Monday, July 23, 2007

Global warning.

Just came back from Friedrichshafen from Outdoor Trade Fair. I have a lot of notes, but need to work through them.

One the almost fiinished is about climate change impact. During our classes we discussed the possible incentives to businesses to pay attention to the problem of global warming. I've just had a talk to russian distributor and outdoor product developper, he told me that due to poor winter almost all russian retailers have now a huge amount on inventory. This can be translated to inventory holding costs, assortment obsolescence and therefore lowering margins for next year etc. So, to avoid those costs retailers should think in advance and invest into environmental projects.

Thinking further. Next year wholesaler will be suffering. Since retailers have huge stocks, they are going to lower their orders. The wholesalers' orders to suppliers also will lower. Moreover, due to poor sales (this year ducring Xmas the temperature was +7, snow covered the ground only in february, the season was closed in the end of march - no sales at all) retailers won't be able to pay in time. Therefore we have two more suffering parties.

The question now is if it is a global weather ternd or just a cyclical changes. Due to suffering now businesses are not willing to invest in environment. Moreover, this is classical prisoners' dilemma - if you confess and start investing while others stay silent, you're a loser. First mover disadvantage. And dilemma will be solved to unefficient no-no square until its players' asses will be fried.

That's why some institutions and organizations have recently appeared. One of them - European Outdoor Froup - started Association for Conversation. They're making environmental projects and collect money to do them. Members we selling goods during exhibition to invest. i will elaborate on this topic further.

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