Parallel Universes and Supermarkets

It does not matter where in the developed world one lives nor whether one is male or female, straight or otherwise, of European descent or already part of the cultural & ethnic mix that our descendants will turn into – supermarkets are never far from our mind. The hunter/gatherers of prehistoric times pursue these activities within supermarkets today. Supermarkets have, depending whom one wishes to believe, a market share of between 60-85% of the total food business. Yes, I know that there are variations and fluctuations based on store departments, store location and the competence level of store management, but I am talking averages here.  My favourite source of semi-reliable information, Wikipedia (http://en.wikipedia.org/wiki/Supermarket), suggests that

 “a supermarket is a self-servicestore offering a wide variety of food and household merchandise, organized into departments. It is larger in size and has a wider selection than a traditional grocery store and it is smaller than a hypermarket or superstore.”

 Whilst one usually has to take wikipedia with a grain of salt as all and sundry are able to edit contributions on-line , I am sure that most readers would agree with this description as being fairly accurate. Let’s see what else wikipedia has to say on the topic to help us better understand what a supermarket is – and equally as important, what it is not!

On the matter of why we shop at supermarkets, Wikipedia feels,

 “Its basic appeal is the availability of a broad selection of goods under a single roof at relatively low prices.”

As a possible reason why relatively low prices should be achievable, Wikipedia offers this explanation.

 “The stores often are part of a corporate chain that owns or controls (sometimes by franchise) other supermarkets located nearby — even transnationally — thus increasing opportunities for economies of scale.”

Wikipedia also thinks it has got the answer to the fundamental question on supermarket economics.

 “Supermarkets usually offer products at low prices by reducing their economic margins. Certain products (typically staple foods such as bread, milk and sugar) are occasionally sold as loss leaders, that is, with negative profit margins. To maintain a profit, supermarkets attempt to make up for the lower margins by a higher overall volume of sales, and with the sale of higher-margin items.”

Hm, let me sum up here. Supermarkets are food outlets that achieve economies of scale which enable them to sell food at relatively low prices and in the process often reducing their economic margin.

I have spent the last few days contemplating the Wikipedia article which appears to have been put together by perfectly sane and sensible people. Yet the supermarket world I see is somewhat different to the one described by the Wikipedia authors. How can this be? What is happening here? Who has gotten hold of the wrong end of the stick? The answers to these questions, valued readers, are actually very exciting because we may just have reached the point where the good old supermarket business is at the verge of proving and confirming a theory that has fascinated mankind for hundreds of years.

I am referring, of course, to the theory that parallel universes exist!

No, I have not gone completely of my rocker but I know that consumers and growers alike are experiencing a totally different supermarket related reality than the one described in Wikipedia. In our reality here, supermarkets with established and unquestionable economies of scale are, for example, selling Royal Gala apples for around $1 per kilo more currently than a greengrocer down the road. Suppliers are being asked to buy space in supermarket catalogues in order to have their produce advertised whilst reducing their own economic margins is typically a totally abhorrent concept for supermarkets because that is not in their shareholders’ best interest. On top of that, regular suppliers are being asked to implement complex food safety programmes whilst supermarkets reserve the right to buy from whomever they like regardless and when it suits them, food safety system or otherwise.

This all fits with physics theories involving parallel universes, “which form a natural four-level hierarchy of multiverses allowing progressively greater diversity.” (Tegmark, M. 2003. Parallel Universes. Science and Ultimate Reality. From Quantum to Cosmos. Cambridge University Press).

In his somewhat challenging paper, Tegmark (2003) introduces multiverses as a conceptual hierarchy that is peppered with Hubble volumes, chaotic inflation, unitary quantum mechanics and mathematical structures unknown to us that give rise to different fundamental equations of physics.  The key question, by the way, for Tegmark is not whether parallel universes exist, but how many of them there are!

So, you can see it is perfectly simple. We do not live in a universe but on several multiverse levels all at once. That would explain why what the supermarkets are saying and what they are doing is often barely related to each other. It seems that supermarkets have developed the ability to cross from one multiversal level to another and back so rapidly that we don’t notice and perceive them to be locked in one spot because of the brick and mortar needed to build them. Another possible explanation is that supermarkets are able to be simultaneously present on more than one level of our multiverse without themselves realizing that this is so. If I have thoroughly confused you by now, forgive me. My excuse is that the topic is very complex. I will try to explain it in a nutshell.

 

Common economic principles related to economies of scale no longer apply because the economic unit size of supermarket chains has grown exponentially and disproportionally compared to the economic unit size of supermarket suppliers.

We started off in the 1950s and 1960s with New Zealand supermarkets buying their produce at auction, alongside all other produce retailers. In the 1970s first attempts to buy direct from growers emerged. This trend became more robust in the 1980s and snowballed in the 1990s. By 2000 then separately owned Woolworths and Progressive had their respective systems sorted out, often sourcing whole categories from just one supplier. This in turn changed the nature of some of these suppliers from growers who packed, to packers who grew and purchased from other growers. Subtle difference, eh. Foodstuffs in the meantime followed its own evolutionary path on produce supply.

Then two events occurred in relatively short order. Firstly, Progressive purchased Woolworths. No sooner had the dust settled, the tables turned for Progressive. It became the successful takeover target for Woolworths Australia. Now we have a substantial volume of New Zealand produce being procured every day under Aussie rules. The intrinsic costs of running a produce buying operations, the additional costs of complying with Woolworths Australia requirements in this market, the costs associated with funneling all produce through a centralized distribution centre, the impact of corporate accounting policies on distribution costs as well as associated regulatory or self-inflicted compliance costs and the produce department margin expectation all add up to negating the benefits of being able to buy attractively due to enjoying economies of scale. To be very clear here – I am not blaming supermarkets or anyone else for that matter. Running a buying team costs money and, of course, one wants to play by one’s own rules if one is big enough to achieve it; centralized distribution provides more control and accounting policies exist for a reason; compliance costs are a fact of life and positive margins are needed in order to justify the capital intensive nature of being in the supermarket business.

Every single aspect listed here can be vigorously defended and justified up to a point.

My point is that the sum of these aspects when added to the fact that our industry markets and sells commodities and not 18 karat gold jewellery, and compounded by the imbalance in economic unit size between buyer and seller, is tipping the balance and no longer makes it possible for a supermarket to do what Wikipedia says a supermarket should be doing – offering “a broad selection of goods under a single roof at relatively low prices.”

And none of the above is purely a local New Zealand phenomenon.  This brings me back to the multiverse theory, which obviously deserves closer investigation than many of us have realized until now.

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