from the truth. In the first place, ithe "discount" they offer is negligible, averaging 1% or sometimes even less. They are used for many purposes:
1. to check what an individual buys regularly and what he buys sporadically
2. to determine average spending patterns according to the perceived income range
3. to check which special offers appeal most to customers
4. to calculate, for any given article, the optimum price for max profits with a perceived income range. For example, a luxury imported biscuit will be sold only to higher income brackets and by linear regression, they can determine whether to set the price lower and hope to sell more or set the price high and sell fewer.
5. to calculate which articles to restock and those to not restock (this is also a function of suppliers' quantity discounts and payment terms, as the big guys almost blackmail their suppliers into long payment delays)
6. to calculate what are the likely seasonal variations in spending patterns for different classes of client. This is especially important for fresh produce. Which customers would stop buying cucumbers when the price reaches £1/kg or £1.50?

In other words, these cards are to maximise profitability and to help practise "just-in-time" deliveries with a minimal buffer stock. This is why, at any one time, items just disappear off the shelves, quite often for good. You can bet your bottom euro that the programmers are already working on software which will tell them what price hikes the gullible public will swallow for each class of product when the euro hits and when the price hike will be implemented (it will be a slow process over several months).

Have you ever wondered why the small village supermarkets can sell many articles at the same price as the big'uns, sometimes even cheaper? It is because their margins are much slimmer as they do not benefit from the economy of scale. But then they do not have "bonus" cards. The bonus is for the supermarket, not the individual.

[sk]

@devil
excellent,simply excellent!i totally agree

[turkcyp]

Dear andytandreou,

Broadly speaking governments manage economy by having three kind of policies
- trade policy
- fiscal policy
- monetary policy.

And even monetary policy is not in government hands but rather in Central Banks hands and assuming that central bank is independent of government (the way it should be) than we only have two policy tools in our disposal to manage our economy. After using Euro you will not even have Central bank anymore, in the sense of functionality of monetary policy.

In case of Cyprus trade policy will not be effective because being in EU it means your trade policy will be decided by the Brussels as well (against third countries) and for EU countries you can not apply trade policy anyway, it is common market, supposedly. This is not viewed as a policy tool by many economist anyway because the tariffs all around the world have been coming down due to GATT.

So in any Euro zone country the only policy tool in government disposal is fiscal policy. Which is actually what you have indirectly been referring by saying employment. Government decides about the taxes and try to stimulate and cool down the economy. This is how fiscal policy works. Unless you are suggesting direct government employment in the form of state enterprises which is a very bad idea. Every country in the world have been privatizing state enterprises left and right(I do not want to get into the reasoning for it but there are definite reasons for it). And fiscal policy applied through taxes takes a long time to work. Reaction time of economy to fiscal policy is much longer than monetary policy.

So unless you think getting into Euro will help you increase some other trade figures like increase tourism, or exports or something, there is no reason for Cyprus to substantially benefit by giving up its monetary policy. There are psychological desires, in the form of being a part of bigger Europe but no tangible economic reasons. I simply do not believe that because Cyprus start using Euro the trade with Cyprus in the form of goods and services will increase.

Furthermore as you have said unemployment levels in Cyprus are much better compared to continental Europe. This means the economy is already running at its full capacity. Any more increase in economic activity without increasing capacity will bound to create inflation in Cyprus. Furthermore when Cyprus gets into Euro there will be a definite one time increase in prices, as the price levels for many goods in Cyprus are still relatively cheaper compared to Europe.

Anyway I just believe Cypriots one to be a part of Euro only for psychological reasons not real economic reasons.

[sk]

u may be right but if i am not mistaken the 10 new eu members must join the euro at some point,and this does not mean they will postpone it for as long as they can....

[michalis5354]

I dont see how the introduction of Euro will decrease prices! Quite the opposite will happen as Devil said! The costs are fixed. Companies will adjust the new Euro price to reflect a reasonable margin and hence stay in business !

[schmetterling]

Hello to everyone,

this is my first post in this forum, but I am not new, I am already reading here for about 6 months
Now I would like to add my experience with the introduction of the Euro. Most prices did increase!
Ok, it might be that bridge piers and diving platforms are cheaper now ( ), but these things you need for living are more expensive. Let me give you an example. Before the Euro you paid about 2,00 DM for french fries in an snackbar, which is calculated in Euro 1,02. Now it is about Euro 1,50 which is converted into DM 2,93. Everywhere prices where rounded up, just salaries were converted very exactly. Another example from the gas station. When fuel got more expensive it was up to 2 or 3 Pfennige (which is about half of the eurocent) and now it is up to 2 or 3 Cent. I even found a shop where some products (in my case it was charcoal) changed the prices from DM to Euro, which is double!!! Other Euro currency countries had the same experience. I dont think it will be different in Cyprus.
There is only one advantage, you can go into a lot of countries and dont need to change money anymore and of course you can compare the prices easily, specially for me this is an advantage living close to the border of another eu-country.

And Lidl is for sure not a shop for elderly and low-income folks......everyone goes there, because why to pay more in a normal supermarket for the same product? And if you can have the same product just under a different name cheaper, why not to go there? Perhaps you all will think different, when you have the Euro as well......

[michalis5354]

And Lidl is for sure not a shop for elderly and low-income folks......everyone goes there, because why to pay more in a normal supermarket for the same product? And if you can have the same product just under a different name cheaper, why not to go there? Perhaps you all will think different, when you have the Euro as well......

We have had a discussion earlier regarding Lidl is Lidl a German group?

[schmetterling]

Yes it is german supermarket with right now 2450 shops just in Germany and more in other countries. It is comparable with Aldi just that they sell branded articles as well.
For working there Lidl is not really recommended they have a bad reputation how they treat their employees, but for shopping they are great.
(I dont have anything to do with them, I just try to save my money and prefer to shop there than to the metro-shops)

[garbitsch]

Is it true that the KFC is no more "Kentucky Fried Chicken" because they use somekind of chickenish animal, which was genetically deformed?

[sk]

how did u come up with that garbitch???